Price Impact

The change in the token's value resulting from a trade in a pool is referred to as Price Impact. This is calculated as the discrepancy between the current market value and the effect that the trade has on the overall liquidity within a pool. The degree of Price Impact experienced is contingent on the volume of the liquidity pool.

When there is high liquidity in the pool, the effect of your trade on the token's price may be minimal. In contrast, when liquidity is low, the impact of your trade on the token's price may be more significant. Consequently, a larger price impact may result in a less favorable overall price for the trade.

It's important to keep in mind that the rate of price impact is continually fluctuating as the total value of the liquidity pool shifts based on the supply and demand of each token.

In the event of an anticipated high Price Impact, USDFI will issue a warning as the swap may result in a significant loss. The decision to proceed with the transaction despite the warning is at the user's own risk.