Slippage

Overview

What it means and why it matters

Slippage is the difference between the price expected when an order is placed and the price actually achieved when it executes. It matters when crypto payments are converted through markets with limited or changing liquidity.

How it works in practice

A merchant payment is converted by a market order or decentralized exchange swap. The available quotes can move as the order consumes liquidity or the market changes. The execution report records filled quantities, realized average price and the difference from the reference quote.

Technical detail without the jargon

Calculate slippage against a clear reference time and price. A 1% slippage tolerance on a swap may cause a transaction to revert if the actual price moves beyond the limit, but gas can still be spent. The size of the trade relative to market depth matters.

A deeper point to understand

Positive slippage is also possible when the execution price improves relative to the reference. In merchant reporting, show both signed direction and monetary impact rather than treating every difference as a loss. Use execution size and market depth to determine whether an observed deviation is expected or anomalous.

Common mistakes and limitations

Slippage is not the same as a provider’s stated spread or network fee. Some quotes guarantee all-in amounts; others are indicative and expose the merchant to execution risk.

What to check in a real payment system

Compare realized average fill with the explicit pre-trade reference and store both timestamps. Simulate conversions of different sizes to reveal depth limits. A high-slippage warning should trigger a smaller order, alternate venue or explicit user approval rather than silent execution.

Related concepts

Crypto Settlement, Crypto Payout, Network Fee.

Further reading

Uniswap — Price Impact and Slippage.