Slippage in Crypto Trading: What It Is and How to Manage It
Slippage is the difference between a trade's expected price and the actual executed price. It's common in crypto, especially with new or low-liquidity tokens. Understanding slippage helps traders protect their funds and creators build healthier token launches.
Key Points
- 1Slippage is the price difference between your order and its execution, often costing you money.
- 2High slippage (10-50%+) is typical for new Solana tokens with low liquidity pools.
- 3Slippage tolerance settings (like 5% or 10%) can prevent failed transactions but may result in worse fills.
- 4Launchpads with built-in liquidity and bonding curves can reduce initial slippage for new tokens.
- 5For traders, checking pool depth and using limit orders are the best ways to control slippage.
What Exactly is Slippage?
The hidden cost of fast-moving markets.
Slippage occurs when you place a market order to buy or sell a cryptocurrency, but the transaction completes at a different price than you anticipated. This happens because market prices move between the moment you submit your order and when it's processed on the blockchain. In decentralized trading, slippage is amplified by the mechanics of automated market makers (AMMs) and liquidity pools.
For example, if you try to buy a new Solana token when its liquidity pool only has 50 SOL, your large buy order will consume available tokens, pushing the price up with each subsequent portion of the trade. The first part of your order might execute at the listed price, but the last part could be 20% higher. That average price difference is your slippage.
4 Main Causes of High Slippage
Low Liquidity
Tokens with small liquidity pools (e.g., under 100 SOL) experience dramatic price shifts with modest trades. A 10 SOL buy might move the price 15%.
High Volatility
During news events, launches, or social media pumps, prices change rapidly. Orders placed during these spikes face significant slippage.
Large Order Size
A trade representing a big percentage of the pool's total liquidity will inevitably cause price impact. Splitting into smaller orders can help.
Network Congestion
On Solana, during peak activity, transaction processing delays can mean your order is filled at a substantially different price than when you signed it.
- Low Liquidity: Small pools magnify price impact.
- High Volatility: Rapid price moves outpace execution.
- Large Order Size: Big trades consume available liquidity.
- Network Congestion: Slow execution changes the price context.
Slippage and New Solana Token Launches
The first trades are often the most expensive.
Launching a token presents a unique slippage challenge. On platforms like pump.fun, tokens start with a bonding curve, where initial buys directly increase the price. This often results in 20-50% slippage for the first few buyers. After the token "graduates" to a Raydium pool, slippage depends on the initial liquidity provided.
A launchpad like Spawned.com addresses this by combining an initial launch phase with a smoother transition. The platform's structure is designed to reduce the extreme slippage seen in pure bonding-curve launches. By integrating the launch with an immediate liquidity provision framework, early buyers experience less drastic price impact. This creates a more stable entry point, which can help build longer-term holder confidence.
How to Set Your Slippage Tolerance
A crucial setting that balances success with cost.
Slippage tolerance is a setting in your wallet (like Phantom) or DEX interface that defines the maximum price movement you'll accept.
- Access Settings: In a DEX like Raydium or Jupiter, find the settings icon (often a gear) near the swap confirmation button.
- Set a Percentage: Enter a value like 1%, 5%, or 10%. For stablecoin swaps, 0.1-0.5% may suffice. For new tokens, 10-15% might be needed.
- Understand the Trade-off: A low tolerance (1%) may cause transaction failures if the price moves. A high tolerance (25%) guarantees execution but may give you a very bad price.
- Use Dynamic Slippage: Some aggregators like Jupiter offer "Auto" mode, which adjusts based on token volatility and pool conditions.
Pro Tip: For unknown tokens, check the liquidity pool size first. If it's very small, consider if the trade is worth the potential high slippage.
The Best Strategy for Lower Slippage
Informed choices lead to better execution.
For token creators, choosing a launchpad that prioritizes liquidity depth from the start is the most effective method to reduce initial buyer slippage. A platform that facilitates a larger initial pool, rather than relying solely on a steep bonding curve, provides a better experience for your first community members.
