Price Impact (DEX)
The change in a liquidity pool’s token price caused by a trade, expressed as a percentage deviation from the initial quote.
What is Price Impact (DEX)?
Price impact measures how much a swap alters the price of a digital asset in a DEX pool, driven by the trade size relative to pool depth. Large trades in low-depth pools cause significant price shifts, increasing costs. For example, a $50,000 USDC-to-ETH swap in a $1 million Uniswap V3 pool incurs ~0.5% price impact, reducing output by $250, per Uniswap analytics. In contrast, a $500,000 pool might see 2% impact ($1,000 loss). Curve’s stablecoin pools, with $2 billion TVL in 2025, maintain <0.01% impact for $10,000 swaps due to optimized AMM formulas. A 2023 flash loan attack exploited price impact, inflating costs by 10% in a low-depth pool. Traders can mitigate impact using DEX aggregators like 1inch or splitting orders, crucial for cost efficiency in high-volume DEX trading.
Related Terms
Slot in Ethereum
A 12-second time interval in a proof-of-stake blockchain where a validator can propose a new block of Ethereum, which may remain empty if no block is proposed.
Convertible Preferred Stock
Preferred stock convertible into common shares, blending dividend income with equity conversion potential.
Depth Chart
A visual graph depicting the cumulative buy and sell orders across price ranges in an order book.
CLOB (Central Limit Order Book)
A trading mechanism that matches buy and sell orders for assets based on price-time priority, commonly used in both traditional and decentralized exchanges.
Current Mid-market Price
The midpoint between the highest bid and lowest ask prices in the order book.
Compound
A decentralized finance (DeFi) protocol that enables lending and borrowing of digital assets through algorithmically managed interest rate markets.