Flash Loan Simple Flow

End-to-end execution flow for simple flash loans in Aave V3 (single Asset only).

Quick Reference

Aspect	Details
Entry Point	Pool.flashLoanSimple(receiverAddress, asset, amount, params, referralCode)
Key Transformations	Premium Calculation
State Changes	reserve.accruedToTreasury += premiumToProtocol.rayDiv(liquidityIndex)
Events Emitted	FlashLoan

---

Flow Diagram

flowchart TD
    %% Styling definitions
    classDef validation fill:#ffcccc,stroke:#ff0000,stroke-width:2px
    classDef transformation fill:#ccffcc,stroke:#00aa00,stroke-width:2px
    classDef storage fill:#ccccff,stroke:#0000ff,stroke-width:2px
    classDef event fill:#ffffcc,stroke:#aaaa00,stroke-width:2px
    classDef error fill:#ff0000,stroke:#000000,color:#fff
    classDef critical stroke:#ff0000,stroke-width:3px
    classDef callback fill:#ccffff,stroke:#00aaaa,stroke-width:2px

    %% Entry point
    Entry["Pool.flashLoanSimple<br/>receiverAddress, asset,<br/>amount, params,<br/>referralCode"] --> Execute["FlashLoanLogic<br/>executeFlashLoanSimple"]

    %% Validation Phase
    subgraph ValidationPhase ["1. Validation Phase"]
        direction TB
        Validate["ValidationLogic<br/>validateFlashloanSimple<br/>CRITICAL: Reserve state"]
        class Validate validation
    end

    Execute --> ValidationPhase

    %% Token Transfer Phase
    subgraph TransferPhase ["2. Token Transfer Phase"]
        direction TB
        CalcPremium["TRANSFORMATION<br/>totalPremium =<br/>amount.percentMul<br/>flashLoanPremiumTotal"]
        class CalcPremium transformation

        CalcPremium --> Transfer["AToken<br/>transferUnderlyingTo<br/>receiverAddress"]
    end

    ValidationPhase --> TransferPhase

    %% Callback Phase
    subgraph CallbackPhase ["3. Callback Phase"]
        direction TB
        Callback["IFlashLoanSimpleReceiver<br/>executeOperation<br/>CALLBACK"]
        class Callback callback

        Callback --> CheckReturn{"Return Value"}
        CheckReturn -->|true| Continue[Continue]
        CheckReturn -->|false| Error1["REVERT<br/>INVALID_FLASHLOAN_EXECUTOR_RETURN"]
        class Error1 error
    end

    TransferPhase --> CallbackPhase

    %% Repayment Phase
    subgraph RepaymentPhase ["4. Repayment Phase"]
        direction TB
        SplitPremium["TRANSFORMATION<br/>premiumToProtocol =<br/>totalPremium.percentMul<br/>flashLoanPremiumToProtocol<br/>premiumToLP =<br/>totalPremium - premiumToProtocol"]
        class SplitPremium transformation

        SplitPremium --> UpdateState["ReserveLogic<br/>updateState<br/>Updates indexes"]

        UpdateState --> AccrueLP["STORAGE UPDATE<br/>liquidityIndex +=<br/>premiumToLP accrued"]
        class AccrueLP storage

        AccrueLP --> AccrueProtocol["STORAGE UPDATE<br/>accruedToTreasury +=<br/>premiumToProtocol.<br/>rayDiv(liquidityIndex)"]
        class AccrueProtocol storage

        AccrueProtocol --> UpdateRates["ReserveLogic<br/>updateInterestRates<br/>amount + totalPremium added"]

        UpdateRates --> PullRepayment["IERC20<br/>safeTransferFrom<br/>receiver -> aToken<br/>amount + totalPremium"]
    end

    Continue --> RepaymentPhase

    PullRepayment --> FinalEvent["EMIT<br/>FlashLoan"]
    class FinalEvent event

    %% Error annotations
    %% CRITICAL: Receiver must approve pool to pull repayment
    %% CRITICAL: Receiver must return true from executeOperation
    %% CRITICAL: Total premium must be available in receiver contract

    %% Link styles for critical paths
    linkStyle 2 stroke:#ff0000,stroke-width:3px
    linkStyle 10 stroke:#ff0000,stroke-width:3px

