The maximum allowable slippage set by a trader during a transaction.
Slippage Tolerance is the maximum percentage of slippage a trader is willing to accept when executing a transaction, especially on decentralized exchanges. If the price moves beyond this threshold, the transaction fails to protect the trader from excessive losses.
How Slippage Tolerance Works
Trader sets a percentage (e.g., 0.5%, 2%)
If the price shifts more than that amount during execution, the trade reverts
High tolerance increases execution success but also increases risk
Low tolerance reduces risk but may cause failed transactions
When Higher Tolerance Is Used
Low-liquidity token trades
Volatile markets
NFT mints or high-volume events
Time-sensitive trades
Risks of High Slippage Tolerance
Price manipulation
Sandwich attacks
Executing trades far from expected prices
Always balance execution certainty with price protection.
Summary
Slippage tolerance defines how much price deviation a trader is willing to accept. It protects against extreme slippage, especially on DEXs.
