Price Impact (DEX)
The change in a liquidity pool’s token price caused by a trade, expressed as a percentage deviation from the initial quote.
What is Price Impact (DEX)?
Price impact measures how much a swap alters the price of a digital asset in a DEX pool, driven by the trade size relative to pool depth. Large trades in low-depth pools cause significant price shifts, increasing costs. For example, a $50,000 USDC-to-ETH swap in a $1 million Uniswap V3 pool incurs ~0.5% price impact, reducing output by $250, per Uniswap analytics. In contrast, a $500,000 pool might see 2% impact ($1,000 loss). Curve’s stablecoin pools, with $2 billion TVL in 2025, maintain <0.01% impact for $10,000 swaps due to optimized AMM formulas. A 2023 flash loan attack exploited price impact, inflating costs by 10% in a low-depth pool. Traders can mitigate impact using DEX aggregators like 1inch or splitting orders, crucial for cost efficiency in high-volume DEX trading.
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A trading mechanism that matches buy and sell orders for assets based on price-time priority, commonly used in both traditional and decentralized exchanges.