Why Is Slippage Tolerance a More Relevant Concept for AMMs than Limit Order Books?

Slippage tolerance is highly relevant for Automated Market Makers (AMMs) because trades are executed against a liquidity pool based on a mathematical formula, not a specific order price. The price is highly sensitive to the size of the incoming trade and market volatility, making slippage a common occurrence.

Limit order books, however, execute at a specified price or better. While a market order on an order book can experience slippage, the explicit price control of limit orders makes the concept less central than in the formulaic, pool-based execution of AMMs.