Slippage
Slippage is the difference between the expected price of a trade at the time of submission and the actual executed price, caused by market movement or insufficient liquidity during confirmation.
✦ Key Insight
Can turn profitable trades into losses, especially in volatile or thin markets. Proper slippage management is essential for consistent trading performance on DEXs.
✕ Common Misconceptions
Setting tolerance too high (sandwich attack risk) or too low (failed trades); trading large sizes in low-liquidity pools without splitting; ignoring MEV.
Detailed Explanation
How It Works: On AMMs, large orders move the price along the bonding curve. Between signing and inclusion, external trades can also change the pool. Users set a maximum slippage tolerance; if exceeded, the transaction reverts.
FAQs:
Positive slippage possible?
Yes, if price moves favorably.
How to minimize?
Use aggregators, limit size, trade liquid pairs, set realistic tolerance (0.5–1% typical).
Protected by default?
No, user must configure.
In Practice
Dig Deeper
Market Order
An order to buy or sell immediately at the best available current market price.
DEX Aggregator
A DEX aggregator is a protocol or service that sources liquidity from multiple decentralized exchanges and routes a user’s trade across the best available pools or paths to achieve optimal price and minimal slippage.