What Is “Slippage Tolerance” and How Does It Enable Sandwich Attacks?

Slippage tolerance is the maximum percentage deviation from the expected trade price that a user is willing to accept for their transaction. It is a necessary setting on DEXs due to the volatile nature of on-chain liquidity.

High slippage tolerance enables sandwich attacks because it signals to the front-runner that the victim is willing to accept a wide range of prices. The attacker can then confidently execute their "buy" transaction (driving the price up) and "sell" transaction (driving the price down) around the victim's trade, knowing the victim's trade will still execute at the now-manipulated price.