Description of the slippage : The cryptographic dictionary
#The AMM#Eight hundred and eighty thousand#The crypt#The trade#The DEX
What's the slip?
A slippage is the difference between the price that a trader expects to pay (or get) when placing an order and the price at which the order was actually executed. For example, if you intend to buy 100 baht coins but your matching system gives you 100.5 baht, the difference of 0.5 baht would be a slip.
This phenomenon is especially common on DEX (zero-distributed exchanges) that use AMM (Automated Market Maker) systems because the price of an asset moves slightly with each trade, which changes the ratio of tokens in a pool.
Why did it happen and when?
The larger the sell order is relative to its current condition, the greater the slippage. People with a thin volume also have higher slippages than large coins in deep state.
During periods of high volatility or network congestion, the gap between expected price and actual execution will widen further because other orders may be matched before your order is confirmed.
How does this affect Thai traders?
For users who trade on DEX with THB -wrapped assets or new tokens at the floor, a slippage is an actual capital cost that must be accounted for when calculating profit-loss.
Most DEX interfaces set an " slippage tolerance" so that if the price moves beyond a predetermined level before completion, the trade is automatically canceled instead of being executed at a worse price.
There are two settings to be aware of: the first is that you can't see anything.
- It's too low. Businesses fail all the time, and you still have to pay gas for that effort.
- It's too high. The risks are unfairly priced, and in extreme cases can be exploited by the less fortunate.
A conclusion to remember.
A slippage is not a fee charged by an exchange, but it's the normal cost of trading on the open market. Beginners in small tokens or new coins with shallow liquidity will feel its effects most easily. Understanding this mechanism and adjusting for volatility appropriately are essential skills before entering into trades at DEX .
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