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Is there actually no opportunity cost? Do the funds not have to be available at the time of the transaction? They may never leave your account but they still ne
by aleksiy123 3y ago
Is there actually no opportunity cost? Do the funds not have to be available at the time of the transaction? They may never leave your account but they still need to be there no?
- lxgr 3y agoTheoretically, the funds don't need to "exist": They're a fictional quantity; a scribble in the margin of an intermediate calculation, never to be committed to any ledger. Practically, I suppose that many smart contracts or blockchains don't see things that way and really do require the funds to be available in some account (that also consents to them being used in this way) to keep existing systems and protocols happy. I'd still argue that the marginal interest here should be zero or very close to it, in an efficient market (due to the time being infinitely short) – so seeing quotes of 0.09% of interest for flash loans makes me suspect that there's non-negligible friction somewhere.