Slippage: when price drifts during a trade

Why Slippage Happens

Slippage is the difference between the price quoted when you place an order and the price at which the trade actually executes. It exists because the market moves between the moment you click buy or sell and the moment your order settles. On a central order book, slippage comes from limited liquidity: a large market order eats through several price levels, with each successive unit filling worse than the last.

On a decentralized exchange the same effect occurs because the pool's pricing curve shifts as you swap. Volatility amplifies the problem—when markets move fast the spread widens, the book thins out, and even modest trades can fill noticeably away from the quote. Network congestion adds a layer too: if your transaction is mined a few blocks later than expected, the on-chain price may have already moved.

Most platforms let you set a maximum slippage tolerance, often expressed as a percentage. The trade reverts if the executed price drifts beyond that threshold, protecting you from extreme outcomes—but raising the chance the swap fails entirely. Splitting large trades into smaller chunks, using limit orders rather than market orders, and trading in deeper markets are the standard tools to keep slippage in check.