Slippage

Slippage refers to the difference between the expected price of a trade and the price at which it is executed. On decentralised exchanges (DEXS) like Minswap, slippage is more common due to using liquidity pools instead of traditional order books.

There are two types of slippage: Positive Slippage: When a trade executes at a better price than expected. Negative Slippage: When a trade executes at a worse price, which is more common and undesirable.

Minimising slippage is critical for ensuring more accurate and cost-effective trades, especially for those trading large volumes or volatile markets.

Strategies for Minimising Slippage

Trade in High-Liquidity Pools

Higher liquidity means less price impact per trade. Before trading, check the Total Value Locked (TVL) in the pool under the “Markets” > “Pools” section on Minswap.

Use Limit Orders

Set a specific price at which you’re willing to buy or sell. If the market price deviates beyond your set limit, the trade won’t execute, protecting you from unfavourable prices.

Monitor Market Volatility

Trading volatile assets against stablecoins like USDM or Djed can reduce price fluctuations, minimising slippage.

Adjust Slippage Tolerance Settings

Adjust your slippage tolerance settings to prevent trades from executing at prices far from your expected rate.

Trade During Low Volatility Periods

Executing trades when the market is less volatile can lead to more predictable pricing and reduced slippage.

Use Stablecoins or Less Volatile Assets

Assets like stablecoins (e.g., USDM, Djed) are designed to have less volatility, meaning their prices remain relatively stable compared to more speculative cryptocurrencies. When swapping between highly volatile assets, consider using stablecoins as an intermediary. This can reduce the risk of rapid price changes and minimise slippage. For example: $SNEK/$USDM.

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Minimising slippage is essential for improving trade accuracy and avoiding unexpected losses. You can ensure that your trades are executed at or near the expected price by leveraging strategies such as trading in high-liquidity pools, setting appropriate slippage tolerances, and trading during less volatile periods. On platforms like Minswap, these tactics can help you optimise your trading experience and maximise cost-efficiency.