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When trading on a DEX, what is the loss that can occur when the size of the liquidity pool is small compared to the size of the transaction?

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In this guide, you’ll learn the answer to “When trading on a DEX, what is the loss that can occur when the size of the liquidity pool is small compared to the size of the transaction?” in OverWallet.

When trading on a DEX, what is the loss that can occur when the size of the liquidity pool is small compared to the size of the transaction?

Question: When trading on a DEX, what is the loss that can occur when the size of the liquidity pool is small compared to the size of the transaction?

Answer: Price Impact.

Further reading

Which blockchain platform is known for its focus on enhancing privacy through features like Confidential Transactions and Bulletproofs?

What are the losses that liquidity providers may experience when the exchange rates for token trading pairs on a DEX increase significantly?

What do we call the entity that provides liquidity to the liquidity pool on a DEX?