What is Slippage in Crypto and How to Best Avoid It?

Imagine you click “buy” on a hot new crypto at $100, but your order executes at $103. What gives? That extra $3 is what’s called slippage; it’s the difference between the price you thought you'd pay and what you actually paid when the trade happened.

This article will further explain what slippage is, why it happens (liquidity, volatility, even bots front-running your trades), and how it can be positive or negative.

We’ll also discuss whether 2% slippage is “high,” when low vs. high slippage tolerance is appropriate, and benchmarks for “good” slippage on DEX vs CEX trades. You’ll get to see real examples, from meme coin buyers setting 50% tolerance, to a trader who swapped $220k but got only $5k back due to slippage.

What is slippage in crypto?

Slippage in crypto is the gap between the price you expected to get in a crypto trade and the price at which it actually executes.

Example: You place a market order to buy 100 XRP at $0.50 each, expecting to pay $50, but the trade fills at $0.52, so you end up paying $52. That $2 difference is slippage.

Slippage can swing both ways:

• Negative slippage means you got a worse price than anticipated – e.g., you paid more to buy, or got less when selling. This feels like a hidden fee, effectively costing you money.

“I had a trade that stopped me out by almost 15 pips and then reversed back.” u/violroll_

• Positive slippage means a better price than expected – e.g., the price dropped just before your buy executed so you paid less (or got more tokens). Positive slippage saves you money (though as we’ll see, sometimes the platform or another trader may pocket that difference).

“After much thinking and testing, I decided to implement a way which dynamically adjusts my limit order price to the changes in current market price... If price goes down, my order price will go down as well so that I can capture some positive slippage.” u/AlgoTrader5

Slippage is a normal phenomenon in all financial markets (i.e., stock, Forex, crypto), especially with market orders (orders that buy or sell immediately at the best available price) during volatile periods (when prices are changing rapidly up or down).

On centralized exchanges (CEXs) with order books (e.g., Binance, Kraken, Bybit), if you buy a large amount, you might “slip” through multiple sell orders, ending up with a higher average price than the top of book (i.e., the best available price shown at that moment). This happens because your large order needs to be filled by several smaller sell orders — and once the cheapest ones are used up, the rest get filled at higher prices.

On decentralized exchanges (DEXs) like Uniswap or PancakeSwap, swapping crypto or tokens moves the pool price against you (price impact) because you’re trading directly with a pool of funds (i.e., the bigger your trade, the more it shifts the price inside that pool) which shows up as slippage.

Example: A trader planned to buy 1 BTC at $100,000, but by the time the order executed, BTC had risen and they paid $100,200 (i.e., negative slippage costing an extra $200). Conversely, another trader set out to sell ETH at $2,500 each; a sudden jump meant their order filled at $2,520 (a bit of positive slippage).

Notably, order type matters a lot when it comes to slippage. Market orders, specifically, are most prone to slippage because they execute at the best available price(s) whatever that may be. Limit orders, on the other hand, won’t accept a worse price than your limit; they prevent negative slippage but might not fill if the market doesn’t come to your price.

In a 2009 study titled "Slippage and the Choice of Market or Limit Orders in Futures Trading," researchers Scott Brown (University of Puerto Rico), Timothy Koch, and Eric Powers (University of South Carolina) highlight that while market orders offer immediacy, they can result in less favorable prices, whereas limit orders provide price control but may not always be filled.

In crypto, DEX swaps are akin to market orders (with slippage limits), but some advanced DEX platforms or aggregators (like MC² Finance) now offer limit orders to help users avoid slippage risks.

💡 MC² Finance actually goes above and beyond by showing you real-time price data, slippage risk, and liquidity depth before you trade, alongside an authenticity score gathered across 32+ data points. That means no surprises.

What causes slippage in crypto?

Slippage boils down to two main factors: market volatility and liquidity (or lack thereof). But there are some sneaky causes too, like bots and large orders, that can exacerbate slippage beyond normal:

Rapid market movements (Volatility)

Crypto prices can swing dramatically in seconds because they're driven by supply, demand, and hype (and not controlled by any central authority). If you place an order during a sudden pump or dump, the price you wanted may be long gone by the time your transaction processes due to network delays, price updates, and other traders beating you to the best prices.

