5 ms·

The loan part is really bizarre to me; how does one borrow 80m without the lender knowing who you are, why would a lender lend 80m without knowing the borrower,

The loan part is really bizarre to me; how does one borrow 80m without the lender knowing who you are, why would a lender lend 80m without knowing the borrower, and if you're anonymous enough to steal the money from Beanstalk then why would you even pay the loan back? There are so many layers of insanity here.

drcode 4y ago
That's the cool part: everything is part in one transaction, so the lender is paid back instantly with interest. Zero risk for the lender.
- rhino369 4y ago
  Well not zero . . .
  - xur17 4y ago
    OK, arguably a tiny about of risk from smart contract bugs in the flash loan code (but given the surface area of something like that, and such, it should be VERY small). The is exactly 0 risk from anything else though.
carmen_sandiego 4y ago
The loan is zero-risk for the lender because it's taken out and repaid within the same transaction (sort of like a database transaction). If the borrower fails to repay, the entire transaction fails/reverts and the money is never lent out. Now, the borrower doesn't only have to put the borrow and repay calls into that one transaction. They can put anything in between, for example interacting with Beanstalk.
- koboll 4y ago
  I'm not much for regulation of crypto/DeFi in general, but instant lending like this should absolutely, 100% be illegal. It's exclusively useful for exploits and MEV vampirism, and for nothing else.
  - TrapLord_Rhodo 4y ago
    i'm glad you're not a regulator. I can get loans on my assets to participate in defi, arbitrage, & and literally cash out my money into a bank account if i so wished. Pretty useful.
    - colinmhayes 4y ago
      You can't cash out flash loans, they need to repaid within the same block. The only legitimate use case seems to be arbitrage/stablecoin stabilization.
peteradio 4y ago
Consider that it was intentionally built to function this way. The only insanity then is the belief by whoever is ultimately liable on Beanstalks end that the this setup won't land them in jail. Who knows maybe this is ruled legal and anybody can launder money in any way they want so long as they oh shucks are too dumb to setup proper contracts.
avinashv 4y ago
This is possible because of a concept called a flash loan. Using a smart contract, you can borrow (without collateral) and the smart contract would reverse the transaction if the money is not repaid. There is a cost to borrowing, but in this case it obviously made sense. Cryptocurrency arbitrage bots were some of the first implementations of flash loans that I know of. https://www.coindesk.com/learn/2021/02/17/what-is-a-flash-loan/ https://www.coindesk.com/learn/2021/02/17/what-is-a-flash-lo...

drcode 4y ago

That's the cool part: everything is part in one transaction, so the lender is paid back instantly with interest. Zero risk for the lender.

rhino369 4y ago
Well not zero . . .
- xur17 4y ago
  OK, arguably a tiny about of risk from smart contract bugs in the flash loan code (but given the surface area of something like that, and such, it should be VERY small). The is exactly 0 risk from anything else though.

carmen_sandiego 4y ago

The loan is zero-risk for the lender because it's taken out and repaid within the same transaction (sort of like a database transaction). If the borrower fails to repay, the entire transaction fails/reverts and the money is never lent out. Now, the borrower doesn't only have to put the borrow and repay calls into that one transaction. They can put anything in between, for example interacting with Beanstalk.

koboll 4y ago
I'm not much for regulation of crypto/DeFi in general, but instant lending like this should absolutely, 100% be illegal. It's exclusively useful for exploits and MEV vampirism, and for nothing else.
- TrapLord_Rhodo 4y ago
  i'm glad you're not a regulator. I can get loans on my assets to participate in defi, arbitrage, & and literally cash out my money into a bank account if i so wished. Pretty useful.
  - colinmhayes 4y ago
    You can't cash out flash loans, they need to repaid within the same block. The only legitimate use case seems to be arbitrage/stablecoin stabilization.

peteradio 4y ago

Consider that it was intentionally built to function this way. The only insanity then is the belief by whoever is ultimately liable on Beanstalks end that the this setup won't land them in jail. Who knows maybe this is ruled legal and anybody can launder money in any way they want so long as they oh shucks are too dumb to setup proper contracts.

avinashv 4y ago

This is possible because of a concept called a flash loan. Using a smart contract, you can borrow (without collateral) and the smart contract would reverse the transaction if the money is not repaid. There is a cost to borrowing, but in this case it obviously made sense. Cryptocurrency arbitrage bots were some of the first implementations of flash loans that I know of. https://www.coindesk.com/learn/2021/02/17/what-is-a-flash-loan/ https://www.coindesk.com/learn/2021/02/17/what-is-a-flash-lo...