Flash Loans

Virtue supports flash loans for assets that are accepted as collateral within the protocol — such as IOTA and stIOTA.

Flash loans let users borrow these assets without upfront collateral, as long as the borrowed amount is returned within the same transaction.

They are mainly used for arbitrage opportunities, including:

• Price discrepancies across DEXs

• VUSD depegging events

Example: Arbitrage when VUSD trades below $0.95

1. Flash loan $10,000 worth of IOTA

2. Use the borrowed IOTA to buy discounted VUSD on a DEX (e.g. $0.95), receiving approximately 10,526.3 VUSD

3. Redeem 10,526.3 VUSD through the protocol for $1 worth of IOTA per VUSD → receive $10,526.3 worth of IOTA

4. Repay the original flash loan of $10,000 in IOTA

5. Profit the ~$526.3 difference

This is a simplified example and does not include protocol fees such as the flash loan fee or redemption fee, which may affect final profitability.

All of this happens in a single transaction, with no capital or collateral needed.

Flash loans are permissionless and available for any collateral-eligible asset in Virtue.

They help reinforce the VUSD peg while enabling capital-efficient strategies — all executed in a single atomic transaction.