Slippage is the difference between the expected price of a trade and the actual execution price. Slippage occurs when there is a delay between placing a trade and executing it, and the price of the asset being traded changes.

For example, if you place an order to buy one Bitcoin for $50, but before your order is executed, the price rises to $52, you may suffer slippage of $2 per coin. loss. This means your actual purchase price will be $52 instead of the expected $50.

Another example is if you find 20 ETH and 80 USDT in the AMM pool, then your expected ETH price is 4 USDT/ETH. However, if you plan to spend 20 USDT to swap in the pool, you will only end up with 4 ETH instead of the expected 5 ETH, which means you suffer a slippage loss of 1 USDT/ETH. Your actual purchase price will be 5 USDT, not the expected 4 USDT.

Slippage is especially common in fast-moving markets or highly volatile assets (like cryptocurrencies), as well as long-tail assets with limited liquidity (or is it like cryptocurrencies?). Regardless, it has a significant impact on trading performance and it is important to consider slippage when placing trades.