Whether you’re delving deep into the world of DeFi or just dipping your toes in, you’ll likely encounter two things while trading: slippage and gas fees. While many will quickly gloss over these fundamental components of DeFi, traders must understand how they affect their ability to execute a trade at the price they want successfully.
What are gas fees?
Gas fees are paid when interacting with smart contracts or transacting on a blockchain, such as when trading on a DEX (decentralized exchange). Several factors can influence how much gas is paid, but one of these is the ability of a DEX to route your transaction through multiple liquidity pools, across other DEXes, and across multiple chains.
What is slippage?
Slippage is the difference between the expected price of a trade and the actual price outcome; it is a byproduct of the way DEXes function. Slippage can result in the final price being higher or lower, and the amount of deviation can range from insignificant to a lot. Generally, less slippage is better. However, under certain market conditions, setting slippage too low can result in a failed trade, while setting it too high can unnecessarily result in a sub-optimal price. Ideally, the DeFi platforms and tools you use must enable you to minimize slippage and optimize your trade for success.
Optimizing gas fees and slippage on token swaps
Avoiding gas fees and slippage when navigating the world of DeFi (decentralized finance) is not always possible, and they can play an even more significant role when trading tokens across multiple blockchains.
Gate Web3 Swap, the decentralized trading platform on Gate.io, is optimized to minimize gas fees and slippage. To fetch the best price for a trade, it sometimes has to make multiple “sub-trades” in the background, known as routing. Gate Web3 Swap uses the GateRouting intelligent algorithm to find the most efficient route for your trade; a shorter route can mean less gas fees and fewer chances for high-slippage scenarios. In addition, slippage tolerance can be adjusted for each swap to ensure the final price does not deviate too far.
Along with optimizing trades for slippage and gas, Gate Web3 Swap enables near-instant trades across the most popular blockchains. It allows trading tokens within one chain, cross-chain, and transferring the same token from one chain to another.
Everything Web3 all in one place
With Gate Web3, crypto users can access everything needed to navigate the world of decentralized finance. This includes the basics, like self-custody wallet creation and management tools, as well as token swapping, order book-style perpetuals trading, staking and earning, and a thriving NFT marketplace. Further, users can access thousands of decentralized applications (DApps), participate in initial and non-initial token airdrops, and discover hundreds of other airdrops from around the web.