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Author: Admin | 2025-04-28
To enter — or exit — any trade. Slippage is the difference between the expected price of a trade and the price at which it is executed. Slippage is most common during periods of higher volatility, and can also occur when a large order is executed but there isn't enough volume at the selected price to maintain the bid-ask spread.This market order price that is used in times of high volatility or low volume in a traditional order book model is determined by the bid-ask spread of the order book for a given trading pair. This means it’s the middle point between what sellers are willing to sell the asset for and the price at which buyers are willing to purchase it. However, low liquidity can incur more slippage and the executed trading price can far exceed the original market order price, depending on the bid-ask spread for the asset at any given time.Liquidity pools aim to solve the problem of illiquid markets by incentivizing users themselves to provide crypto liquidity for a share of trading fees. Trading with liquidity pool protocols like Bancor or Uniswap requires no buyer and seller matching. This means users can simply exchange their tokens and assets using liquidity that is provided by users and transacted through smart contracts.How Do Crypto Liquidity Pools Work?An operational crypto liquidity pool must be designed in a way that incentivizes crypto liquidity providers to stake their assets in a pool. That’s why most liquidity providers earn trading fees and
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