Slippage

What is a slippage?

In cryptocurrency trading, slippage captures the gap between a trade’s expected price and the actual price at which it settles.

You see an initial quote when you authorize a buy, sell, or swap of a crypto asset. But crypto markets shift fast — often in seconds. By the time your transaction processes and confirms on the blockchain, the rate can already be different. That shift is slippage.

There are two main types:

• Negative slippage. The trade executes at a worse price than you anticipated. A buyer ends up paying more; a seller receives less. Take a simple case: you plan to buy 1 ETH for $2,000, but the final execution price hits $2,020. That’s 1% negative slippage.
• Positive slippage. Here, the market moves in your favor while the trade processes, so you get a better price than quoted. Buyers pay less, sellers earn more.

Why slippage happens

Several core dynamics drive slippage:

• Market volatility. Prices can swing sharply in a matter of seconds. Your quoted rate may no longer reflect reality by the time the network confirms the trade.
• Low liquidity. When there aren’t enough counterparties at your target price, the system pulls from the next available levels in the order book or liquidity pool — often at less favorable rates.
• Large order sizes. A sizable trade relative to available liquidity tends to move the price as it fills, executing parts of the order at progressively worse rates.
• Network delays. Blockchain congestion — say, on Ethereum — slows confirmations. More time for the market to shift means a higher chance of slippage.
• MEV (Maximum Extractable Value). On decentralized exchanges, searchers sometimes front-run or sandwich large swaps. They exploit the timing of your trade to profit, effectively widening the slippage gap.

Slippage shows up most often on decentralized exchanges (DEXs) or in swap features that tap open liquidity pools instead of centralized order books.

*This material is provided for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency markets are highly volatile. Cryptocurrency trading involves significant risk and can result in the loss of your invested capital. Always conduct your own research before making any financial decisions.