What Is the Relationship between Slippage Tolerance and Failed Transactions?
Slippage tolerance is a user-set parameter that defines the maximum acceptable percentage difference between the expected and executed price. If the market price moves beyond this tolerance during the transaction's execution (e.g. due to volatility or front-running), the transaction will revert or fail.
A low tolerance reduces risk but increases the chance of failure, while a high tolerance increases the risk of a bad execution price.
Glossar
Optimal Slippage Tolerance
Balance ⎊ Optimal Slippage Tolerance represents the strategically determined maximum percentage difference between the expected trade price and the worst acceptable execution price, striking a crucial balance between execution certainty and cost minimization.
Miner Extractable Value
Arbitrage ⎊ Miner Extractable Value, within cryptocurrency markets, represents the profit potential available to actors capable of identifying and exploiting temporary discrepancies in asset pricing across different exchanges or decentralized finance (DeFi) protocols.
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.
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.