Slippage (DEX)

Slippage on a decentralized exchange (DEX) is the difference between the expected price of a token trade and the actual executed price, caused by market volatility or insufficient liquidity in a pool.

What is Slippage (DEX)?

Slippage occurs in DEXs like Uniswap, Sushiswap, or Curve when a trade’s executed price deviates from the quoted price due to changes in a liquidity pool’s token ratios during transaction confirmation. DEXs rely on automated market makers (AMMs) with liquidity pools, where prices are determined by the ratio of paired tokens (e.g., ETH/USDC) using formulas like x * y = k. Large trades or low liquidity can shift these ratios significantly, causing slippage. Volatility in token prices between transaction submission and blockchain confirmation (e.g., ~12 seconds per Ethereum block) also contributes. Users can set a slippage tolerance (e.g., 0.5% on Uniswap) to limit unexpected costs, but trades may fail if slippage exceeds this.

For example, on Uniswap V3 in September 2025, swapping 10 ETH (~$30,000) for USDC in a pool with $1 million liquidity might quote 29,900 USDC. If a prior trade or market move shifts the pool’s ratio, the executed price could yield only 29,700 USDC, resulting in 0.67% slippage ($200 loss). Low-liquidity pools, like a niche token pair with $50,000 TVL, can see slippage exceed 5% for a $5,000 trade, per DeFiLlama data. High-volume pools like USDC/USDT on Curve, with $500 million TVL, typically have <0.1% slippage for small trades. In 2023, a flash crash in a low-liquidity DEX pool caused 10% slippage on a $100,000 trade, highlighting risks. To mitigate, users can trade during low-volatility periods, use DEX aggregators like 1inch to find optimal pools, or set tighter tolerances, though this risks transaction failure in fast-moving markets. Slippage remains a key factor in DEX trading, with $1.5 trillion in 2025 DEX volume amplifying its impact.