Slippage

Slippage is the difference between the expected price of a trade when you initiate it and the actual executed price, representing one of the primary costs of trading beyond explicit fees. Two types exist: price impact slippage occurs because your trade itself moves the market, on AMMs, larger trades move further along the bonding curve, receiving progressively worse prices for each additional unit. Market movement slippage occurs when prices change between transaction submission and execution, especially problematic in volatile markets or when transactions remain pending in the mempool. In AMM pools, slippage is mathematically determined by trade size relative to pool liquidity. A $10,000 swap in a $1 million pool experiences roughly 1% price impact; the same swap in a $100 million pool experiences 0.01%. This is why deep liquidity matters. DEX interfaces show estimated slippage and let users set tolerance: the maximum acceptable deviation from the quoted price. If slippage exceeds your tolerance, the transaction reverts. Setting tolerance too low causes failed transactions during volatility; too high exposes you to sandwich attacks where MEV bots detect your pending transaction, trade ahead of you to worsen your price, and profit from the artificial slippage they created. Experienced traders use private mempools, MEV protection services, and limit orders to minimize slippage costs.