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Encyclopedia DeFi · Entry 55

Slippage and price impact: two reasons a swap rate can differ

AI-assisted research · separate automated verificationCorrections

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DeFi
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4 cited records
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In this article

At a glance

Key facts

Key facts for Slippage and price impact: two reasons a swap rate can differ
FactDetailSource
Price impactA trade’s size relative to reserves affects its rate.[2]
Slippage boundA minimum output restricts accepted execution.[1]
ToleranceA wider permitted range does not add liquidity.[1][2]
01

A trade moves along the curve

In a fee-free pool with 100 A and 1,000 B, the starting marginal rate is 10 B per A. A trade of 10 A receives about 90.909 B, or 9.0909 B per A on average. Relative to the starting rate, that is about 9.09% lower.

This gap exists even if no other trader acts between quote and execution. The trade itself changes inventory. Software sometimes includes fees or uses another reference rate in its displayed price-impact figure, so the definition matters.

02

Calculate the minimum acceptable output explicitly

For an illustrative exact-input swap using a direct percentage reduction from a 100-unit quote, a 1% tolerance sets a 99-unit minimum before rounding. An interface can use a different convention, so inspect the actual encoded bound that the contract enforces.

Raising tolerance to 5% changes the permitted minimum to 95; it does not improve the 100-unit quote. A looser bound can allow worse execution. A tighter bound can lead to failure when state moves, and an included failing transaction may still cost gas.

03

Keep the reference and timing visible

A useful comparison reports input, quote time or block, quoted output, minimum output and settled output. Separate pool fees from gas and interface charges. Otherwise two percentages can describe different economic effects while using the same word.

Limits can reject an unfavorable transaction without preventing the gas cost of an included failure. A deadline can limit when a transaction is valid, but does not reserve the quoted pool state until then.

Direct answers

Questions people ask

Will increasing slippage tolerance make the swap cheaper?

No. It broadens the range of acceptable execution and may allow a worse result. The quoted output still comes from inventory, route, fees and the amount being traded.

Inspect the evidence

The answer and key facts have stable claim links. These records retain the scope and qualification when reused.

Price impact describes how a trade changes execution price by consuming liquidity. Slippage commonly describes a difference between the quote and actual execution as conditions change. A slippage-tolerance setting permits a bounded worse result or rejects the trade; increasing it does not improve the quote.

Scope: DeFi. Verification: verified · 2026-10-02T18:17:57.897Z.

Link to this claim
Price impact: A trade’s size relative to reserves affects its rate.

Scope: DeFi. Verification: verified · 2026-10-02T18:17:57.897Z.

Link to this claim
Slippage bound: A minimum output restricts accepted execution.

Scope: DeFi. Verification: verified · 2026-10-02T18:17:57.897Z.

Link to this claim
Tolerance: A wider permitted range does not add liquidity.

Scope: DeFi. Verification: verified · 2026-10-02T18:17:57.897Z.

Link to this claim
Revision history
  1. — First publication after primary-source research and independent automated verification.
  2. — Before first publication, independent review checked and revised: sections, sources. Compared pricing guide trade bounds and v2 curve with the article’s explicit comparison conventions. Recomputed average-rate gap 9.09%, 1% haircut 99 from100, and 5% haircut95. Verified tolerance changes permitted minimum rather than quoted output or liquidity. Added EIP-140 evidence for included-failure gas and a Swap Lab exercise. No universal UI percentage convention is claimed.
  3. — Expanded explanation: Calculate the minimum acceptable output explicitly. Worked examples are illustrative; source checks and independent verification are recorded separately.

On the Understand a swap path · Learn next: DeFi composability: reusing capabilities and inheriting dependencies

Source register

Sources and references

Retrieval dates and locators are recorded individually.
  1. Uniswap v2 pricingUniswap

    Reserve-dependent quotes, trade bounds and external price observations.

    Locator: Pricing Trades; Exact Input; Exact Output · Version / scope: Uniswap v2 · Retrieved: 2026-10-02Open source
  2. Uniswap v2 pair sourceUniswap

    Reserve accounting, LP shares, fee-adjusted invariant and optional protocol fee.

    Locator: mint; burn; swap; _mintFee · Version / scope: v2-core v1.0.1 · Retrieved: 2026-10-02Open source
  3. EIP-140: REVERT instructionEthereum Improvement Proposals

    Reverting rolls back state but does not refund work already executed; unused gas is not all consumed.

    Locator: Specification; Test Cases · Version / scope: EIP-140 final · Retrieved: 2026-10-02Open source
  4. UniswapX overviewUniswap

    Signed order execution through fillers; execution conditions are mechanism-specific.

    Locator: Signed orders; Fillers; Dutch auctions · Retrieved: 2026-10-02T17:21:47.712ZOpen source
How this article was made

Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.

Editorial method and corrections

Degrees of Satoshi editorial project. “Slippage and price impact: two reasons a swap rate can differ.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/slippage-and-price-impact/