For traders, the verdict is clear: always check the liquidity pool depth before trading a new token. Use limit orders when possible (available on some DEXs), and split large orders into several smaller ones over time. Setting a realistic, informed slippage tolerance is better than using an excessively high "just make it work" percentage.
Ultimately, slippage is a cost of trading in decentralized markets. The goal isn't to eliminate it, but to understand and minimize it through better platform choices and trading habits.
How Launch Models Affect Early Slippage
Not all token launches are created equal.
| Launch Model | Typical Early Slippage | Why It Happens | Outcome for Buyers |
|---|---|---|---|
| Pure Bonding Curve (e.g., pump.fun) | Very High (30-50%+) | Price increases mathematically with each buy. No initial liquidity buffer. | First buyers pay a large premium; high price volatility. |
| Traditional Launchpad (Fixed Price) | Low (1-5%) | Set price with large initial liquidity. | Fair initial price, but requires significant upfront capital from team. |
| Hybrid Model (Spawned.com) | Moderate (10-20%) | Combines initial engagement with structured liquidity growth. | Smoother price discovery, less extreme initial impact for early supporters. |
The Spawned.com model is designed to balance accessibility for creators with a more stable trading environment. The integrated AI website builder and post-graduation fee structure (1% via Token-2022) support ongoing project development, which can lead to sustained liquidity and lower long-term slippage for holders.
Launch Your Token with Slippage in Mind
Build a stronger foundation for your community.
If you're creating a Solana token, consider how your launch platform influences the initial trading experience for your community. High slippage can discourage early adoption and reward flippers over holders.
Spawned.com provides a launchpad built to support healthier token economics from day one. With a focus on sustainable liquidity and a full suite of tools—including an AI website builder—it helps set your project up for lower volatility. The launch fee is 0.1 SOL (~$20), and the model includes ongoing holder rewards from a 0.30% transaction fee.
Ready to launch with a better start? Build your token page and manage your launch with tools designed for the long term.
Related Terms
Frequently Asked Questions
Not always. Slippage can be positive if the price moves in your favor between order and execution, though this is rare. Typically, slippage is a cost. A small amount (0.5-2%) is normal and acceptable for executing a market order quickly. It becomes problematic when it's unexpectedly high, often due to low liquidity.
For established tokens with deep liquidity (like SOL, USDC), 0.1-0.5% is often enough. For newer or memecoins, a tolerance of 5-10% is common to ensure the trade goes through. Setting it above 15% is risky, as you could get a very unfavorable price. Always check the pool's liquidity first.
You can avoid slippage by using limit orders, where you set the exact price you're willing to accept. However, not all Solana DEXs support limit orders for every token pair. For market orders, some slippage is inevitable due to blockchain processing time and market mechanics.
Your transaction failed because the market price moved beyond the slippage tolerance you set before the transaction could be confirmed. For example, if you set 5% slippage and the price jumped 7% during network congestion, the transaction will revert to protect you from an unexpectedly bad fill. Try a slightly higher tolerance or wait for less volatile conditions.
It's the primary factor. A larger pool means individual trades have less price impact. A trade worth 1% of the pool's total value will cause far less slippage than a trade worth 10% of the pool. Before buying a new token, check its liquidity pool value on the DEX; a pool under 50 SOL will likely have high slippage on any moderate-sized trade.
Launch models dictate initial price discovery. A pure bonding curve model creates very high initial slippage, as each buy directly raises the price. A launchpad that injects initial liquidity or uses a hybrid model provides a deeper pool from the start, resulting in lower slippage for early buyers. This can lead to a less volatile and more equitable launch.
Not directly. Slippage is a function of liquidity and market mechanics, not platform fees. However, a platform that uses part of its fee structure (like Spawned.com's 0.30% holder reward) to encourage holding and liquidity provision can foster a deeper, more stable pool over time, which indirectly reduces average slippage for traders.
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