How Does a Decentralized Exchange (DEX) Handle Slippage Compared to a Centralized Exchange (CEX)?

A CEX uses a traditional order book, where slippage occurs when an order "walks the book." A DEX, particularly one using an Automated Market Maker (AMM), handles slippage through a mathematical formula (like $x y=k$) and the concept of "pool imbalance." Large trades on a DEX cause a greater price impact (slippage) as they move the ratio of assets in the liquidity pool, which is the equivalent of a CEX's order book depth.