Slippage Tolerance Limits

Slippage tolerance limits are user-defined or protocol-enforced constraints on the maximum amount of price change allowed during a trade execution. In volatile markets, the price can move significantly between the time a transaction is submitted and when it is actually mined on the blockchain.

Without slippage protection, a trade might execute at a much worse price than the user expected, leading to unintended losses. Protocols often set default slippage limits to protect users from "sandwich attacks," where an attacker observes a pending transaction and executes their own trade to force the price to move against the user.

By enforcing these limits, the protocol ensures that trades only execute if the price remains within a reasonable, safe range. This is a crucial feature for maintaining fair market access and protecting participants from the inherent latency and unpredictability of blockchain execution.