In essence, high volatility means between the time you click “Swap” or “Buy” and the time it’s executed, the price might have moved significantly, resulting in slippage. This is especially true in DeFi, where your transaction might sit in a queue (mempool) for a few blocks if the network is busy or you didn’t pay a high enough gas fee, meaning others with faster or higher-fee transactions get processed first.

For example, when Elon Musk tweeted that Tesla would accept Dogecoin for merch, DOGE shot up over 20% within minutes. If you placed a market order right after the tweet, your trade likely executed at a much higher price than expected (i.e., classic slippage caused by a flood of traders reacting at once).

Low liquidity or thin order books

When liquidity (aka buying and selling power is available at each price) is low, executing a trade will “eat through” the available orders and push the price unfavorably because there aren’t enough buyers or sellers at your target price. On DEXs, low liquidity pools have steep price impact curves  because there’s less money in the pool to balance the trade (i.e., even a modest trade can shift the price a lot).

On order-book exchanges, a thin order book means the spread is wide and there aren’t many orders near the current price because few people are actively buying or selling at that moment.

Slippage is higher in “small and obscure altcoins” or pairs with few traders. In contrast, highly liquid markets (BTC, ETH on major exchanges) have so many buyers and sellers that a small trade won’t move the price much, keeping slippage minimal.

Large order sizes

The bigger your order relative to the market/pool, the more slippage you can expect because your trade has to move through multiple price levels (on CEXs) or shift the token ratio in the pool (on DEXs).

Hence, a market order that is large will consume multiple price levels of the order book or a big chunk of a DEX liquidity pool and you get an average price far worse than the first quoted price.

"There was a coin I was a 15% holder of supply. It had $6k liquidity and a $12k market cap. I had like $1,900 worth in tokens. I sold it at once using the bot and I received $980. Nobody sold before me, and there was no sandwich bot. Also, tax 0/0. I don't get it. The only thing that I noticed was that I wasn't able to sell it on DEX because of 'high price impact.' How is that possible that I have lost 50% of value in USD?” u/IndependentSet513

Bots and front-running (MEV)

In decentralized trading, setting a high slippage tolerance can invite Maximum Extractable Value (MEV) bots to exploit you. These scan pending transactions and if they see you’re willing to accept, say, a 10% worse price, they might jump in before your trade (paying higher gas to be first), buy the token to drive up the price, and let your trade execute at that inflated price – then they sell and pocket the difference.

This is called a sandwich attack, a form of front-running. If you’ve ever seen a DEX warning like “Your transaction may be frontrun” after setting a very high slippage (commonly appears if tolerance > ~5-10%), that’s what it’s cautioning.

“The DEX will always get you the most tokens that it can, but if your slippage is set too high, say 20%, you’re allowing the trade to happen as long as you get only 80 tokens. Sandwich bots see your trade coming, then they quickly buy up the token to make sure you ONLY get 80, then they immediately sell, effectively stealing your SOL.” u/DubaiInJuly

Delayed transactions/network congestion

In busy periods (e.g. bull runs or NFT mints), network congestion can slow down execution because so many people are trying to make transactions at once, it creates a traffic jam. On Ethereum, a transaction might wait 30 seconds or more in the mempool. In that time, prices may move.

If your trade isn’t mined quickly (perhaps you set low gas), the chance of slippage increases because the market price can move while your transaction is pending. This is why some traders crank up gas fees to get priority, reducing the window wherein prices could change and cause slippage.

“The lower your fee, the lower the priority of your transaction. The lower the priority, the longer it'll take. As time passes, price changes.” u/DelayedEntry

Token mechanics (fees/rebases)

Some crypto tokens have built-in transaction fees or rebasing mechanisms that effectively guarantee slippage by changing the amount of tokens during or after a trade (this means the number of tokens you send or receive can change without warning).

For example, Safemoon and similar tokens (with “hold and earn” incentive like EverGrow, BabyDoge, or Reflect Finance) charge around a 10% fee on each swap. So you must set at least ~10-12% slippage tolerance to successfully trade them.

That’s not exactly market slippage (it’s by design), but traders experience it as such (you receive 10% less tokens than you paid for). If you didn’t know and kept slippage at 1%, the transaction would fail. Some “rebasing” crypto tokens (e.g., Ampleforth, OlympusDAO, and Base Protocol) also change supply and price frequently, which can confuse DEX trade estimates, resulting in what looks like slippage.

