The difference between the expected price of a trade and the actual price at execution, caused by low liquidity or market movement.
Slippage is the difference between the expected price of a crypto trade and the actual execution price. It occurs primarily due to low liquidity (not enough orders at the desired price), large order sizes relative to available liquidity, and market movement between when you submit a trade and when it executes. On DEXs, slippage is a function of trade size relative to pool depth — a $100 swap in a $100M pool might have 0.01% slippage, while the same swap in a $100K pool could have 10%. Users set slippage tolerance (e.g., 0.5% maximum) to control the worst acceptable price. High slippage tolerance can lead to MEV attacks (bots exploiting the allowed range). In volatile markets, even centralized exchange limit orders can experience slippage if the order book is thin. Reducing slippage involves breaking large orders into smaller pieces, using limit orders, choosing high-liquidity pools, and avoiding trading during extreme volatility.
Slippage is the difference between the expected price of a trade and the actual execution price — a critical factor when trading on decentralized exchanges where prices are determined by pool liquidity. On an AMM, every trade changes the pool ratio and thus the price, meaning large orders relative to pool size experience significant slippage. A 1% slippage tolerance means you accept up to 1% worse than the quoted price; lower tolerance protects you but risks failed transactions during volatile conditions. Slippage is influenced by: trade size relative to pool liquidity (larger trades = more slippage), pool fee tier (higher fees = wider effective spread), and market volatility (fast price movements change the pool between your submission and execution). MEV bots exploit slippage tolerance — sandwich attacks place orders around your trade, pushing the price to your slippage limit and extracting the difference as profit.
Swapping $50,000 of a small-cap token on a DEX with only $200K in pool liquidity would result in roughly 20% slippage — meaning you'd receive about $40,000 worth of tokens instead of $50,000.
For stablecoins: 0.1-0.5%. For major tokens (ETH, BTC): 0.5-1%. For volatile or low-liquidity tokens: 1-3%. Avoid setting very high slippage (5%+) as MEV bots will extract the full tolerance amount. If a transaction fails due to slippage, increase gradually rather than jumping to a high tolerance.