Slippage / Price Impact

Slippage is the difference between the expected price of a trade and the actual price at which the trade is executed. Slippage can occur due to various factors, such as market volatility or insufficient liquidity. When you set slippage tolerance, you're determining the maximum acceptable difference between the quoted price and the executed price. If the slippage exceeds your tolerance, the trade may not execute, helping you avoid unexpected losses. Understanding both price impact and slippage is crucial for making informed trading decisions and optimizing your DeFi experience.

Price Impact refers to the change in the token’s price resulting from the size of your trade relative to the available liquidity in the pool. Larger trades in pools with lower liquidity can cause significant price shifts, meaning you might receive a less favorable exchange rate than expected. It’s an important factor to consider, especially when trading large amounts, as it directly affects the value you get from the trade.