What is Slippage and Why Does It Happen?

When you deposit or withdraw with FIVA, you might notice that the final amount is slightly different from what you expected. This difference is called "slippage," and it's a normal part of how blockchain finance works.

Understanding Slippage Simply

Imagine you're at a farmers market trying to buy apples. The sign says $1 per apple, but when you want to buy 100 apples at once, the vendor says "I only have 80 apples at $1 each, but I can sell you the remaining 20 for $1.10 each."

You end up paying a bit more than expected because there weren't enough apples available at the original price. This is essentially what slippage is in blockchain finance.

Why Slippage Happens

In traditional banks, there's always someone ready to exchange your dollars for euros at a fixed rate. But in blockchain finance, exchanges happen through liquidity pools - think of them as shared pots of money that people contribute to.

When you want to swap tokens:

• You're trading against what's available in these shared pools

• If the pool is small or your trade is large, the price moves as you trade

• Just like our apple example - the more you want, the higher the price gets

Where Does the Slippage Go?

The important thing to understand is that slippage doesn't go to FIVA. When slippage occurs:

The difference goes to liquidity providers - these are people who put their money in the pools to help others trade. They earn small fees from every trade, including any slippage.

FIVA doesn't profit from slippage - we want it to be as low as possible for you, just like you do.

How FIVA is Working to Reduce Slippage

We're actively working to make slippage smaller for everyone:

Attracting more liquidity: We're working with partners to bring more money into the pools, which means better prices for everyone.

What This Means for You

Slippage is a blockchain limitation - it's an annoying part of how blockchain finance currently works, and we know it's frustrating.

Smaller amounts = less slippage - just like buying fewer apples is easier than buying the whole market.

It gets better over time - as more people use blockchain finance, pools get bigger and slippage gets smaller.

FIVA is on your side - we benefit when slippage is low because it makes for a better user experience.

The Bottom Line

Slippage is one of the trade-offs of using blockchain technology instead of traditional banks. While traditional banks hide these costs in their fees and spreads, blockchain makes them visible but fair.

FIVA is committed to making your experience as smooth as possible by working to reduce slippage over time. We're all in this together - when slippage is low, everyone wins.