What is Slippage?

Slippage is the difference between the expected price when submitting a trade and the actual execution price.

In blockchain trading, token prices fluctuate with market activity and liquidity. During the time between order submission and on-chain confirmation, price changes may occur, resulting in slippage.

Causes of Slippage:

• Market Volatility: Prices shift as other trades are executed while waiting for confirmation.

• Low Liquidity: Large orders can significantly impact pool prices, pushing them up or down.

• Network Congestion: Longer confirmation times increase the likelihood of price changes.

Slippage Tolerance:

On decentralized trading platforms, users can set a “slippage tolerance,” i.e., the maximum acceptable deviation percentage. If the price change exceeds this range, the transaction is automatically canceled to prevent excessive losses.