What Is “Slippage” and How Does It Relate to DEX Liquidity and Price Feeds?

Slippage is the difference between the expected price of a trade and the price at which the trade is executed. It occurs because a large trade significantly changes the token ratio in an AMM pool, resulting in a less favorable price for the trader.

In low-liquidity pools, slippage is high. Attackers exploit this by using flash loans to induce high slippage, which temporarily manipulates the on-chain price that an oracle might read.