By reading the article “how to solve Price Impact Too High error in Uniswap DEX” published in Adaas Investment Magazine, you will get acquainted with Price Impact Too High Error and its solutions in general.
Price Impact Too High is an error that some decentralized exchange users, especially the Uniswap decentralized exchange, encounter during some transactions, which is an obstacle for their transactions.
There are various solutions to the error of Price Impact Too High in decentralized exchanges, and in the following, we have explained to you the best methods to solve this problem.
As you have read, there are 3 solutions to this error that Adaas Investment Magazine has provided for you.
One of the most successful methods to fix this error is to use other versions of exchanges. You may ask, how many versions does a decentralized exchange have?
For example, the Uniswap decentralized exchange is offered in version V1 (old version) and V2 and new version V3. To change the versions search Uniswap V2 on google for example.
Sometimes some cryptocurrencies can be bought in very small amounts of dollars because of their very low price. Also, they may do not have many big liquidity pools therefore, the price impact mechanism can make problems for transactions which have a big amount.
To solve this problem, we can reduce the number of assets we intend to trade and buy or sell the desired amount in a few transactions.
To trade cryptocurrencies in decentralized exchanges such as Uniswap, when faced with Price Impact Too High error, changing the price slippage to complete the transaction can be the solution.
Sometimes, due to excessive price fluctuations and the lengthy process of registering a buy or sell transaction in decentralized exchanges, an increase in price slippage helps to complete the transaction.
To do this, according to the image below, we click on the gear symbol in the Uniswap DEX, then we try to change the price slippage tolerance and confirm it. To find the best slippage tolerance you must read the token which you want to trade white paper.
Other solutions, such as using high-speed Internet, using another mobile phone or another laptop, and even changing browsers application can sometimes solve the problem of Price Impact Too High. You can also share the solutions you have experienced in the comments section so that users can access their answers faster.
Also, the practical information that has been published for you below will make you more aware of the nature of this error.
The Price Impact mechanism causes the purchase or sale price of an asset in a decentralized exchange to be inversely related to its value.
For example, if a person wants to buy a token which has $1 price, the exchange will consider the price of $1, but if they want to buy 20% of the supply of liquidity for that token, the exchange with the Price Impact mechanism will raise the price much higher. Hence there is no economic justification for the whale to do this transaction and abandons its transaction.
The same mechanism applies to the sale of tokens, and the selling price of 1 token is different from 1000 tokens and it depends on the amount of token supply and the supply of pools providing liquidity to the exchanges.
In short, the Price Impact mechanism is created to deal with the behavior of whales in buying or selling large quantities of tokens and changes the price according to the order quantity.
At Adaas Capital, we hope that by reading this article you will be fully immersed in Price Impact Too High error in the UnisSwap and its solutions. You can help us improve by sharing this article which is published in Adaas Investment Magazine and help optimize this article by submitting your comments.