Price impact

Price impact is a deterministic property of the pool's current state and the order size, and it should not be confused with slippage. Price impact is the structural, predictable effect of your order on price, given size and available liquidity, and it can be calculated before executing. Slippage is the difference between the expected and the actually executed price due to state changes between quote and execution, such as other transactions or latency, and it is managed with a tolerance setting. In short, price impact is what you cause; slippage is what the environment causes you.

It is the real cost of executing large orders in DeFi. In a constant-product AMM, the x times y equals k model of Uniswap v2, buying moves price along the curve: the larger the trade relative to pool reserves, the greater the impact, and pools with less liquidity suffer more for the same size. Uniswap v3's concentrated liquidity reduces impact within the active range. It is independent of the pool fee, which is a separate layer.

Aggregators such as 1inch, CoW Swap and 0x exist largely to route and split orders across pools and minimize impact. As a security good practice, oracles that rely only on the spot price are vulnerable to deliberately induced price impact, so robust design uses time-weighted average prices.