DeFi & Web3Beginner

What is slippage on a decentralized exchange?

Slippage on a DEX is the gap between the quoted price and the price your swap gets. Pool depth and trade size usually decide that gap on a swap.

Vahe HakobyanEditor-in-chief Updated Oct 6, 20263 min readFact-checked

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How does slippage happen?What does slippage tolerance do?Slippage vs price impact What risks come with slippage?FAQ

Short answer

Slippage on a decentralized exchange is the gap between the quoted price and the price your swap actually gets. Your trade changes the pool price before it settles.

Many decentralized exchanges use liquidity pools for swaps, so the quote can move.

How does slippage happen?

A liquidity pool holds assets, and a formula sets the price from the pool balances. Your swap moves those balances, so the pool price changes before your trade settles. Thin liquidity and larger trades usually mean more slippage.

How pool depth and trade size affect slippage
Condition	What usually happens
Thin pool, small swap	A modest price move
Thin pool, large swap	A larger price move
Deep pool, large swap	A smaller move than in a thin pool

What does slippage tolerance do?

Before you confirm a swap, the DEX asks you to set a slippage tolerance. The setting is a maximum. If the price moves farther than your limit, the DEX cancels the swap instead of filling it.

Slippage vs price impact

Price impact is your trade's effect on the pool price. Slippage is the gap between the quote and the price you receive. Price impact is one cause of slippage.

Price impact and slippage compared
Criterion	Price impact	Slippage
What it measures	Your trade's effect on the pool price	The gap between the quote and the price you receive
Who causes it	Your own trade	Your trade and other pool activity

What risks come with slippage?

Slippage tolerance is a tradeoff. A high setting makes a completed swap more likely, but it can give you a worse price. A low setting makes failed swaps more likely.

Sandwich attacks: a bot can place trades around your pending swap and move the price against you.
Failed swaps: a low tolerance can cancel the swap, and you may still pay the network fee.
Worse fills: a high tolerance can let a swap complete far from the quote.

Frequently asked questions

Yes. Positive slippage means your swap gets a better price than the quote, because the pool price can move in your favor.

Slippage tolerance is a maximum, not a guarantee. If the price moves beyond your limit, the DEX usually cancels the swap.

Yes, but it usually looks different. Many centralized exchanges use an order book, so one order can fill at several prices.

A bot watches pending swaps and places trades around yours. For a buy swap, it buys before and sells after, pushing the price up. For a sell swap, it does the opposite.

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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.