---

Step-by-Step Execution

1. Entry Point

File: contracts/protocol/pool/Pool.sol

function flashLoanSimple(
    address receiverAddress,
    address asset,
    uint256 amount,
    bytes calldata params,
    uint16 referralCode
) public virtual override {
    DataTypes.FlashloanSimpleParams memory flashParams = DataTypes.FlashloanSimpleParams({
        receiverAddress: receiverAddress,
        asset: asset,
        amount: amount,
        params: params,
        referralCode: referralCode,
        flashLoanPremiumToProtocol: _flashLoanPremiumToProtocol,
        flashLoanPremiumTotal: _flashLoanPremiumTotal
    });
    FlashLoanLogic.executeFlashLoanSimple(_reserves[asset], flashParams);
}

Key difference from flashLoan:

• flashLoanSimple handles a single Asset (no arrays)

• Simpler interface with direct parameters instead of arrays

• Lower gas overhead for single-Asset flash loans

2. Execute Flash Loan Simple

File: contracts/protocol/libraries/logic/FlashLoanLogic.sol

function executeFlashLoanSimple(
    DataTypes.ReserveData storage reserve,
    DataTypes.FlashloanSimpleParams memory params
) external {
    // The usual action flow (cache -> updateState -> validation -> changeState -> updateRates)
    // is altered to (validation -> user payload -> cache -> updateState -> changeState -> updateRates) for flashloans.
    // This is done to protect against reentrance and rate manipulation within the user specified payload.

    ValidationLogic.validateFlashloanSimple(reserve);

    IFlashLoanSimpleReceiver receiver = IFlashLoanSimpleReceiver(params.receiverAddress);
    uint256 totalPremium = params.amount.percentMul(params.flashLoanPremiumTotal);
    IAToken(reserve.aTokenAddress).transferUnderlyingTo(params.receiverAddress, params.amount);

    require(
        receiver.executeOperation(
            params.asset,
            params.amount,
            totalPremium,
            msg.sender,
            params.params
        ),
        Errors.INVALID_FLASHLOAN_EXECUTOR_RETURN
    );

    _handleFlashLoanRepayment(
        reserve,
        DataTypes.FlashLoanRepaymentParams({
            asset: params.asset,
            receiverAddress: params.receiverAddress,
            amount: params.amount,
            totalPremium: totalPremium,
            flashLoanPremiumToProtocol: params.flashLoanPremiumToProtocol,
            referralCode: params.referralCode
        })
    );
}

3. Validation Checks

File: contracts/protocol/libraries/logic/ValidationLogic.sol

function validateFlashloanSimple(DataTypes.ReserveData storage reserve) internal view {
    DataTypes.ReserveConfigurationMap memory configuration = reserve.configuration;
    require(!configuration.getPaused(), Errors.RESERVE_PAUSED);
    require(configuration.getActive(), Errors.RESERVE_INACTIVE);
    require(configuration.getFlashLoanEnabled(), Errors.FLASHLOAN_DISABLED);
}

4. Handle Flash Loan Repayment

File: contracts/protocol/libraries/logic/FlashLoanLogic.sol

function _handleFlashLoanRepayment(
    DataTypes.ReserveData storage reserve,
    DataTypes.FlashLoanRepaymentParams memory params
) internal {
    uint256 premiumToProtocol = params.totalPremium.percentMul(params.flashLoanPremiumToProtocol);
    uint256 premiumToLP = params.totalPremium - premiumToProtocol;
    uint256 amountPlusPremium = params.amount + params.totalPremium;

    DataTypes.ReserveCache memory reserveCache = reserve.cache();
    reserve.updateState(reserveCache);
    reserveCache.nextLiquidityIndex = reserve.cumulateToLiquidityIndex(
        IERC20(reserveCache.aTokenAddress).totalSupply() +
            uint256(reserve.accruedToTreasury).rayMul(reserveCache.nextLiquidityIndex),
        premiumToLP
    );

    reserve.accruedToTreasury += premiumToProtocol
        .rayDiv(reserveCache.nextLiquidityIndex)
        .toUint128();

    reserve.updateInterestRates(reserveCache, params.asset, amountPlusPremium, 0);

    IERC20(params.asset).safeTransferFrom(
        params.receiverAddress,
        reserveCache.aTokenAddress,
        amountPlusPremium
    );

