For those of you who want to avoid high slippage rates, there is no need to be concerned. You will find valuable tips in this blog that will allow you to reduce slippage rates on PancakeSwap. 

In this blog, you’ll learn:

  • What is PancakeSwap?
  • What is Slippage in PancakeSwap?
  • Tips to Reduce Slippage
  • And much more.

Firstly, I would like to introduce you to PancakeSwap.

What is PancakeSwap?

PancakeSwap is a decentralized exchange aka DEX is an automated market maker system that takes away the need for order books and limit orders. 

The platform has an automated process that automatically draws from one or more liquidity pools, then rebalances after trades are complete.

PancakeSwap is very straightforward to set up this decentralized platform, and no registration is required. It only needs to be connected to a wallet such as Trust Wallet or MetaMask for its full functionality to be available.

What is Slippage in PancakeSwap?

In PancakeSwap, slippage refers to the difference between the expected price of a token and the actual price of that token.

Let's say you want to buy 10 mangoes at the store. You see that each mango is $1. However, if there were breaking news due to the new variant of COVID-19, the price of all mangoes would be $100 per mango. Therefore, if you desire 10 mangoes, you will need to pay $1000 rather than just $10. 

Trading crypto on PancakeSwap can be like this as well. When people trade they might not get the same price as other people because what they are selling their crypto for is different from what someone else might want to buy. 

In other terms, it boils down to how much you are willing to bear a loss during the currency exchange. It begins with "0.1%" and keeps on increasing according to the liquidity of a particular coin or token.

In most cases, slippage set to "0.1%" results in a warning message indicating that the transaction may fail. There are some reasons that cause the error transaction:

  • Insufficient liquidity in the pool
  • Low slippage tolerance
  • Reduced gas fees

Here are some instructions to assist you in the use of PancakeSwap's slippage settings.

Using Slippage Settings on PancakeSwap

In PancakeSwap, a few settings are available for you to set the slippage for your transactions. To access the settings we have to click on the Gear icon.

In this new section, we will scroll down to find the heading entitled "Slippage Tolerance" and from there we can change the slippage percentage.

You may receive fewer tokens if you increase the slippage tolerance. Still confused? Do not worry, let me demonstrate.

In this case I will convert 0.45 BNB to Cake and receive 21 cakes with a slippage tolerance of 0.01%

Now I have set the tolerance to 15%, so I will receive 18 Cake.

Sometimes, you must speak with the token team about the slippage tolerance. Most tokens disclose their slippage tolerance on social media.