When trading on a DEX, what are the losses that can occur due to the differences between the time a transaction is sent and the time it is actually processed?
Options
A) SlickBack
B) Slippers
C) Sleepage
D) Slippage
Correct Answer
The correct answer is Slippage.
Explanation
Slippage refers to when the price of a trade changes between the time a trader initiates a transaction and the time the transaction is executed on the blockchain. If there’s a significant price change during this time gap, the trader may end up getting a different price than expected, resulting in losses. So, the correct answer is D. Slippage.
This is a common concern in decentralized trading, especially on platforms that use Automated Market Makers (AMM), where prices are determined dynamically based on the ratio of assets in liquidity pools. Traders need to be aware of potential slippage and consider it when making transactions on a DEX.
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