Slippage—the difference between expected and actual execution price—is inherent to AMM trading. Understanding its causes lets you minimize its impact on your trades.
Sources of Slippage
Price Impact: Your trade changes pool ratios, moving the price as it executes. Larger trades relative to liquidity create more impact.
Price Movement: Market prices can change between transaction submission and confirmation, especially during volatile periods.
MEV Extraction: Sandwich attacks front-run and back-run your trades, extracting value through deliberate price manipulation.
Minimization Strategies
- Use aggregators to split trades across multiple pools
- Set appropriate slippage tolerance (0.5-1% for stable conditions)
- Use private transaction pools for MEV protection
- Break large trades into smaller pieces
- Time trades during lower volatility periods
Small optimizations compound over many trades. Treat slippage management as a core trading skill.