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Price impact vs price slippage#

Price impact is the predictable change your trade causes along an AMM curve. Price slippage is the difference between the quote you saw and the result available when your transaction executes. They can occur together, but they are not the same risk.

How price impact works#

CenturionDEX does not use a traditional order book. In v2, the pool's reserve ratio changes as one asset enters and the other leaves under x · y = k. In v3, your swap moves through active liquidity distributed across ticks. Larger trades relative to available liquidity move farther along the curve and therefore have greater price impact.

The quoted output normally already reflects estimated price impact and the pool's fee. Splitting a trade or choosing a deeper pool can reduce impact, although multiple transactions also require additional CTN for Newton costs.

How slippage works#

A quote is a snapshot. Before your signed transaction is included in a block, other swaps can change the pool price. Your slippage tolerance sets the worst acceptable movement from the quoted result. If the available output falls below the minimum, the swap reverts instead of executing at a worse price.

A tolerance such as 0.50% is an execution limit, not a protocol fee. Setting it too low can cause reverts in a moving market. Setting it unnecessarily high gives the transaction more room to execute at an unfavorable price or be targeted by adverse ordering.

Worked example#

Assume the interface quotes 995 tokens for 10 CTN after accounting for the current pool state and fee. With a 0.50% tolerance, the minimum received would be slightly above 990 tokens.

  • The difference between the pool's pre-trade spot ratio and the quoted average execution is price impact.
  • Any deterioration between the 995-token quote and the onchain execution is slippage.
  • If output would fall below the minimum, the transaction should revert, although the failed attempt can still consume a network cost.

How to manage both#

  1. Verify the token contracts and selected pool.
  2. Review the interface's price-impact warning before signing.
  3. Use a slippage tolerance suited to current volatility and token behavior.
  4. Consider a smaller trade or deeper pool when impact is high.
  5. Requote if the transaction has been waiting or the market moved sharply.
  6. Keep enough CTN for a replacement or retry if the first transaction fails.

Common issues#

  • “Insufficient output amount”: the pool moved beyond your tolerance before execution.
  • High impact with a stable chart: your trade may be large relative to active liquidity.
  • Unexpectedly large loss: verify pair direction, token transfer behavior, and minimum received.
  • Repeated reverts: the token may impose custom transfer rules rather than ordinary market slippage.

Related#