Price Impact is the change in token price directly caused by your trade.
Price Impact is reflected as the difference between the current market price and how your trade impacts the total liquidity in a pool.
The price impact you experience depends on the size of the liquidity pool.
When the pool has high liquidity, your trade may have a smaller price impact. When the pool has low liquidity, your trade may have a larger price impact.
Therefore, the larger the price impact, the worse overall price you may receive.
It’s important to remember that the price impact rate changes constantly, because the total value of a liquidity pool changes based on the supply and demand of each token.
Low Price Impact Example
The example below shows low price impact. In this transaction, the price impact rate results in a small loss of 0.053%.
High Price Impact Example
The example below shows high price impact. In this scenario, Uniswap will initiate a price impact warning because you’re likely to experience a significant loss.
At your own risk, you can submit this swap by selecting “Swap Anyway”.