Understanding Slippage

Slippage is the difference between the expected price of a trade and the actual price at execution on the blockchain. Understanding slippage helps you set appropriate expectations and avoid failed transactions.

When you place a trade, it isn’t completed instantly. There is a short delay between submitting the trade and its confirmation on the blockchain. During that time, prices can change. Common reasons include:

• Other trades: Someone else may trade the same token before your transaction confirms, changing the price.

• Network timing: Even on fast networks like Solana, trades take a moment to finalize.

• Low liquidity: In smaller markets, prices move more with each trade. Your trade can shift the price on its own.

Slippage tolerance is the maximum price difference you’re willing to accept on a trade. If the final execution price exceeds this limit, the transaction will fail rather than complete at a worse price.

This helps protect you from unexpectedly unfavourable trades. If a trade fails due to slippage, no funds are lost — the transaction is simply cancelled. This can happen when markets are moving quickly, liquidity is low, or your slippage tolerance is set very low.

Price impact and slippage both affect the final price of a trade, but they come from different sources.

• Price impact is how much your own trade moves the price and is shown before you trade.

• Slippage is price movement caused by other trades while your transaction is pending.

Price impact depends on your trade size and the market’s liquidity. Slippage depends on what happens in the market after you submit the trade.