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How Does ‘Slippage’ Affect Large Trades in a Liquidity Pool?

Slippage is the price difference between expected and executed trade; large trades cause higher slippage dueage to the AMM formula.
Greeks.Live15.11.25

How Does ‘Slippage’ Affect Large Trades in a Liquidity Pool?

Slippage is the difference between the expected price of a trade and the executed price. In a liquidity pool, large trades consume a significant portion of the available assets, causing the ratio to change dramatically, which in turn causes the price to move unfavorably.

High slippage results in a worse execution price for the trader, making large treasury transactions more expensive.

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