What Is Slippage in Crypto? Explained for Australians (2026)

What is slippage?

Slippage is the difference between the price you expect and the price at which your trade actually executes. If an app quotes A$2.00 per token and your order fills at an average of A$2.02, the gap is slippage, usually written as a percentage of the expected price. Here that is 1%.

In crypto you meet it most often when swapping tokens on a decentralised exchange (DEX), where your wallet asks you to set a "slippage tolerance" before you confirm. It also affects market orders on centralised exchanges (CEXs), especially for smaller coins.

Positive vs negative slippage

• Negative slippage means a worse price than expected: you pay more when buying or receive less when selling. This is the version most people mean.
• Positive slippage means a better price than expected, for example when the price dips slightly between your quote and the fill while you are buying.

Neither is predictable in advance.

Why does slippage happen?

1. Volatility. Crypto prices can move quickly. The longer the gap between quote and fill, the more the price can change.
2. Liquidity. Liquidity is how much can be bought or sold without moving the price much. When it is thin, even a modest order can push the price.
3. Order size. The bigger your order relative to available liquidity, the more of it fills at worse prices.
4. Market design. DEXs and CEXs work differently.

On a DEX (AMM). Most DEXs use an automated market maker (AMM): you trade against a liquidity pool, a pot of two tokens held in a smart contract. A pricing formula sets the price from the ratio of the two tokens. When you swap, you add one token and remove the other, so the ratio, and the price, shifts against you. The bigger your swap compared with the pool, the bigger the shift. Our DEX guide explains how DEXs work, and our what is DeFi guide covers the wider ecosystem.

On a CEX (order book). A centralised exchange usually runs an order book, a live list of buy and sell orders at different prices. A market order takes the best orders first and then works down the book. If the best price has only a small amount available, the rest fills at the next price, and the next, so your average price drifts. A limit order only fills at your price or better.

What is slippage tolerance?

Slippage tolerance is a percentage setting that tells a DEX the largest price movement you will accept. When you confirm, the app works out a minimum amount you must receive. If the trade would deliver less, it fails instead of going through.

• Too low and normal price movement can make swaps fail, which can still cost a network fee (see our what is Ethereum gas guide).
• Too high and you accept a worse price than necessary and give bots more room to exploit you.

There is no universal right number, and many apps pre-fill a default, so check it rather than assuming it suits your trade.

Price impact vs slippage

• Price impact is how far your own trade moves the price in the pool or book. Good interfaces show it before you confirm.
• Slippage is the wider gap between expected and executed price. It includes price impact plus any market movement while your transaction waits for confirmation.
• Slippage tolerance is the limit you set on that movement.

A worked example in Australian dollars

This example is entirely hypothetical. The numbers are invented to show the mechanics, ignore fees, and are not real prices or a forecast.

Imagine a small pool holding 25,000 "Token X" and A$50,000 of an AUD-pegged stablecoin, so the starting price is A$2.00 per Token X. Using a standard constant-product formula:

• Small swap. You swap A$500 and receive about 247.5 Token X, an average price of about A$2.02. That is roughly 1% worse than the starting price.
• Large swap. You swap A$5,000 and receive about 2,272.7 Token X, an average of about A$2.20, roughly 10% worse.

Ten times the order produced about ten times the price gap, because the bigger swap moved the pool further. Now add tolerance. Suppose the app quotes 247.5 Token X for the A$500 swap and you set 0.5% tolerance, so the minimum is about 246.3. If the market moves while your transaction waits and you would only get 245, the swap fails instead of filling. Real pools charge fees and use different formulas.

How to reduce slippage

You cannot remove slippage, but you can manage it.

• Use limit orders on a CEX, so you only fill at your price or better, though it may not fill at all.
• Trade smaller. Splitting a large order can reduce each part's price impact, although prices can move between parts and fees can add up.
• Choose liquid pairs. Deeper pools and busier order books move less for the same order.
• Mind the timing. Prices can move sharply during major news, and busy networks confirm slowly.
• Set tolerance deliberately and read the preview, including price impact, minimum received and fees, before confirming.

MEV, front-running and sandwich attacks

On many blockchains, pending transactions wait in a public queue before confirmation. MEV (maximal extractable value) is profit that can be made by reordering or inserting transactions around yours, and bots watch for it.

A front-running bot spots your pending swap and trades ahead of it. A sandwich attack goes further: the bot buys just before your swap, pushing the price up, lets your swap fill at the worse price, then sells straight after. A high tolerance gives the bot more room. Some wallets offer features designed to reduce this exposure, but they do not remove the risk.

Slippage for Australians

• AUD pairs. Australian exchanges list AUD pairs, and order book depth can differ from a coin's busiest global pairs, so check the depth shown before a large market order. Our crypto exchange guide and crypto trading basics guide cover exchanges and order types.
• Moving to a DEX. You typically need a self-custody crypto wallet and a token such as a stablecoin, so there may be an extra conversion step with its own costs. Our what is a wallet address guide explains addresses; check them carefully, because blockchain transfers generally cannot be reversed.
• Records. The ATO generally treats crypto-to-crypto swaps as capital gains tax events, so keep records of the AUD value of each swap. This is general information, not tax advice.
• A neutral source. Moneysmart, run by the Australian Securities and Investments Commission (ASIC), says most crypto assets are high risk and you should be prepared to lose everything you put in. Read its crypto assets page before you trade.

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