What is slippage?

Slippage comes into play on exchanges such as PancakeSwap. It describes the change in a token’s trading price between the time the order is placed and when it is executed. Slippage is most impactful during periods of high market volatility (when a lot of trades increase or decrease). This means that slippage is the expected percentage difference between the quoted price and executed price.

The slippage tolerance function of PancakeSwap is a good way to mitigate slippage. You can set a threshold where the trade won’t execute if the expected price of the asset moves by the set amount.

The recommended slippage for buying Wrapped XEP on PancakeSwap is 0.5 to 5% as of December 2021.