What are slippage (price slippage) and price impact?
Slippage (price slippage) is the difference between the price you expect and the price that occurs in a DEX transaction. As the liquidity pool grows and your transaction shrinks relative to the pool, this difference decreases. Paribu manages slippage for you automatically; it stops transactions whose price impact rises too high, for your security.
Why does slippage occur?
On a DEX, the price is determined by the balance in the liquidity pool. Because a large transaction changes the balance in the pool, the price that occurs may be slightly different from the expected one. The larger the pool and the smaller the transaction relative to that pool, the lower the slippage.
How does Paribu manage slippage?
- The slippage tolerance is set automatically; there is no separate slippage setting on the screen for you to adjust
- In practice this tolerance appears as the Minimum Received row on the summary screen — your transaction is sent with a guarantee that you will receive at least that amount
- If the price falls below this lower limit at the moment of the transaction, your transaction is canceled automatically and your amount is refunded
In other words, a transaction is not carried out at a price significantly worse than expected: it either completes above the lower limit or does not take place at all.
What happens if the price impact is too high?
In some transactions, especially with low-liquidity tokens or large amounts, the price impact can increase significantly. In this case, Paribu warns you in stages and stops the transaction if the impact rises too high:
| Price impact | Behavior |
|---|---|
| Low | The transaction proceeds in its normal flow, no warning is shown |
| Medium | An informational warning is shown: it states that your transaction amount may be less than expected |
| High | A confirmation checkbox appears next to the warning — you cannot continue without checking "I understand the price impact, I want to continue" |
| Very high | The transaction is blocked; the screen states that it cannot be completed because significant losses may occur |
Each warning also shows the price impact percentage calculated for that transaction.
Note: The boundaries of these stages are not fixed and may be updated from time to time. For this reason no percentage is given in this article — you can see which warning appears for the amount you enter on the screen
Important information
- Slippage is a natural part of a DEX and depends on the pool size
- The slippage tolerance is managed automatically; it cannot be changed by the user
- If the price impact is too high, the transaction cannot be made
- Price impact rises quickly on low-liquidity tokens; the liquidity analysis finding in the token's security review gives an indication
Frequently asked questions
Can I change the slippage setting myself?
No. The slippage tolerance is set automatically by Paribu and cannot be changed by the user.
Why was my transaction stopped for "high price impact"?
This is to prevent you from transacting at an unexpectedly disadvantageous price. You can try with a smaller amount or with a token that has higher liquidity.
Is slippage a fee?
No. Slippage is not a fee but a price difference resulting from the pool balance. The provider fee and the network fee are separate items; for details, see the What are DEX provider fees, networks, and the transaction limit? article.
My transaction was canceled because the price dropped, what happened to my money?
Your amount is refunded. When the price falls below the minimum received amount you saw on the summary screen, the transaction is not submitted; your balance does not change and you can try again.
Related articles
- What are a DEX (decentralized exchange) and a liquidity pool? — The logic of a DEX and a liquidity pool (AMM)
- How do I buy a token on a DEX? — Steps for buying a token on a DEX and the confirmation process
- What are DEX provider fees, networks, and the transaction limit? — DEX fee items and supported networks
Author:
Paribu