Explain the Concept of ‘Slippage’ in a Trade and How It Relates to the Size of ‘K’

Slippage is the difference between the expected trade price and the executed price. It occurs because the AMM formula forces the token ratio to change with every trade, especially large ones.

A larger 'k' (deeper pool) means a larger change in trade size is needed to move the price by the same amount. Therefore, a larger 'k' results in lower slippage for a given trade size, improving execution.