Define “Slippage” in the Context of a Large Liquidation Order

Slippage is the difference between the expected execution price of a liquidation order and the actual executed price. A large liquidation order, especially in an illiquid market, must fill at progressively worse prices down the order book.

This results in high slippage, meaning the exchange receives less for the collateral, potentially causing a deficit and exacerbating the market price drop.