Price Impact
The effect a trade has on the market price of an asset, proportional to trade size relative to liquidity.
In-Depth Explanation
A $10K trade in a $100M pool barely moves the price; the same trade in a $100K pool moves it significantly. AMMs display expected price impact before execution. High price impact means you're getting a worse deal. DEX aggregators route through multiple pools to minimize price impact on large trades.
Related Terms
Slippage
The difference between the expected price of a trade and the actual executed price.
Liquidity
The ease with which an asset can be bought or sold without significantly affecting its price.
Automated Market Maker
AMMA smart contract that provides liquidity and enables trading using a mathematical formula instead of an order book.
More in Trading & Markets
View all →Slippage
The difference between the expected price of a trade and the actual executed price.
Maximal Extractable Value
MEVValue that can be extracted by reordering, inserting, or censoring transactions within a block.
Sandwich Attack
An MEV extraction technique where an attacker places transactions before and after a victim's trade to profit from the price impact.
Frontrunning
Placing a transaction ahead of a known pending transaction to profit from the anticipated price movement.