“Experienced same for a base token. It's something called Honeypot scam - where the token contract is structured in a way that you can't withdraw, then they rug it.” u/OkCollection8569

💡 Always know a token’s rules and check its authenticity score on MC² Finance; if it requires unusually high slippage to trade, make sure it’s not a honeypot or scam trap.

Market manipulation

Occasionally, slippage can be caused by intentional pump-and-dump or manipulation. A sudden large order or removal of liquidity can move price just as you trade. (This is more of an edge case, and often indistinguishable from normal volatility, but worth noting for completeness.)

In practice, slippage often results from a combo of the above factors. A low liquidity and large market order during a volatile moment is one such perfect storm for slippage. The key causes to remember are rapid price changes (volatility) and insufficient liquidity at the price you want. Those set the stage for slippage, while things like bots or token quirks amplifying it.

“I want to swap one of my Altcoins (in this case ARPA to USDT), it does show me a Price impact of -51% and I would only get half the amount of USDT of what my 4000 ARPA are actually worth.” u/stockpimperoni

Is low or high slippage better?

Neither low or high slippage is universally better. A better slippage depends on your goals and the situation. Let’s compare the two approaches and when to use each:

When is low slippage tolerance better?

Low slippage tolerance (e.g., 0.1%–1%) is best for stable, liquid markets like BTC, ETH, or stablecoin pairs as there are lots of buyers and sellers, so prices don’t move much between when you click “swap” and when the trade happens.

You're essentially saying, “I only accept a tiny price change.” This is ideal if you prioritize price accuracy over execution speed, and it’s great for CEX limit orders (because you set the exact price you’re willing to buy or sell at and wait for someone to match it) or DEXs with deep liquidity (because there's enough trading volume to handle your order without moving the price much).

A 2023 study by researchers at the University of California found that a dynamic slippage system, adjusting tolerance based on trade conditions, can cut trader losses by 54.7% overall and 90% for default users.

The main benefit is that it protects you from overpaying or underselling; your trade only goes through if the price stays within your comfort zone. However, in fast-moving or volatile markets, your transaction might fail altogether because the price moves outside your set slippage range before it can be confirmed, leaving you with no trade but still paying gas fees.

When is high slippage tolerance better?

High slippage tolerance (e.g., 5%–20%+) is often necessary in illiquid or volatile environments (think meme coins, early launches, or tokens with transaction taxes) due to rapid price swings, low liquidity, or built-in fees that reduce the amount you receive during a trade.

A 2022 study titled "Impact and User Perception of Sandwich Attacks in the DeFi Ecosystem" reported that a significant number of users set slippage tolerances above 10%, which is considerably higher than the recommended 0.1%–1% range

Here, you’re saying, “I’m okay with a much worse price, just get my trade through.” This ensures the trade executes even during sudden price spikes or dips. It’s useful when speed is more important than precision, but it comes at a risk: you could end up paying significantly more or receiving far less than expected.

Your goal is to find a balance. You want the lowest tolerance that still allows the trade to happen. Plus, high slippage settings can make you a target for front-running bots.

Practical strategy

If you expect high volatility or you’re trading a small-cap token, you might start with a moderate tolerance (say 2-3%) and only increase it if you see the transaction failing or not picking up. Conversely, if conditions are calm, keep it tight (0.1–0.5%). Many DEX aggregators (like MC² Finance) now have algorithms to auto-adjust slippage for you within a reasonable range so you don’t have to guess.

👉 On MC² Finance, you can trade across chains, filter tokens by what matters (like volume or market cap), and let an AI agent help you set slippage and find smart trades (instantly).

What is a good slippage for crypto?

Some of the best benchmarks and practices for good crypto slippage include:

Stablecoins & large caps

For very liquid pairs (like USDC/USDT, BTC/USD, ETH/USD), a “good” slippage tolerance is extremely low – around 0.1% to 0.5%. In fact, many platforms default to 0.5% or lower for majors. According to dYdX, about 0.5% is standard on most big exchanges.

