How Does Slippage Tolerance on a DEX Affect a User’s Vulnerability to Sandwich Attacks?
Slippage tolerance is the maximum percentage price change a user is willing to accept between the time they submit a transaction and the time it executes. A high slippage tolerance makes a user highly vulnerable to sandwich attacks because it gives the attacker a larger price range to exploit.
A low slippage tolerance limits the attacker's profit, potentially making the attack uneconomical.
Glossar
Slippage Tolerance Limits
Threshold ⎊ Slippage tolerance limits, within cryptocurrency and derivatives markets, define the maximum acceptable price deviation during trade execution; exceeding this boundary typically results in transaction rejection.
Vulnerability
Exposure ⎊ Vulnerability within cryptocurrency, options, and derivatives manifests as quantifiable risk to capital stemming from imperfectly hedged positions or systemic dependencies.
Sandwich Attacks
Execution ⎊ Sandwich attacks, within cryptocurrency derivatives and options trading, represent a sophisticated market manipulation tactic exploiting order book dynamics.
High Slippage Tolerance
Tolerance ⎊ High slippage tolerance, within cryptocurrency and derivatives markets, signifies an investor’s or trading system’s capacity to accept price discrepancies between order execution and the anticipated price.
Setting Slippage Tolerance
Tolerance ⎊ Setting slippage tolerance within cryptocurrency derivatives represents a predetermined acceptable deviation between the expected execution price and the actual price realized during trade execution.
Slippage Tolerance
Mechanism ⎊ Slippage tolerance, within cryptocurrency, options, and derivatives trading, defines the maximum acceptable difference between the expected price of a trade and the price at which the trade is actually executed.