Whether it is a traditional financial market or a cryptocurrency market, slippage can occur whenever there are trading and price volatility scenarios. While slippage is not unique to Web3, it is more pronounced in the Web3 environment because the crypto market is much more volatile than traditional markets, and slippage occurs more frequently and magnitude.

So, most DEXs allow you to set a "slippage tolerance" (e.g. 0.5%, 1%). If the actual price is outside of your tolerance, the trade will be automatically cancelled.

What is slippage

Slippage refers to the difference between the actual transaction price and the expected price at the time of trading. This gap can be caused by market volatility or lack of liquidity. Slippage can be positive (buying at a lower price than expected) or negative (buying at a higher price than expected).

example

Imagine you go to the vegetable market to buy apples, and you originally thought that it was 15 yuan per kilogram of apples, but when you arrived at the stall, you found that the stall owner said that apples have been in short supply recently, and the price has risen to 20 yuan per kilogram. So you have to buy it at the new price. That's slippage: you were expecting $15, but you ended up paying $20.

Whether it is a traditional financial market or a cryptocurrency market, slippage can occur whenever there are trading and price volatility scenarios. While slippage is not unique to Web3, it is more pronounced in the Web3 environment because the crypto market is much more volatile than traditional markets, and slippage occurs more frequently and magnitude.

So, most DEXs allow you to set a "slippage tolerance" (e.g. 0.5%, 1%). If the actual price is outside of your tolerance, the trade will be automatically cancelled.

What is slippage

Slippage refers to the difference between the actual transaction price and the expected price at the time of trading. This gap can be caused by market volatility or lack of liquidity. Slippage can be positive (buying at a lower price than expected) or negative (buying at a higher price than expected).

example

Imagine you go to the vegetable market to buy apples, and you originally thought that it was 15 yuan per kilogram of apples, but when you arrived at the stall, you found that the stall owner said that apples have been in short supply recently, and the price has risen to 20 yuan per kilogram. So you have to buy it at the new price. That's slippage: you were expecting $15, but you ended up paying $20.