Flash loans in Blockchain / Solidity - Interactive Code Practice

Practice - 5 Tasks

1fill in blank

easy

Complete the code to start a flash loan using the lending pool.

Blockchain / Solidity

lendingPool.[1](asset, amount, params);

Drag options to blanks, or click blank then click option'

Awithdraw

Bdeposit

Cborrow

DflashLoan

Attempts:

3 left

💡 Hint

Common Mistakes

Using 'borrow' instead of 'flashLoan' causes the code to fail because 'borrow' is not the flash loan function.

Using 'deposit' or 'withdraw' does not start a flash loan.

The flashLoan function initiates a flash loan in most DeFi lending pools.

2fill in blank

medium

Complete the code to check if the flash loan was repaid within the same transaction.

Blockchain / Solidity

require(amountOwing <= IERC20(asset).balanceOf([1]), "Flash loan not repaid");

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Aaddress(this)

Bbalance

Cmsg.sender

Dtx.origin

Attempts:

3 left

💡 Hint

Common Mistakes

Using msg.sender checks the caller's balance, not the contract's.

Using tx.origin checks the original transaction sender, which is incorrect here.

The contract's token balance is checked using IERC20(asset).balanceOf(address(this)) to ensure repayment.

3fill in blank

hard

Fix the error in the function signature for executing the flash loan logic.

Blockchain / Solidity

function executeOperation(address asset, uint256 amount, uint256 premium, address initiator, bytes calldata [1]) external returns (bool) {

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Aparams

Bdata

Cdetails

Dinfo

Attempts:

3 left

💡 Hint

Common Mistakes

Using other names like 'data' or 'info' causes mismatch with the lending pool interface.

Incorrect parameter names cause compilation errors.

The parameter is conventionally named params to hold extra data passed to the function.

4fill in blank

hard

Fill both blanks to calculate the total amount to repay including the premium.

Blockchain / Solidity

uint256 amountOwing = amount [1] premium [2];

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A+

B-

C*

D/

Attempts:

3 left

💡 Hint

Common Mistakes

Using '-' subtracts the premium, which is incorrect.

Using '*' or '/' causes wrong calculations.

The total amount owed is the sum of the borrowed amount and the premium, so both blanks use '+'.

5fill in blank

hard

Fill all three blanks to approve the lending pool to withdraw the owed amount.

Blockchain / Solidity

IERC20(asset).[1](address([2]), [3]);

Drag options to blanks, or click blank then click option'

Aapprove

BlendingPool

CamountOwing

Dtransfer

Attempts:

3 left

💡 Hint

Common Mistakes

Using 'transfer' instead of 'approve' causes errors.

Approving the wrong address or amount causes the flash loan to fail.

The contract must approve the lending pool to withdraw the owed amount using approve.

Practice

1. What is the main feature of a flash loan in blockchain?

easy

A. You can borrow funds without collateral but must repay within the same transaction

B. You borrow funds with collateral and repay anytime

C. You borrow funds and repay after 30 days

D. You borrow funds only for staking purposes

Solution

1. Step 1: Understand flash loan basics

   Flash loans allow borrowing without collateral but require repayment in the same transaction.

2. Step 2: Compare options

   Only You can borrow funds without collateral but must repay within the same transaction correctly states no collateral and instant repayment.

3. Final Answer:

   You can borrow funds without collateral but must repay within the same transaction -> Option A

4. Quick Check:

   Flash loan = no collateral + instant repayment [OK]

Hint: Flash loans = borrow now, repay instantly [OK]

Common Mistakes:

• Thinking collateral is required
• Assuming repayment can be delayed
• Confusing flash loans with regular loans

2. Which of the following is the correct Solidity function signature to implement a flash loan callback?

easy

A. function repayLoan(uint256 amount) external

B. function flashLoan(address borrower, uint256 amount) public

C. function startLoan(address asset, uint256 amount) external returns (bool)

D. function executeOperation(address[] calldata assets, uint256[] calldata amounts, uint256[] calldata premiums, address initiator, bytes calldata params) external returns (bool)

Solution

1. Step 1: Identify the standard flash loan callback

   The Aave protocol requires implementing executeOperation with specific parameters.

