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Flashloan Tutorial - Create a basic flashloan smart contract

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how do you take a loan without any sort

of collateral on the Chain the special

type of loan present on blockchains

which allow you to take a loan without

providing any sort of collateral

provided that you determine it in that

specific transaction that loan is called

a flash store and in today's video we're

going to understand how do we take

advantage of a flash loan to make

something happen what's up everyone GM

gmgm welcome to web3 club and in today's

video we are finally going to learn what

are flash loans how do we use them where

are they useful how do you go about it

and a bunch of stuff here and there by

the way today's video is presented to

you by eth India hackathon each India is

I guess Asia's biggest ethereum

hackathon and it is run by devolio so if

this is something that interests you

please go ahead check out eth india.co

I'll link to it in the description down

below the hackathon will be from 2nd

December to 4th of December it's only

going to be invite only so if I were you

I would just go ahead and apply it today

so that you get a good chance of being

accepted it doesn't cost anything to

apply and a maximum team size available

is 5 so just go ahead get your team and

just apply the hackathon will be from

2nd to 4 December in Karnataka Bangalore

so if you're looking to explore India's

Silicon Valley just fly in now back to

flash loans but before we get started

please make sure to hit that like button

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of people just like you and me who are

trying to help each other out all right

with that said let's get started

started

first things first what are flash loans

and as per always documentation flash

loans are a special transaction that

allow you to borrow an asset as long as

the borrowed asset is returned in the

same transaction generally they come

with a fee and it is a feature that is

provided by away so away has a new

protocol called Huawei V3 it's not

really new it's it's been there since

long but I mean new for a lot of

purposes because it's the latest one and

it's not on ethereum yet so today's

video will not be on ethereum but it

will be applicable on all of these

networks so optimism arbitrum Harmony

polygon Phantom and Avalanche all these

networks we will cover today I mean you

don't really need to do anything you

just need to write the code once and

then deploy everywhere and it will work

seamlessly everywhere so away V3 has two

types of flash loans one is Flash loan

and one is Flash loan simple today we

are going to focus on flash loans simple

now how does it execute what what goes

on in the in the background what happens

so what we do is we create let's say a

smart contract that smart contract calls

away and asks for a flash loan so our

provides us with the flash loan and

after that Ave calls back a function on

our smart contract which we need to

execute now in that execution what we

need to make sure is after the execution

is done we return the loan that we have

taken and give it back to away and how

do we give it back we simply approve

that erg20 token for away to take it

back if away is not able to take back

the amount plus fees

the transaction will fail and you will

just end up wasting gas you will not

make any money and you will not be able

to keep those assets as well now why

would you want to do this there are a

bunch of reasons but let's say you want

to you see some Arbitrage in two dexes

and what you want to do is take

advantage of it so you can take a flash

loan so that you know you can take a

huge amount without having your having

it yourself do the Arbitrage make some

money and return the flash loan back

similarly if you want to liquidate a

position let's say for make a dollar for

Army or anything like that any sort of

loan that anybody has taken and it needs

to be liquidated in that scenario as

well what you can do is take a flash

loan liquid liquidate the person and

return the flash loan and keep your

profit now the flash loan feed sort of

depends on a lot of things but generally

you can figure out with this function

from the RS smart contract now how do we

do this so to to do this what we

basically need is this specific uh flash

loan simple receiver to be implemented

and Away has given us a base contact as

well so today we are going to use that

so to figure out the waste contract what

you do is you go to our way away V3

contracts flash loan and Flash loan

there's a base thing all right so now in

the base what you need is Flash loan

simple receiver all right so once once

you have this what you will do is open

remix and you will simply write this

code that I've already written written

so I'm going to explain I'm going to run

run you through this code and explain

what it does all right so the couple of

things that I've already done is

imported open Ziplines uh ierg20 and

safe math okay once we have these two

things what we also need is this flash

loan simple receiver base all right so

to do that we have Ave slash core V3

slash contract flash loan slash base and

then flash loan simple receiverbase dot

Sol this in itself is an abstract

contract on it so once we have that what

we do is write contract simple flash

loan which is Flash loan simple receiver

base okay now if you check out the

simple receiver base it has this I pool

address and everything and nothing

nothing else you know we need to sort of

worry about so one thing that we

basically need to understand is that in

the Constructor what will happen is we

will ask for the ipool address all right

I put address provider and to figure out

what the address will be what we'll do