“Based on my initial research, I determined 0.1% is a realistic amount of slippage on liquid coins, so I set my slippage value to 0.2% per buy/sell.” u/budsta123

If you set 1% for a large trade in BTC, you’re giving more room than usually needed. Good slippage here means minimizing it – you can often comfortably go 0.1% and still execute, unless you’re trading an unusually large size that consumes a lot of the order book. For stable-to-stable swaps (like USDC → DAI on a DEX), even 0.1% might be fine because those pools are huge and prices barely move.

Mid-cap altcoins

For well-known altcoins with decent volume (think top 50 tokens), “good” slippage tolerance might be around 0.5% to 1%. These markets have some volatility, but nothing too crazy in normal conditions.

“The default slippage tolerance is 0.5% -- and when I make a trade I always take a second to make sure I would be ok if it came back successful right on the edge of that limit.” u/dmosinee

If an alt is a bit less liquid or you’re trading during a volatile day, you might bump to ~1%. Anything above 2% for a mid-cap coin should raise the question: is the market particularly turbulent right now or the venue illiquid? Otherwise, you probably don’t need that much cushion.

Low-cap and new tokens

For smaller tokens or brand new launches, higher slippage tolerance becomes “good” in the sense of necessary. Here, a “good” slippage setting might be 3% to 5% or even more, depending on the circumstances. If a coin’s price is jumping around by the second, a tight 1% tolerance will likely just fail repeatedly. The key is to research: check how volatile the token is and how much liquidity is in the pool or order book.

“Slippage is simply setting the minimum amount of coin that you'll accept from a trade. Because prices can change after you submit a transaction, slippage is unavoidable, and you must specify the fewest number of coins you'll accept for the txn to go through.” u/cryptosize

For example, some BSC tokens or Uniswap micro-caps might only have a few thousand dollars of liquidity – a swap of a few hundred dollars could move the price a few percent. In such cases, 5% or even 10% tolerance could be what it takes to succeed. Community forums often mention using 5-10% for very volatile meme coins (with the caveat that this is risky).

Exchange vs. DEX differences

On a centralized exchange, you typically don’t get to set “slippage tolerance” explicitly (market orders just execute, limit orders protect you by design). But effectively, you control slippage by using limit orders or by not trading huge market orders. On a DEX, you do set tolerance in the swap settings. Many DEX UIs choose a default for you – for example, Uniswap’s interface introduced auto-slippage that adjusts between 0.1% and 5% based on the trade and network conditions. PancakeSwap defaults to 0.5% for many pairs, and 1% for others, if not changed.

“DEX: Earn higher APR while handling your own finances. CEX: Earn lower APR, but no stress of having to handle everything yourself (where to invest, no self-custody of your keys).” u/misterrunon

A rule of thumb: stick with the default unless you have a reason to change it. The default is usually a balance of safety vs. practicality the platform has determined. If you see trades failing, then increase slowly.

How to know the right number

One way to gauge is by looking at the price impact% before confirming the trade. Most DEXs will show an estimate of price impact. If it says, for example, “Price impact: 0.8%,” then setting slippage slightly above that (maybe 1%) makes sense – to account for small fluctuations beyond the static impact. If price impact is basically zero (like <0.1%), keep your tolerance low; if it’s large (say 3%), you’ll need tolerance at least that high or a bit more.

“Price impact = how much your sell/buy will impact the liquidity pool. Slippage = difference on price of 2 different tokens/coins you are using in transaction during time it takes to complete transaction.” u/Expensive-Schedule-3

Another method: do a small test trade. Trade a tiny amount to see if it goes through and what the slippage ends up being. This can reveal if, say, the token has a tax (you’ll notice you got less out than expected, indicating you need to account for that).

MC² Finance case study

MC² Finance assists by providing transparency on slippage before you trade. For instance, it aggregates DEX liquidity and routes your order optimally. This means it will try to get you the best price across Uniswap, 1inch, PancakeSwap, etc., minimizing slippage. It also uses intent-based trading and smart order routing so you don’t have to manually fiddle with gas or slippage settings.

The result is no failed swaps in many cases, because it essentially handles the slippage logic for you. A “good slippage” on MC² Finance app is simply whatever the platform suggests – it will warn you if a trade has high price impact or if the coin is sketchy. For example, if you were buying a token that’s likely to slip 5%, MC² Finance would factor that into its analytics and authenticity score so you know the cost upfront.

How to avoid slippage in crypto?

