What is slippage tolerance?
In one line: Slippage tolerance is a setting on crypto swap apps that caps how much worse than the quoted price your trade is allowed to fill, or it cancels.
The idea in plain words
On a decentralized exchange, the price you see when you click "swap" can change before your trade lands on the blockchain. Other trades may land first. That gap is Slippage.
Slippage tolerance is your limit. You tell the app: "If the price gets worse than this percent, cancel my trade." It works a bit like a Limit order on a regular exchange.
A simple example
You want to swap 1,000 USDC for a token. The app quotes 500 tokens.
- With a 0.5% tolerance, you'll accept no fewer than 497.5 tokens. If the price moves more than that, the swap fails, and you pay only the network fee.
- With a 10% tolerance, you'll accept as few as 450 tokens. The swap almost always goes through, but you might get a much worse deal.
Why it matters
A very low setting means trades often fail, especially in a small Liquidity pool or a fast market. A very high setting means you might pay far more than you planned.
High settings also invite bots. On public blockchains, bots can see your pending swap. They buy just before you, pushing the price up to your limit, then sell right after. You get the worst price you allowed. This is called a sandwich attack, a kind of Front running.
A common mistake
Raising tolerance to force a trade through. Some new tokens have a hidden tax or tricky code, and the app says the trade "needs" 20% or more slippage. That's a warning sign, not a setting to fix.
If a swap only works with a very high tolerance, stop and check the token. It may be a trap or have a tax built in. See how to spot a rug pull.
Many swap apps default to a fraction of a percent or an "auto" setting. Bigger trades in thin pools are worth splitting into smaller ones.
Questions
What slippage tolerance should I use?
For big, busy coins, a small setting under 1% often works. Thin or new tokens may need more, and that itself is a sign of risk.
What happens if slippage exceeds my tolerance?
The swap cancels. Your tokens stay in your wallet, but you usually still pay the network fee for the failed try.
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