GlossaryIntermediate
Slippage Tolerance
A user-set maximum amount of slippage a trade will accept before it's automatically rejected, protecting against an unexpectedly worse execution price.
Slippage tolerance is a user-configured maximum amount of slippage (see Kaavon's "Slippage" glossary definition) a trade will accept before the transaction is automatically rejected rather than executed at a worse price than intended.
Setting slippage tolerance too tight can cause a transaction to fail repeatedly during normal price volatility or network congestion; setting it too loose exposes the trade to a worse execution price than necessary, or in some cases, to a sandwich attack (see Kaavon's "Sandwich Attack" glossary definition) deliberately exploiting the excess tolerance.
Examples
- A slippage tolerance set too tight can cause a swap to repeatedly fail during ordinary price volatility, rather than ever actually executing.
- An unusually loose slippage tolerance can expose a trade to a sandwich attack, since it leaves meaningful room for an attacker to manipulate the price within the user's accepted range.