What is Slippage in Crypto Trading?
The difference between the expected price of a trade and the price at which the trade is actually executed.
Key details
- Market Dynamics
- More common in illiquid or volatile markets.
- Size Dependent
- Larger trades are more likely to experience slippage.
- Positive or Negative
- Can result in better or worse prices than expected.
- DEX Feature
- Common in decentralized exchanges due to their AMM nature.
Examples
- 01Setting a 1% slippage tolerance when swapping tokens on Uniswap.
- 02Large Bitcoin trades on exchanges moving the market price.
- 03Using slippage protection features in DeFi aggregators like 1inch.