is go here click on B3 we can just go

here and click on V3 over here and the

network that we are working with is

polygon so let's say polygon and then

once you have this pool address provider

you can just copy this address and just

use this address when deploying all

right so the next thing that we do is uh

we have this function called create

slash loan and it accepts two things one

is the asset and the other is the amount

so now once we have these two things

what we will do is we basically you know

just if you ignore this part what we're

just doing is calling this pool which is

from here we have this pool function

pool object uh so we are using this pool

object and calling flash loan simple on

that now flash loan simple

um takes five parameters

one is receiver so the receiver is the

Smart contract where we have the logic

up that we need to run after we receive

flash loan so this is the receiver then

there is acid so this asset is the

address of the smart contract of the

asset so that in dye's case you will

have dies address over here then the

amount is the number of tokens that we

want to sort of borrow uh params is

something that you know we can pass to

this and this function will again when

it calls the another smart contract or

the receiver smart contract it it sends

the parents with it all right so what we

need to do is basically have this ABI

encoded params in bytes format and then

we receive them over there and just

decode them all right and then there's

referral code which you can just safely

leave to zero so receiver is this

current address this current smartphone

right that we're using so this is what

we have the as the receiver and the

asset and amount are sent by the

argument in the parents we are just

letting it not be anything all right and

then this is a this is an important

function which is execute operation now

in this execute operation is the

function which is called by the average

pool it is called once a school

transfers the tokens to us all right so

the asset and the amount has been

transferred and now there's a premium

that we need to pay back to the away now

this initiator is the address which

actually initiated this flash loan so I

believe this initiator will be the

address of this specific smart contract

and then params are the things that we

send over here so this is the function

that will be executed uh once we receive

our smart our flash loan all right so

what we can do is we can run Arbitrage

over here integrate with uni swap to do

that Arbitrage integrate with any other

decks we can also do liquidation so that

you know if you want to liquidate let's

say somebody's maker position or away

position you can do that over here once

everything is done what you need to do

is figure out what is the total amount

so what you can do is amount Plus

premium all right so I'm using safe math

Library just because everybody else uses

and I'm not 100 certain if I can just

remove dot add with a plus which is why

I'm just using dot add over here so what

you can do is what you're doing is just

amount Plus premium that is the amount

that we owe back to away and then what

we do is we Typecast asset as an ie rc20

token and then approve the address of

the pool with the amount that we owe to

the pool so that the pool can transfer

these tokens back to itself and once you

know the approval is done we are just

logging that approval now instead of

emitting the amount owed let's emit the

amount uh that we actually own all right

so in the asset what we can emit is the balance

balance of

address this all right and this is

another thing that I want to emit first

before we ask for the flashlight so I'm

going to emit this before we ask the

flash loan and after we receive the

flash load okay so let me just make this

much more clearer

okay so now we once we have received our

flash loan uh this is what it will show

and then we are just returning true now

as per the docs we need to return true

if the if the if the operation was

successful otherwise we return false all

right so this is the Smart contract that

we needed now we need to do some Voodoo

stuff to actually make this work

actually test this out because uh we

what we actually need to do is um

interact with Avis smart contract so we

obviously don't have that on remix and

we don't really want to deploy this on a

network proper Network because we just

want to test it out all right so what

I'm going to do is something called

4king the network all right but before

we do that uh let's just compile this

and I I believe they will we will find

some issues here

yeah one issue will be we need to use 8.10

8.10

so uh

to do that we can just use this and then

compile again all right uh compilation

is not success successful because I used

8.10 so make sure that you use 8.10 if

you want to work with this now it is

giving us a couple of War warnings which

we can safely ignore now if we go to

deploy and run you can see that in the

environment option we have this thing

called hard hat provider and that is

something that we will be using now uh

what I am doing is I've created a new

folder and started my my terminal over

there now I believe you have npx or npm

node.js installed so if you have what

you have is also a way to basically run

this npx command so I believe you can

run this yeah and it should return

something for you all right so if you

don't have npx just go ahead figure out

how to install node in npm and ipd you

will receive npx with that so now when I

once I have npx what I do is write npx

hard hat

um in it and this is in the new Flash

loans directory that I am using so all

right so once I do that it is saying

that uh should I install hard hat and I

want to do that so I will just press e y

