Slippage
In one sentence
Slippage is the gap between the quoted price of a trade and the executed price. It grows with trade size relative to liquidity and is one of the largest hidden costs on-chain.
What it actually means
When you submit a trade on an on-chain DEX, you see a quoted price based on the current state of the pool or order book. By the time your transaction lands, the state has changed — other trades hit, the price moved, or your own trade is large enough to move the market. The difference between the quote and the execution is slippage.
On AMMs (Uniswap, Curve), slippage is mathematically determined by the curve and the size of your trade relative to the liquidity. On order-book DEXes (Hyperliquid, dYdX), it depends on order-book depth and how many price levels your order has to sweep.
How it works
You set a slippage tolerance when you trade — say 0.5%. If the actual execution would happen at a worse price than 0.5% from your quote, the transaction reverts. Tight slippage protects you from getting a bad fill but increases the risk that your trade simply fails. Loose slippage almost guarantees execution but exposes you to sandwich MEV.
Why it matters to you
Slippage is a real cost you pay on every trade, every entry, every exit. On a $1M trade in a thin pool, slippage can be 2% — $20,000 lost, just on execution. DEX aggregators (1inch, Matcha, Odos) reduce slippage by routing across many venues and splitting orders, but they cannot fix the underlying liquidity problem.
- Small trade in deep liquidity: slippage is negligible.
- Large trade in thin liquidity: slippage can be larger than expected gains.
- Loose slippage in volatile markets: invites sandwich attacks.
- Stable-stable swaps on Curve: typically near-zero slippage.
Real example
Selling 100 ETH (about $300k) via a direct Uniswap V2 swap in a thin pool might cost 0.30% in fees but trigger 1.5% in price impact — $4,500 of slippage. Splitting the same trade across Uniswap V3, Curve, and a private market maker via an aggregator typically reduces slippage to 0.2%–0.4%, saving thousands.
Slippage vs price impact vs fees
These three are often confused. Swap fee is the explicit cost charged by the venue (0.05%–1% on Uniswap pools). Price impact is the deterministic price move caused by your trade against the curve. Slippage is the tolerance you set to allow for state changes between quote and execution. Total trade cost = fee + price impact + (any sandwich MEV that lands within your slippage tolerance). On a large trade, price impact dominates the other two by an order of magnitude.
MEV and private orderflow
Loose slippage on public trades is an invitation to be sandwich-attacked: a bot front-runs your trade pushing the price worse, you execute at the new bad price, then the bot back-runs and pockets the difference. Private orderflow (Flashbots Protect, MEV Blocker, CoW) protects against this by routing your transaction outside the public mempool. For trades above a few thousand dollars, this is now standard practice and most major wallets offer it as a setting.
How Otomato monitors it
Slippage is a per-trade execution detail, not a portfolio state, so Otomato does not alert on each swap. What Otomato does cover is the related risk surface: when your Uniswap V3 LP goes out of range (effectively giving you maximum adverse selection), when limit orders fill at partial or unexpected sizes on Hyperliquid, and when pool liquidity on your held assets collapses such that exiting would cost meaningfully more than entering.
Related terms
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