    IAToken(reserveCache.aTokenAddress).handleRepayment(
        params.receiverAddress,
        params.receiverAddress,
        amountPlusPremium
    );

    emit FlashLoan(
        params.receiverAddress,
        msg.sender,
        params.asset,
        params.amount,
        DataTypes.InterestRateMode(0),
        params.totalPremium,
        params.referralCode
    );
}

5. IFlashLoanSimpleReceiver Interface

File: contracts/flashloan/interfaces/IFlashLoanSimpleReceiver.sol

interface IFlashLoanSimpleReceiver {
    /**
     * @notice Executes an operation after receiving the flash-borrowed asset
     * @dev Ensure that the contract can return the debt + premium, e.g., has
     *      enough funds to repay and has approved the Pool to pull the total amount
     * @param asset The address of the flash-borrowed asset
     * @param amount The amount of the flash-borrowed asset
     * @param premium The fee of the flash-borrowed asset
     * @param initiator The address of the flashloan initiator
     * @param params The byte-encoded params passed when initiating the flashloan
     * @return True if the execution of the operation succeeds, false otherwise
     */
    function executeOperation(
        address asset,
        uint256 amount,
        uint256 premium,
        address initiator,
        bytes calldata params
    ) external returns (bool);

    function ADDRESSES_PROVIDER() external view returns (IPoolAddressesProvider);

    function POOL() external view returns (IPool);
}

---

Amount Transformations

Premium Calculation

User requests flash loan amount
    ↓
amount = 1000 * 10^18  // 1000 tokens
    ↓
flashLoanPremiumTotal = 0.09% = 9 (basis points)
    ↓
totalPremium = amount.percentMul(flashLoanPremiumTotal)
             = (1000 * 10^18 * 9) / 10000
             = 0.9 * 10^18  // 0.9 tokens
    ↓
flashLoanPremiumToProtocol = 0.03% = 3 (basis points)
    ↓
premiumToProtocol = totalPremium.percentMul(flashLoanPremiumToProtocol)
                  = (0.9 * 10^18 * 3) / 10000
                  = 0.27 * 10^18
    ↓
premiumToLP = totalPremium - premiumToProtocol
          = 0.9 * 10^18 - 0.27 * 10^18
          = 0.63 * 10^18
    ↓
amountPlusPremium = amount + totalPremium
                  = 1000.9 * 10^18

Premium Distribution:

• Total Premium: Paid by borrower (e.g., 0.09% on Aave V3 mainnet)

• To Protocol: Portion sent to treasury (e.g., 0.03%)

• To LP: Portion added to liquidity index for LPs (e.g., 0.06%)

Key Points:

• Receiver must have approved the Pool to pull amount + totalPremium

• Receiver must return true from executeOperation or transaction reverts

• Premiums are protocol-configurable and can vary by network

---

Event Details

FlashLoan Event

event FlashLoan(
    address indexed target,           // Receiver contract address
    address initiator,                // msg.sender (initiator)
    address indexed asset,            // Asset address
    uint256 amount,                   // Amount flash loaned
    DataTypes.InterestRateMode interestRateMode,  // Always 0 for flash loans
    uint256 premium,                  // Total premium paid
    uint16 indexed referralCode      // Referral code
);

---

Error Conditions

Error	Condition	File
RESERVE_PAUSED	Reserve is paused	ValidationLogic.sol
RESERVE_INACTIVE	Reserve is not active	ValidationLogic.sol
FLASHLOAN_DISABLED	Flash loans disabled for reserve	ValidationLogic.sol
INVALID_FLASHLOAN_EXECUTOR_RETURN	Receiver returns false from executeOperation	FlashLoanLogic.sol

Note: Unlike flashLoan, flashLoanSimple does not validate the receiver address is a contract. The caller is responsible for ensuring the receiver correctly implements IFlashLoanSimpleReceiver.

---

Related Flows

• Flash Loan (Multi-Asset) - Multi-asset flash loan with arrays

• Borrow Flow - Standard borrowing

• Liquidation Flow - Liquidation execution

• Repay Flow - Debt repayment

---

Source File Locations

contracts/protocol/pool/Pool.sol
contracts/protocol/libraries/logic/FlashLoanLogic.sol
contracts/protocol/libraries/logic/ValidationLogic.sol
contracts/flashloan/interfaces/IFlashLoanSimpleReceiver.sol
contracts/protocol/tokenization/AToken.sol