Slippage is the price degradation that happens between when a trade is placed and when it executes. On an AMM, a large buy moves the pool's price as it executes, so the average fill price is worse than the quoted spot price. On centralized exchanges, slippage comes from order books getting eaten through. On any market, slippage is proportional to trade size relative to liquidity depth.
In a constant-product pool with reserves x and y, swapping dx of token X yields roughly dy ≈ y * dx / (x + dx). For small dx, this approaches the spot price. For large dx, the price impact grows nonlinearly; a trade equal to 10% of pool depth typically incurs ~10% slippage on a constant-product AMM.
DEX aggregators (1inch, 0x, CoW Swap) reduce slippage by splitting large trades across multiple pools. Limit orders and TWAP orders spread execution across time to reduce per-trade impact.
Slippage is one of the main hidden costs of crypto trading. Quoting prices off the spot rate without accounting for slippage misleads users and traders. For institutional-size trades, slippage often exceeds the visible exchange fee.
Large trades and their slippage profiles show up in the whale-tracker premium endpoint.