Slippage Tolerance
Slippage tolerance is the largest price deviation you are willing to accept on a trade, usually set as a percentage. If the price moves further than that before your transaction executes, the trade is cancelled instead of filling at a worse price.
Why your swap price can change
On a decentralized exchange (DEX), you see a quote, sign a transaction and then wait for it to be included in a block. In the meantime other trades can hit the same liquidity pool and move the price. Your own trade also moves the price, more so in a small pool. The difference between the quoted and the executed price is called slippage.
Slippage tolerance is your limit on that difference. The DEX interface turns it into a hard number written into the transaction: a minimum amount you must receive on a sell, or a maximum amount you will pay on a buy. The smart contract checks this number at execution and reverts the trade if it is not met.
An example
Say you swap 1 ETH and the quote shows 2,000 USDC. With a 0.5% tolerance, the minimum received is 1,990 USDC. If the pool price drops so that you would receive only 1,985 USDC, the transaction fails and you keep your ETH, although on most chains you still pay the gas fee for the failed attempt. With a 5% tolerance the same trade could fill as low as 1,900 USDC.
Setting it too high or too low
Too low, and trades fail repeatedly in fast markets or for volatile tokens, each failure costing gas. Too high, and you invite sandwich attacks: a bot sees your pending transaction in the public mempool, buys just before you to push the price up to your limit, lets your trade fill at that worse price, then sells right after. The profit the bot makes comes from the gap your tolerance allowed.
Tokens that charge a fee on every transfer often need a higher setting simply to go through, which is also why scam tokens sometimes tell buyers to raise slippage to unusual levels. A request to set 20% or more deserves suspicion.
Ways to limit the damage
Splitting large trades, trading in deeper pools and using private transaction routes that hide your order from the public mempool all reduce how much slippage you need. Some DEX aggregators set the tolerance automatically based on the pool and token, but it is still worth reading the minimum received before you sign.
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Frequently asked questions
What slippage tolerance is normal?
For large, liquid pairs, many interfaces default to around 0.5% or less. Small or volatile tokens may need more, and the right level depends on pool depth and market speed.
Why did my swap fail with a slippage error?
The price moved beyond your tolerance before the transaction executed, so the contract cancelled the trade to protect you. Gas for the attempt is usually still charged.
Is slippage tolerance the same as slippage?
No. Slippage is the actual price difference you experience. Slippage tolerance is the maximum difference you allow before the trade is rejected.
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