Low Slippage Execution

Definition ∞ Low slippage execution describes the process of completing a trade for a digital asset with minimal deviation between the expected price and the actual execution price. Slippage occurs when market conditions change rapidly between order placement and order fulfillment, especially with large trades or low liquidity. Achieving low slippage is desirable for traders as it reduces unexpected costs and ensures more predictable outcomes. This is particularly important in volatile decentralized markets.
Context ∞ Decentralized exchanges and automated market makers continually work to optimize liquidity and pricing mechanisms to facilitate low slippage execution. A primary challenge involves managing volatility and liquidity fragmentation across various trading pools. Innovations in liquidity provision and order routing algorithms aim to improve trade efficiency and reduce slippage for users.