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How Does ‘Slippage’ Occur on an AMM?

Slippage is a worse-than-expected price due to a large trade changing the asset ratio in the pool.
Greeks.Live17.11.25

How Does ‘Slippage’ Occur on an AMM?

Slippage occurs when a large trade significantly changes the ratio of assets in the liquidity pool, causing the price received by the trader to be worse than the expected price. Since the constant product formula must hold, a large removal of one asset necessitates a disproportionate price change to maintain the constant k.

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