simulating-flash-loans

# Simulating Flash Loans

## Overview

This skill simulates flash loan strategies across major DeFi protocols (Aave V3, dYdX, Balancer) with profitability calculations, gas cost estimation, and risk assessment. It enables developers and researchers to evaluate flash loan opportunities without executing real transactions.

## Prerequisites

Before using this skill, ensure you have:
- Python 3.9+ with `web3`, `httpx`, and `rich` packages
- RPC endpoint access (free public RPCs work fine)
- Understanding of flash loan mechanics and DeFi protocols
- Optional: Etherscan API key for better gas estimates

## Instructions

### Step 1: Configure RPC Endpoint

Configure your RPC in `{baseDir}/config/settings.yaml`:

```yaml
# Free public RPCs (no signup required)
rpc_endpoints:
  ethereum: "https://rpc.ankr.com/eth"
  polygon: "https://rpc.ankr.com/polygon"
  arbitrum: "https://rpc.ankr.com/arbitrum"
```

Or use environment variable:
```bash
export ETH_RPC_URL="https://rpc.ankr.com/eth"
```

### Step 2: Simple Arbitrage Simulation

Simulate a basic two-DEX arbitrage:
```bash
python {baseDir}/scripts/flash_simulator.py arbitrage ETH USDC 100 \
  --dex-buy uniswap --dex-sell sushiswap
```

This calculates:
- Gross profit from price difference
- Flash loan fee (provider-specific)
- Gas costs
- Net profit/loss

### Step 3: Compare Flash Loan Providers

Find the cheapest provider for your strategy:
```bash
python {baseDir}/scripts/flash_simulator.py arbitrage ETH USDC 100 --compare-providers
```

Output shows:
| Provider | Fee | Net Profit |
|----------|-----|------------|
| dYdX | 0% | $245.30 |
| Balancer | 0.01% | $242.80 |
| Aave V3 | 0.09% | $225.50 |

### Step 4: Liquidation Profitability

Analyze liquidation opportunities:
```bash
python {baseDir}/scripts/flash_simulator.py liquidation \
  --protocol aave --health-factor 0.95
```

Shows positions below health factor threshold with:
- Collateral value
- Debt value
- Liquidation bonus
- Net profit after costs

### Step 5: Tri