An uncollateralized loan that must be borrowed and repaid within a single blockchain transaction. If the loan isn't repaid in the same transaction, the entire transaction reverts.
Example
“A DeFi arbitrageur used an Aave flash loan to borrow $1 million in USDC, exploited a price difference between two DEXs, and repaid the loan plus fees all within one Ethereum transaction, pocketing a $5,000 profit.”