Think you're buying Ethereum at $2,000? Think again. Slippage is the difference between the price you expect to pay and the price you actually get – and in crypto's volatile, sometimes thin markets, it can turn profitable trades into expensive lessons about market mechanics.
Slippage occurs when your order size is large enough to move the market or when prices change between the time you submit your order and when it executes. In traditional markets, slippage might be a few cents per share. In crypto, especially with smaller altcoins, slippage can be several percent on relatively modest trades.
Here's where slippage gets particularly nasty in DeFi: automated market makers like Uniswap calculate prices algorithmically, and large trades can cause significant price impact. That $10,000 altcoin purchase might get filled at prices ranging from your expected rate to much higher, depending on the liquidity pool's depth and your slippage tolerance settings.
When Do You Use Slippage?
You'll see slippage discussions when crypto traders are:
- Explaining why their trades filled at unexpected prices
- Comparing liquidity between different tokens or exchanges
- Teaching proper order management and trading mechanics
- Analyzing the costs of trading different cryptocurrencies
The term appears frequently in trading education, DEX tutorials, and discussions about market efficiency. You'll also encounter it in conversations about the differences between centralized and decentralized exchange trading experiences.
How to Use Slippage in a Sentence
Here's how slippage typically appears in crypto discussions:
- "Set your slippage tolerance to 1% max when trading on Uniswap."
- "The slippage on that altcoin trade cost me an extra 5% – terrible liquidity."
- "Always check slippage before confirming large DeFi swaps."
- "Bitcoin's deep liquidity means minimal slippage even on big trades."
