If you have ever traded in crypto or traditional equity markets, you may have noticed prices might shift slightly by the time an order fills. This is called slippage, it is the difference between the price you expect and the price you receive. Slippage tends to stay small or non-existent when markets are steady, but it becomes easier to notice in fast conditions or in places where liquidity is thin.
On centralized exchanges (CEXs) or centralized crypto trading platforms, slippage can show up when there aren’t many buyers or sellers active at a given moment. With fewer people trading, prices can move more quickly, and even a single larger order may shift the price you receive.
Slippage can move in your favour or against you. In fast markets, you might receive a better price than expected, which is positive slippage. In more volatile or quieter markets, it is often negative.
Some platforms are centralized entities but do not operate like traditional order-book exchanges. Instead of matching orders from other users, these platforms use a Request for Quote (RFQ) model. Under this model, trades are executed through liquidity partners who provide a firm price at the moment of the quote, so the price you are shown is the price you receive. Newton works differently from order-book exchanges. Even though it’s a centralized exchange, the price you see in your quote is the final price, so slippage is already built in.
On Decentralized Exchanges (DEXs), the trading price is determined by an automated market maker (AMM) smart contract. Some DEX users have the option to set a slippage tolerance, and if the price moves beyond their limit, the trade cancels automatically.
Once you understand slippage, it becomes easier to see why participation in the market matters, this is where market makers come in. In traditional markets there are traders and/or firms that help keep the market liquid by actively quoting both sides of a trade. They provide buy and sell orders throughout the day so trades can move without long waits. This helps prices reflect real supply and demand and lowers the chance of large gaps forming when activity changes. These participants' make their profits on the spread between the bid and ask price they quote.
On centralized and digital trading platforms, market activity often comes from professional liquidity providers. Like Market Makers, these groups also place buy and sell orders throughout the day, which helps ensure there is activity on both sides so trades can move without long waits. Their presence supports deeper order books and keeps pricing aligned with what is happening across the broader market. This does not change market conditions, but it helps the trading experience feel steadier and easier to follow, even when things move quickly.
DEXs rely on peer-to-peer liquidity pools where users supply the assets. Some networks also add liquidity directly to these pools to support active trading. This structure typically provides a wider range of tokens to trade and lets people trade directly from their own wallets, retaining self custody. If a pool is small or the network is busy, slippage or slower settlement times can be more noticeable.
Whether you prefer the predictability of firm quotes, the flexibility of decentralized trading, or the structure of traditional exchanges, understanding how pricing works can make the trading experience feel more straightforward. The right choice depends on your comfort level and how you like to manage your assets. We hope this adds a bit of clarity as you explore what works best for you.
If you liked this article, take a look at the other crypto explainers on our blog.
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