Course Content

1. What Is Slippage? Difference between expected and actual trade execution price.
2. Types of Slippage: Positive vs. Negative.
3. Why Slippage Occurs: Low liquidity, volatility, network congestion.
4. Slippage Tolerance: Settings and trade-offs.
5. Calculating Impact: Example calculations & gas vs. slip.
6. Tools: Limit orders, aggregators, gas acceleration.
7. Real Examples: Small-cap traps & DeFi launch slippage.
8. When to Cluck It Off: Strategies & best practices.
9. Key Takeaways.

Introduction

Trading crypto can feel a lot like herding chickens: you plan carefully, set the coop just right, and still—sometimes your bird makes a run for it. In decentralized exchanges and automated market makers (AMMs), that unexpected difference between the quoted price and the executed price is called slippage. Just like a slippery coop floor, slippage can catch you off guard, leaving you with fewer eggs (or tokens) than you counted on.

Course Content

1. What Is Slippage?

Slippage is the difference between the expected price of a trade and the price at which it actually executes. In fast-moving or thinly traded markets, the price can shift between the moment you confirm your swap and when the transaction finalizes on-chain.

2. Types of Slippage

• Positive Slippage: Sometimes, luck is on your side—your trade executes at a better price than quoted.
• Negative Slippage: More common in choppy markets—your trade fills at a worse price, costing you extra tokens.

3. Why Slippage Occurs

1. Low Liquidity: Few tokens in the pool, so large orders move the price.
2. Volatility: Rapid price swings between transaction submission and confirmation.
3. Network Congestion: Delayed blocks can allow prices to drift.

4. Slippage Tolerance Settings

Most wallets and DEX interfaces let you set a “slippage tolerance” (e.g., 0.5%, 1%, 2%). If the price moves more than your tolerance, the trade reverts—keeping your tokens safe but costing you gas fees. Set it too low, and many trades will fail; set it too high, and you risk paying much more.

5. Calculating Slippage Impact

Example Calculation: If you swap 1 SOL for 100 CLUK at a quoted price, but the final fill is at 98 CLUK, that’s a 2% negative slippage.

Gas vs. Slip Trade-Off: Failed trades cost gas, so sometimes accepting a small slippage (like 0.3%) is cheaper in the long run.

6. Tools to Monitor and Manage Slippage

• Limit Orders: Use protocols like Serum or Mango Markets to set exact prices.
• Route Optimization: Aggregators like Jupiter can split orders across multiple pools to find the best fill.
• Gas Fee Acceleration: Speed up confirmation to reduce price drift.

7. Real-World Examples

• Small-Cap Token Trap: A large order in a shallow pool can eat through multiple price levels, resulting in massive slippage.
• High-Volume DeFi Launch: At token launches, network congestion spikes, and slippage tolerance must be adjusted carefully.

8. When to Cluck It Off

• If the expected slippage is within your tolerance and gas costs outweigh potential savings.
• If the pool depth and volatility suggest a low-risk environment.
• Otherwise, consider breaking large orders into smaller chunks to minimize impact.

9. Key Takeaways

• Slippage is an inevitable part of DeFi swapping—but with the right settings and tools, you can keep your eggs unbroken.
• Always balance slippage tolerance against gas costs.
• Use limit orders or aggregators to optimize execution in volatile or low-liquidity conditions.

Quiz