Flash loan allows investors to borrow and return significant amount of money without interest rate within one transaction block. Flash loan attack can have devastating effect to the exchange(platform). Here is an example: one can first borrow a large amount of asset A from the protocol. He swaps asset A to asset B, so that the price of asset A will decrease. He then use the swapped asset B as collateral and borrow more asset A. This could be achieved because the price of asset A has decreased. After he returned asset A, the difference in the amount is his profit. It seems profitable but it will ultimately drain the pool since the above process can happen every block. Asset A and B can be contracts too. Contract trading always includes inherent leverage, so the effect can be magnified, which is detrimental to the platform. Certainly with flash loan, one can arbitrage and wash trade, but stabilizing the platform is of more importance.