In decentralized finance (DeFi), the term "slippage" is often encountered but not always fully understood. Let’s break down what slippage is, how it works in decentralized exchanges (DEXs), and how Slingshot helps protect against it.
What Is slippage?
Slippage is the difference between the expected price and the actual execution price of a trade. This happens due to supply and demand fluctuations and is common in both centralized and decentralized markets.
In the context of DEXs, slippage is influenced by:
Liquidity levels of the token
Size of the trade
Slippage is measured between the two tokens you are swapping—not their USD value.
This is a common misconception, especially for new crypto traders.
Slippage and quotes
Slippage tolerance sets the maximum price deviation you're willing to accept. If slippage exceeds this range, the transaction fails.
For example:
If you swap 1 ETH for USDC with a quoted rate of 4,000 USDC and a 1% slippage tolerance, you'll receive between 3,960 and 4,040 USDC.
If the ETH/USDC market price moves beyond that range before your trade executes, the transaction will fail.
The ideal slippage setting varies by token and market condition:
Too low: Even minor price movements may cause the trade to fail.
Set to 0%: The swap must execute at exactly the quoted price—any deviation causes failure.
Too high: The trade is more likely to succeed, but you risk negative price impact or front-running by attackers.
❗ Always double-check your slippage setting before placing a swap.
Why does slippage happen?
Unlike centralized exchanges that match orders directly, DEXs use automated liquidity pools governed by mathematical formulas to determine token prices. Slippage is affected by:
Liquidity: Shallow pools are more sensitive to price movement
Order size: Larger trades move the price more
Market volatility: Fast-moving prices increase slippage risk
The limitations of single DEX apps
Even popular DEXs like Uniswap or SushiSwap can suffer from high slippage, especially for niche or low-liquidity tokens. These platforms often focus on a limited set of assets, which restricts available liquidity.
How Slingshot can help
Slingshot is powered by DEX aggregators that source liquidity from multiple exchanges. Here’s how this helps:
Broad Liquidity: Pulls from multiple DEXs to reduce slippage
Best Prices: Routes through the best trading paths, sometimes using multiple DEXs in a single trade (e.g., Uniswap → SushiSwap → Balancer0x)
Reduced Complexity: You don’t need to compare rates across platforms—Slingshot handles that automatically
Slingshot auto slippage feature
Slingshot includes an auto slippage feature that estimates the best slippage tolerance for your trade, optimizing for price impact and transaction success.
Auto slippage is currently live on Solana
Default slippage on other chains is set to 3% but can be adjusted manually
You may want to manually increase slippage when trading illiquid tokens.
These assets are more sensitive to price movement, and trades may fail if slippage is too low.
However, use caution—high slippage increases your risk of front-running or loss.
If you have any questions or need support, visit help.slingshot.finance or use the chat widget in the bottom-right corner. You can also reach support from within the app under Profile → Settings → Help Center → Contact Support.