What Is “Slippage” and How Does It Differ from Impermanent Loss?

Slippage is the difference between the expected price of a trade and the executed price. It occurs because a trade changes the token reserve ratio in the pool, causing the price to move against the trader during the transaction.

Impermanent loss, however, is the difference in value between holding the assets in the pool versus holding them outside the pool (HODL). Slippage is a cost to the trader on a single transaction, while impermanent loss is a potential loss to the liquidity provider over a period of time.