and just move forward so now we're just

waiting for hard head to install and I

believe it will install a bunch of other

things as well with us all right so now

it is asking us to create a JavaScript

project so let me just press enter

and this is where I want it to be the

root yes do I want to add a git ignore

yes do I want to install a few other

things that come with it yes why not so

again this will take a little time so

just we don't have any other option just

but just to wait all right once the

installation completes I hope what we

can do is run npx hard hat node and

let's just try to run this first so now

this thing actually ran without any

problems all right so we can just close

this what we actually did was we started

a blockchain node right over here and we

can simply interact with that node just

like how we interact with other

blockchains all right so what I'm going

to do is I'm going to Fork the polygon

chain so to do that what we'll write is

npx hard hat node then double hyphen

fork and what you need to add over here

is something called the RPC URL so for

polygon this is the public RPC URL for

better reliability what you should do is

you should have your own RPC URL by

either hosting your own node or you can

get your RP URL from a provider like

infuro or Alchemy on it so I'm going to

just use this one the polygon RPC if you

want to use let's say any of these other

networks you need to have an RPC URL for

those specific networks all right so now

I just press enter and wait for this

thing to start and again this time that

this thing basically has started so now

uh what I want to do is uh deploy this

code on this blockchain so what I'll do

is connect remix to Hard Hat by clicking

on the hard hat provider option now it

is saying what is the Json Json RPC

endpoint and I believe this is the

correct endpoint

and you can see over here the endpoint

is actually eight five four five and

that is exactly what is written over

here so we press OK and we wait for it

to connect once the connection has been

established uh the next thing that we

want to do is deploy this simple flash

loan on this chain okay uh so to do that

what I'm going to do is go go back to V3

main net contracts click on polygon and

we have pool address provider so I'm

just going to copy this pool address

by clicking on that and then copying um

from here okay so now that I've copied

it I'll just paste it over here and

click transact

and once the transaction succeeds you

can see the transaction is succeeded the

transition has succeeded um

we can open this over here and see that

we have four methods with uh

address provided as a method pool as the

method and bunch of things okay so now

what we can do is just simply call

create flash load but we don't have any

assets all right so to fix that what I

have done is I've gone ahead and figured

out a couple of Assets Now what you can

see over here is I have written a test

all right which basically walks us to a

bunch of things and basically creates a

flash loan and executes it but we don't

have any token for us all right so to

fix that what I have figured out is that

we have is die all right this is the

address of die on polygon and we can

figure out that this is actually

the address on polygon

by pasting it over here and you can see

that this is the Tie stable coin okay

and then what I also found was a die

Veil so to do that what I click did was

clicked here

so we have this token page then on token

page we have this holders and on holders

what you can do is figure out click on

any of the holders for example this one

make sure it is not a contract it is an

eoa of of

a user okay and that user should have

some Matic and then what we can do is

just copy their address all right once

we copy their address we can put this

here in the die well so what we are

going to do is we are going to use this

address this is uh die

um we can because we have forked the the

node what we can do is override any

transaction so what we'll do is we'll

take control of this address and send

some Diet towards us okay and this is

the pool address provider that we

already know for polygon okay so we have

die and die wheel so now that we have

these two things uh what I'm going to do

is create a new

terminal and here I'm right I'm going to

write npx hard hat node hyphen hyphen

Network Local Host so when I do that uh

and actually I don't want node I want to

console so when I do this it will create

a JavaScript control and connect us to

the the node that is running in the

different window so the first thing that

I'll do is I'll just copy these two lines

lines

and paste them then I'm going to do

token equals await ethers dot get

Contract add Okay and like this is

something that I know for ethers but uh

I can simply provide a common interface

and it will read it okay and I can just

send the dies address so once I do that

it did not read it for some reason uh

let me just figure it out all right I've

figured it out with some effort so once

you init the hard hat what you need to

do is basically

um install open Zeppelin contracts by

writing npm open zipline contracts so

once you do have that what you can do is

just open the lock.sol that comes with

it with installing hard hat and import

this line and just make log is erc20 and

then put it over here in the Constructor

so that you know you have an erc20

functioning contract and once you have

that then this is such a hacky thing to

do but what you can do is just write

ethers dot get uh

contract Factory and you can just write

loc over here and why lock because this

is the name of the contract over here

and once you do that you can get a lock contract

uh like this

and with love you can attach it to

um do the die okay so once you attach

