What Is ‘Slippage’ and How Does It Affect an Arbitrageur’s Profit?

Slippage is the difference between the expected price of a trade and the price at which the trade is actually executed. In stablecoin arbitrage, high slippage (due to low liquidity or large trade size) can reduce or eliminate the small profit margin an arbitrageur seeks.

It makes the trade less effective in restoring the peg.