What is Price Impact?
Price impact refers to the change in the price of a token caused by a specific trade. Price impact depends on the size of the trade and the depth of the liquidity pool. When the swap amount is large relative to a smaller liquidity pool, the amount received from the swap will be reduced.
To safeguard our users from unfavourable price impact, Squid has incorporated price impact warnings within our app. We also implement restrictions on swaps where the price impact exceeds 5%.