Slippage
In simple terms
Slippage is when the price you actually pay for a crypto asset is different from the price you expected when you clicked 'buy'. It's like ordering a coffee at $5 but being charged $5.50 by the time your order goes through because the price changed so fast.
Definition
Difference between expected and actual execution price, common in low-liquidity markets.
In depth
Slippage occurs when there is a difference between the expected execution price and the actual price at which a transaction settles on-chain. In decentralized exchanges (DEXs), the market price shifts between the time a user initiates a trade and when validators include the transaction in a block, particularly during periods of high network congestion or low liquidity in the trading pair. The slippage magnitude is determined by the market's depth—how much buying or selling pressure moves the price—and the time lag between price quotation and final settlement. Users typically set slippage tolerance parameters (e.g., 0.5%, 5%) to protect themselves from unacceptable price movements, though setting it too low may cause transactions to fail entirely.
How does Slippage work?
Slippage is the gap between the price expected when an order is sent and the price it actually receives. Two things cause it. First, size: if the order is larger than the quantity resting at the best price, it fills through successively worse levels and the average price drifts. Second, timing: the market can move between submission and execution, which on a blockchain includes the wait for the transaction to be included in a block. Swap interfaces let you set a slippage tolerance, and the transaction fails rather than filling beyond it.
An example
Illustrative figures only. A market buy for 10 units meets a book with 3 units at $100.00, 3 at $100.50, and 4 at $101.00. The fill costs $300.00 plus $301.50 plus $404.00, or $1,005.50, an average of $100.55. Against an expected $100.00, that is 0.55 percent of slippage. The same order in a book with 50 units resting at $100.00 would have filled entirely at the top price.
Figures are illustrative only.
What beginners get wrong
- Raising slippage tolerance to a large number to force a stuck swap through can invite sandwich attacks that capture the difference.
- Entry is only half the picture, since a thinly traded token that was easy to buy can slip much more on the way out.
- Slippage is a property of the book you traded into rather than an exchange error, and it is not normally refundable.
- Splitting one large order into smaller pieces reduces book-walking, though it leaves the remainder exposed to price movement for longer.
Related terms
Part of
How does crypto trading and market structure work? — the subject page for trading and market structure, with all 27 of its definitions in one place.
Educational only — not financial advice.