Slippage isn’t entirely avoidable (it’s part of trading), but there are several tactics to minimize it or dodge its worst effects:

Use limit orders

A limit order lets you set the exact price (or better) you’re willing to trade at. By using limit orders on a centralized exchange, you ensure you won’t get a worse price than your limit – which eliminates negative slippage. The trade-off is that your order might not fill if the market never reaches that price. But if avoiding slippage is a priority (and you’re patient), limit orders are your friend.

“Limit orders don't have slippage but aren't guaranteed to execute. It's up to you to decide which is the best for your trading strategy.” u/enivid

On some DEXs, you can use protocols or features (like 0x limit orders, or Gelato/Auto for Uniswap) to place limit orders as well. If you’re swapping on MetaMask or a DEX aggregator that doesn’t support explicit limits, you’re basically doing a market swap with a tolerance, which is like a soft limit. But on pure CEX platforms, definitely consider limits for larger trades to ensure you don’t overpay as your order fills across the order book.

Trade on high-liquidity platforms

Choose exchanges or DEX pools with lots of liquidity and volume for the token you want. The deeper the market (i.e., lots of buy and sell orders at many price levels), the less slippage for a given trade. If you want to swap tokens on Ethereum, see if there’s a large Uniswap or SushiSwap pool, or use a DEX aggregator or DeFi super-app (aka MC² Finance) which will route across many pools to reduce impact.

💡 Note: If a token is available on both a small DEX and a major CEX, the CEX might give a better price (less slippage) if it has more volume. More volume = more buy/sell orders near the market price → tighter spreads → less price movement when your trade executes.

Trade when markets are calm

Some traders notice certain times of day are more volatile (like US market open, etc.). If you can trade during a more stable period (like late Asian session or early European session, when fewer major economic events hit and volatility tends to be lower), you’re less likely to get big slippage.

A 2020 research by authors from the University of Sussex and University of Glasgow reveals that Bitcoin trading volume and volatility are significantly higher during the daytime hours of U.S. and European stock exchanges

While crypto trades 24/7, there are lulls (i.e., times can result in more stable prices while your trade executes). Just be careful: Low volatility (prices aren’t moving much) doesn’t help if liquidity (not many buyers/sellers to match your trade) is also low at that time, so balance the two.

Avoid market orders (when possible)

This ties to using limits, but even on DEXs, you sometimes have alternatives. For example, you could break your transaction into smaller chunks and manually execute several smaller swaps rather than one big swap (this can reduce the per-swap slippage, though you pay multiple transaction fees – a trade-off).

Some advanced traders (like Quantitative Brokers and Jump Trading) use algorithms like TWAP (Time-Weighted Average Price) and VWAP (Volume-Weighted Average Price) to split large ordersover time by time intervals or market volume, aiming to reduce market impact and avoid slippage. If you have a large amount to sell, do not dump it all at once on a single market order unless you’re okay with eating a ton of slippage. Work it out gradually, or use an OTC desk, or at least different venues.

Set a reasonable slippage tolerance

On DEX trades, always check the slippage tolerance setting before confirming. Don’t use a higher tolerance than necessary. If you set 5% but the trade only needed 0.5%, you didn’t lose 5% (you only lose what actually occurs, not the max). But there is real danger from front-run bots that potentially force you to that worst price. So, keep it just above the estimated price impact.

Most UIs (e.g., 1inch, or Matcha) show an estimate of output and minimum received. Pay attention to that “minimum received” number; it’s effectively what you’re locking in as acceptable. Make sure you’re comfortable with it. If not, cancel and adjust. Never blindly accept a huge tolerance just because someone online said so. Use the lowest tolerance that still executes the swap reliably.

Avoid trading illiquid pairs (if possible)

Sometimes the best way to avoid slippage is not to go where slippage lives. If a token only has a $50k liquidity pool and you’re trying to trade $5k of it, you will inevitably face slippage. If that token is also listed on a centralized exchange or has a wrapped version with more liquidity, try those avenues.

A study titled "Loss and Slippage in Networks of Automated Market Makers" by Engel and Herlihy (2021) delves into how Automated Market Makers (AMMs) inherently introduce slippage, especially in low-liquidity pools.