2. Step 2: Match function signature

   function executeOperation(address[] calldata assets, uint256[] calldata amounts, uint256[] calldata premiums, address initiator, bytes calldata params) external returns (bool) matches the exact signature needed for flash loan execution and repayment.

3. Final Answer:

   function executeOperation(address[] calldata assets, uint256[] calldata amounts, uint256[] calldata premiums, address initiator, bytes calldata params) external returns (bool) -> Option D

4. Quick Check:

   executeOperation signature = function executeOperation(address[] calldata assets, uint256[] calldata amounts, uint256[] calldata premiums, address initiator, bytes calldata params) external returns (bool) [OK]

Hint: Flash loan callback is always executeOperation with specific params [OK]

Common Mistakes:

• Using incorrect function names
• Missing required parameters
• Wrong return type

3. Given this simplified Solidity snippet inside executeOperation:

uint256 amountOwing = amounts[0] + premiums[0];
IERC20(assets[0]).approve(address(LENDING_POOL), amountOwing);
return true;

What does this code do?

medium

A. Transfers the loan amount to the borrower

B. Approves the lending pool to withdraw the loan plus fee for repayment

C. Withdraws the loan amount from the lending pool

D. Rejects the flash loan request

Solution

1. Step 1: Understand the approval call

   The code approves the lending pool contract to spend the loan amount plus premium from this contract.

2. Step 2: Interpret the purpose

   This approval is necessary so the lending pool can pull repayment automatically after the operation.

3. Final Answer:

   Approves the lending pool to withdraw the loan plus fee for repayment -> Option B

4. Quick Check:

   approve() = allow repayment withdrawal [OK]

Hint: approve() lets lending pool pull repayment [OK]

Common Mistakes:

• Confusing approve with transfer
• Thinking it sends funds to borrower
• Missing the premium fee in amount

4. Identify the error in this simplified flash loan executeOperation snippet:

function executeOperation(address[] calldata assets, uint256[] calldata amounts, uint256[] calldata premiums, address initiator, bytes calldata params) external returns (bool) {
    uint256 amountOwing = amounts[0] + premiums[0];
    IERC20(assets[0]).transferFrom(msg.sender, address(this), amountOwing);
    return true;
}

medium

A. Incorrect function parameters

B. Missing return statement

C. Using transferFrom instead of approve for repayment

D. Not calling the lending pool to borrow funds

Solution

1. Step 1: Analyze repayment method

   The code tries to pull repayment using transferFrom from msg.sender, which is incorrect.

2. Step 2: Correct repayment approach

   Flash loans require approving the lending pool to pull funds, not transferring from msg.sender.

3. Final Answer:

   Using transferFrom instead of approve for repayment -> Option C

4. Quick Check:

   Repayment needs approve(), not transferFrom() [OK]

Hint: Repay by approve(), not transferFrom() [OK]

Common Mistakes:

• Confusing transferFrom with approve
• Forgetting to approve lending pool
• Misunderstanding msg.sender role

5. You want to use a flash loan to perform arbitrage between two decentralized exchanges (DEXs). Which sequence correctly describes the steps inside executeOperation to profit and repay the loan?

hard

A. Borrow funds -> Buy low on DEX1 -> Sell high on DEX2 -> Approve repayment -> Return true

B. Borrow funds -> Approve repayment -> Buy low on DEX1 -> Sell high on DEX2 -> Return true

C. Approve repayment -> Borrow funds -> Buy low on DEX1 -> Sell high on DEX2 -> Return true

D. Buy low on DEX1 -> Borrow funds -> Sell high on DEX2 -> Approve repayment -> Return true

Solution

1. Step 1: Understand flash loan flow

   You first borrow funds, then use them to buy low on one DEX and sell high on another to gain profit.

2. Step 2: Approve repayment and finish

   After trading, approve the lending pool to pull the loan plus fee, then return true to complete.

3. Final Answer:

   Borrow funds -> Buy low on DEX1 -> Sell high on DEX2 -> Approve repayment -> Return true -> Option A

4. Quick Check:

   Arbitrage flow = borrow -> trade -> approve -> return [OK]

Hint: Trade first, then approve repayment [OK]

Common Mistakes:

• Approving repayment before trading
• Trying to trade before borrowing
• Not approving repayment at all