AMM Slippage

AMM slippage is the difference between the expected (mid) price and the actual execution price when trading against an automated market maker, driven by the way the pricing curve responds to your order size. For a constant-product pool, price impact grows non-linearly with the trade size relative to pool depth, so doubling your order more than doubles the cost on a small pool. It is separate from market slippage (price drifting before your transaction confirms) and from the swap fee, though all three stack. Slippage tolerance is the guardrail traders set so a swap reverts if the realized price would be worse than a chosen threshold — protecting against both thin liquidity and sandwich attacks.

In plain English — AMM slippage (price impact) is how much worse your execution price gets because your trade itself moves the pool’s balances. On an automated market maker, price is set by a formula, so the bigger your swap relative to the pool, the further you push the price against yourself. Thin pools and large orders mean heavy slippage; deep pools and small orders mean very little. This is distinct from the general slippage caused by market movement between order and fill.

You swap $100,000 into a token whose pool holds only $1,000,000 of liquidity. Because your order is large relative to the pool, the constant-product math can give you several percent worse than the starting price — a four-figure cost on top of any fee.