Or if you must trade it, try to become liquidity provider (LP) to get a better effective rate (though that has its own risks like impermanent loss). This might be advanced, but some whales will provide liquidity and then trade within their own liquidity to minimize slippage (effectively doing a private OTC in a sense). That’s overkill for most, but it shows that lack of liquidity is the root cause, so addressing that (even by waiting until more people add liquidity) can help.

Final thoughts

Slippage happens when you get a different price than expected during a trade (usually worse). It’s caused by market movement, low liquidity, or big trade size. The more volatile or illiquid the token, the more slippage you risk. To stay safe, use limit orders, set reasonable slippage tolerances, and don’t chase hype blindly. If a coin needs 10%+ slippage to trade, ask why; it could be a scam or just too illiquid.

Always check the depth before trading, break big trades into chunks, and avoid FOMO moments. Tools like MC² Finance help protect you by showing real-time slippage impact and routing trades smarter (so you keep more of your money).

FAQs

Does slippage mean I lose money?

Yes, when slippage is negative, it means you got fewer tokens (or paid more) than expected due to price changes during the trade. That “lost” value doesn't disappear; it’s captured by bots, arbitrage traders, or liquidity providers. It's not a visible fee, but it hits your bottom line just the same. For example, if you expected to receive 100 tokens and only got 95, that’s a 5% loss in value. These small losses add up over time, especially if you trade often. Always use limit orders or set your slippage as low as you safely can.

Is 2% slippage high?

It depends. On major assets like ETH or BTC on a centralized exchange, yes — 2% is high. These markets typically allow trades at <0.1% slippage due to deep liquidity. But on decentralized exchanges (DEXs), 2% is fairly standard for smaller coins, or when pools are thin. For meme coins or tokens with built-in taxes (like SafeMoon), even 5–10% might be needed. If you're swapping $1,000 and using 2%, that’s a potential $20 loss. Always look at the estimated price impact and adjust slippage only as much as needed to execute the trade.

Is 5% slippage bad in crypto?

Yes, in most cases. If you’re trading normal tokens like UNI or LINK, 5% is way too high and opens the door to MEV attacks or huge price swings. For example, on a $10,000 trade, 5% slippage means you might lose $500 instantly. That’s not a small cost, it’s avoidable if you trade in smaller chunks or wait for more liquidity. The only time 5% is acceptable is when you're trading ultra-volatile assets or tokens with weird tax mechanics. If you’re not sure why slippage needs to be that high, don’t hit confirm.

What happens if slippage is 50%?

It means you're okay with potentially losing half your money. This is usually seen when trying to exit scam tokens, high-tax meme coins, or completely illiquid markets. For instance, if you try to sell $1,000 worth of a coin and walk away with $500 (or less), that’s 50% slippage in action. Platforms like PancakeSwap let you set it in “expert mode,” but you should only go there if you're absolutely sure the trade is worth it. If a coin demands 50% just to trade, it might be a trap. Walk away.

Can slippage be 100%?

Yes, and it’s a red flag. A 100% slippage setting tells the platform, “execute this trade no matter what, even if I walk away with nothing.” That’s how traders fall into honeypots: scam tokens that let you buy but won’t let you sell unless you accept massive losses. Some bots even exploit high slippage settings to drain users at the worst price allowed. You should never set slippage this high unless you're exiting a worthless token and recovering anything is better than nothing. If you feel you need 100% slippage, you’re in danger (avoid the trade or research fast).

Does slippage affect stop-loss orders?

Yes. A stop-loss becomes a market order when triggered, so if the market is crashing, your order might fill far below your trigger price. Say you place a stop at $100 and the price gaps down to $90 — you’ll sell at $90 due to slippage. This happens often in flash crashes or when bots drain liquidity. On centralized exchanges (CEXs), deep order books offer more protection. On-chain? Riskier. Use limit-stop tools if available, or give your stop some breathing room during volatile times.

What’s the difference between slippage and spread?

Spread is the upfront cost of entering a trade; it’s the gap between the best buy and sell prices. For example, if ETH is $2000 bid / $2005 ask, the spread is $5. Slippage, on the other hand, is the extra price change that happens while your trade is processing, especially if you trade a large amount or the market moves quickly. Spread is visible and fixed. Slippage is hidden and variable. On DEXs, a 0.1% spread could easily turn into 3%+ slippage if you swap too much in a small pool.

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