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AMM and Slippage
Swapping against the AMM and Slippage
When swapping with decentralized exchanges you’ll often find the term “slippage”. This refers to how much the price changes, or slips, because of your trade. This is similar to centralized exchanges, where if you do a market sell, you’ll need to fish lower and lower to find buy orders. The result is that the average price of your trade is lower than the one you started at.
AMMs don’t have orders, instead slippage is algorithmic. Usually, the larger the pool, the less slippage you’ll suffer for the same size of the swap.