Crypto glossary

Slippage

Definition

Slippage is the difference between the price a trader expects when submitting an order and the price at which the trade is actually executed.

Slippage happens for two reasons. The market can move between the moment an order is sent and the moment it is filled, and a large order can exhaust the liquidity available at the best price, so part of it fills at worse levels. On an automated market maker, every trade moves the pool's price, so the larger the trade relative to the pool, the larger the slippage.

Decentralized exchanges let users set a slippage tolerance, for example 0.5%. If the final price would be worse than that, the transaction reverts instead of executing, although the network fee is still paid.

Setting the tolerance too high invites sandwich attacks, where bots buy just before a pending trade and sell right after it, pocketing the difference. Splitting large orders, using aggregators or trading in deeper pools reduces slippage.

Example

A trader expects to receive 3,000 USDC for 1 ETH but the swap delivers 2,970 USDC because the price moved while the transaction was pending, a slippage of 1%.

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