What is price impact?

When a large transaction is executed on a blockchain, it can cause a significant change in the price of the asset being traded. This is called price impact.

If the market has a large amount of liquidity, a single transaction is unlikely to have a significant impact on the price. However, if the market has low liquidity, a large transaction can cause the price to move significantly.

If you make a swap with rare tokens for a large amount, it may have a significant price impact.

But you don't have to worry, you will know about the impact on the price before you make a swap. In case of a significant price impact, you will see the percentage of influence next to a yellow or red warning triangle.

A transaction can cause price impact if the market has low liquidity