Slippage

What it refers to

Slippage is the difference between the price a trade is quoted at and the price at which it actually executes. It can go either way, but the term usually describes receiving less than expected.

Two things cause most of it. The market can move between the quote and the fill, and a large trade moves the price of a thin market as it fills, often called price impact. Many trading apps let users cap slippage, so a trade that would execute beyond a set limit does not go through.

Why this concept exists

Prices on decentralized markets change with every trade, and no trade is filled at the exact moment it is quoted. Slippage names that gap, so users and apps can see it, limit it and compare it between venues.

What this changes for system design

A trade that spans networks takes longer than one on a single network, because each network confirms on its own schedule. That is asynchronous execution, and it leaves more time for the price to move between quote and fill. Depth matters too: effective liquidity, the liquidity usable in practice, decides how far a trade of a given size moves the price.

On SODAX, a trade request is structured as an intent that carries limits such as a minimum amount received and an expiry. A trade completes as requested or reverts and returns the original assets, with no mid-route substitution of the destination token. SODAX does not remove volatility or market risk.

Related terms

• Intents: where a trade's limits are set
• Effective liquidity: depth that limits price impact
• Liquidity pool: where price impact happens
• DEX aggregator: routing to limit the gap
• Asynchronous reality: why time between quote and fill matters
• Recoverability: completes or reverts