What Is Slippage?

Slippage is the difference between the price you expect to pay for a trade and the price you actually get. On a decentralized exchange, you're not trading against a company with unlimited inventory — you're trading against a liquidity pool, and every trade shifts that pool's price a little.

Say a pool holds ETH and USDC. When you swap USDC for ETH, you're adding USDC to the pool and removing ETH from it. The bigger your trade relative to the pool's size, the more the ratio shifts, and the worse your average price gets as the trade executes. A $50 swap in a deep, multi-million-dollar pool barely moves the price. A $50,000 swap in a thin pool might move it a lot — that gap between the quoted price and the final price is slippage.

Slippage isn't unique to crypto — stock traders deal with it too — but it's more visible on DEXs because the mechanics are transparent and the pools are often smaller than traditional order books.

Most DEX interfaces let you set a "slippage tolerance," usually a percentage like 0.5% or 1%. This tells the contract the worst price you're willing to accept. If the price moves past that threshold before your transaction confirms — because of pool movement, network congestion, or someone front-running your trade — the transaction reverts instead of executing at a bad price.

Set the tolerance too low and normal price movement will cause your transactions to fail constantly, wasting gas on reverted attempts. Set it too high and you're exposed to sandwich attacks, where a bot spots your pending trade, buys ahead of it to push the price up, lets your trade execute at the inflated price, then sells immediately after — pocketing the difference you just paid.

For small trades in deep, popular pools, slippage is rarely worth worrying about beyond the default setting. For large trades or thin/illiquid pools, check the price impact your DEX shows before confirming, consider splitting the trade into smaller chunks, or route through an aggregator that spreads your order across multiple pools to minimize the damage.