Slippage Tolerance
The maximum acceptable price difference between a quoted swap price and the executed price; if exceeded, the transaction reverts.
Slippage Tolerance — Slippage tolerance is a user-defined setting on DEX interfaces that specifies the maximum acceptable difference between the quoted swap price and the actual execution price. If the price moves beyond this threshold before the transaction confirms, the swap is automatically reverted.
What Is Slippage Tolerance?
When a user submits a swap on a DEX, there is a delay between the quote and the on-chain execution. During this time, other transactions may change the pool's price. Slippage tolerance sets the maximum deviation the user will accept — typically between 0.1% and 5%.
If the actual execution price falls outside this tolerance, the smart contract rejects the swap, and the user pays only the gas fee for the failed transaction.
How Slippage Tolerance Works
The DEX calculates a minimum output amount based on the quoted price minus the slippage tolerance percentage. This minimum is encoded into the swap transaction as a parameter. The AMM contract checks the actual output against this minimum — if it falls short, the entire transaction reverts.
Setting tolerance too low causes frequent transaction failures during volatile periods. Setting it too high exposes the user to sandwich attacks where MEV bots exploit the wide tolerance to extract value.
Why Slippage Tolerance Matters
Slippage tolerance is a critical risk management tool for DEX traders. The correct setting balances trade reliability against MEV exposure. Most experienced traders use 0.5% for stablecoins, 1-2% for major tokens, and 3-5% for low-liquidity or newly launched tokens.
Related Terms
Slippage
The difference between the expected price of a trade and the actual execution price, caused by price movement or low liquidity.
Read definition DeFi & AMMPrice Impact
The percentage change in a token's price caused by executing a trade against a liquidity pool; larger trades cause greater impact.
Read definition Security & PrivacyMEV (Maximal Extractable Value)
Profit extracted by block producers by reordering, inserting, or censoring transactions within a block.
Read definition Security & PrivacySandwich Attack
An MEV attack where a bot front-runs and back-runs a large swap to profit from the price impact, costing the victim extra slippage.
Read definitionFrequently Asked Questions
Common questions about Slippage Tolerance in cryptocurrency and DeFi.
For stablecoins, 0.1-0.5% is typical. For major tokens like ETH or BTC, 0.5-1% works well. For new or low-liquidity tokens, 3-5% or higher may be needed. Some tokens with transfer taxes require even higher settings.
The token's price moved more than your slippage tolerance between when you submitted the swap and when it was executed on-chain. This often happens during high volatility or network congestion. Increasing the tolerance or using faster transaction speeds can help.
Yes. MEV bots monitor pending transactions and can sandwich trades with high slippage tolerance — front-running the swap to move the price, then back-running to profit. Using MEV protection services like Flashbots or private transactions mitigates this risk.
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