this to die what you can do is uh you

can get like die equals like this okay

so we have die now and die has let's say

the symbol if you want to figure out the

symbol of die we can await this and we

can see that it returns die so it will

use all the ierg20 tokens so this is

something which is a little difficult

weird to do but this is just that way

this is we are doing just this for

testing uh in real world you don't

really need to do this this is just for

us to test okay for some reason uh the

code that you know should work which is

get contract at and then ierg20 and then

the die this code should work for some

reason but it is giving me an error so I

don't know what is going on which is why

we are doing this in a very weird way

which is doing this wire die so I'll

write this down in the description so

that you can understand this copy paste

stuff but this is how it goes okay so

now that we have die another thing I

need is I want to unlock the the die

rail okay and why do I need to unlock

because I want to use that address and

get get dye from there so this is our

own blockchain that we are running so we

can do this so to do that simply just

paste this code which will be there in

the descriptions link somewhere uh which

is HR await

hre.network.provider.request and then

there's an object in this as an argument

which is Method hard hat underscore

impersonate account and then in the

patterns we send die underscore whale

all right so this way what we can do is

we can use die Veil

diwal's address and call whatever you

want to call with it so the next thing

that I'll do is I will you create a

signer with dive in so what we'll do is

just write signer equals update ethers

dot getsigner die underscore will just

press enter so now that we have assign

it what we can do is just write die dot

connect okay connect with signer so once

you have connection uh the next thing

and the transfer to uh

accepts the two address so the two

address that we want is the address of

our simple flash loan so I can copy this

over here and paste this over here all

right and the next thing that I want to

do is let's say for now let it be 0

which is the amount of die that I want

to transfer okay uh before we do

anything let's just see the balance of

our address

okay and we await this so the balance

you can see is zero so the next thing

that we'll do is just transfer ethers

dot utils dot parse ether so path pass

ether what it will do is it will pass

this and multiply by 10 to the power 18.

okay okay so what do you want to do is

we want to transfer this much amount

from the signer which is the dival to

our smart contact address so that we can

pay some fees from the for the flash

loan that we will take so I press enter

the transaction has I hopefully

completed and if I check my balance now

you can see that it is much more all

right so now that we have received the

balance uh what we can do is simply

create this flash loan okay so to create

the flash loan what we need to do is

just copy the die address and the amount

so the amount that for which I want to

take the loan yeah

yeah

is uh let's say for um

500 die okay so I want to take a flash

loan for 500 that okay and I paste this

over here and I click on Transat and it

took a little while for some reason but

the transaction has gone through and I

can open this transaction over here now

you can see that there are logs as well

so what logs show you is the events that

we have um emitted so we emitted the

same event twice okay the events name is

log so I'm not sure if it is visible but

yeah hopefully it should be visible now

so the event's name is log which is

which we emit uh to see what is the

current balance of our token so uh

initially we had like uh I believe a

thousand tokens then we received a

transfer uh after that we sort of return

all right before returning we had a

flash loan of 500 that was transferred

so you can see that uh after just after

the loan we had um 1500 tokens but if I

check now uh what is the balance you

will see that it is a little less than

10 000 because we also had to return the

fees so this is how you do a flash loan

the I understand that this would have

been a little Haywire because of few

things here and few things there uh but

if we were to do all of this on hard hat

you wouldn't have to uh you know go

through so much pain this is how you do

flash loan uh once you you know you

receive the flash loan what you will do is

um in this function called execute

operation you can put whatever code you

want interact with the decks interact

with a liquidation protocol whatever you

want to do and you know make sweet like

make that money make that return

whatever however you can hopefully this

was not very complex and you've got the

gist of this thing if this video was

helpful please make sure to hit that

like button and subscribe to the channel

if you haven't I will make sure to put

all the code all the links in the

description down below so that you can

go through them if there's anything

confusing please leave it in the YouTube

comments or join the Discord server

there are a bunch of people just like

you and me who try to help each other

out if you want to send me a message if

you want to ask me for some consultation

if you want to sponsor a video please

send me an email and if you're a

developer make sure you check out eth

india.co it's a great hackathon that I

believe you should attend it's in

Bangalore from 2nd of December to 4th of

December so

I like it's a no-brainer just go ahead

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YouTube Transcript:Flashloan Tutorial - Create a basic flashloan smart contract

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YouTube Transcript:
Flashloan Tutorial - Create a basic flashloan smart contract