📊Positive Slippage Capture
Positive slippage is one of LiquidSwap's unique value propositions - when your trades execute better than expected, you benefit from the improvement while sharing the upside with integrators and the protocol. This guide explains how this innovative mechanism works and why it benefits everyone.
What is Positive Slippage?
Traditional Slippage vs Positive Slippage
Traditional Slippage (what you expect):
You quote 100 tokens out, but only receive 98 due to price movements
This is "negative slippage" - you get less than expected
Positive Slippage (the bonus):
You quote 100 tokens out, but actually receive 102 due to favorable conditions
This is "positive slippage" - you get more than expected
Why Positive Slippage Occurs
Positive slippage happens when market conditions improve between quote and execution:
Favorable Price Movements: Token prices move in your favor during execution
Better Liquidity: More liquidity becomes available than initially calculated
Arbitrage Capture: LiquidSwap's routing captures arbitrage opportunities
How LiquidSwap Captures Positive Slippage
The 50% Capture Model
LiquidSwap captures 50% of positive slippage above the expected amount:
Example Calculation:
Expected output: 100 USDT
Actual execution: 103 USDT
Positive slippage: 3 USDT
Captured amount: 1.5 USDT (50% of 3 USDT)
User receives: 101.5 USDT (still 1.5% better than expected!)
Why 50% Capture?
This rate balances several factors:
User Benefit: Users still receive significant upside from better execution
Protocol Sustainability: Revenue supports ongoing development and infrastructure
Integrator Incentives: Shared revenue encourages ecosystem growth
Market Competitiveness: Maintains competitive rates vs other aggregators
Distribution of Captured Slippage
With Integrator (feeRecipient Set)
feeRecipient Set)When an integrator has configured a feeRecipient address:
50% to Integrator: Rewards integration and user acquisition
50% to Protocol: Supports infrastructure and development
Without Integrator (feeRecipient Not Set)
feeRecipient Not Set)When no integrator is involved:
100% to Protocol: All captured slippage supports protocol development
Zero-Fee Integration Strategy
Smart integrators can earn revenue without charging explicit fees:
feeBps = 0 (no trading fees)
feeRecipient = "0xYourAddress" (still earn positive slippage)This creates a win-win: users pay no explicit fees, but integrators still earn from positive slippage.
When Positive Slippage is Most Common
High-Frequency Scenarios
Volatile Market Conditions: More price movement = more slippage opportunities
Multi-hop Routes: More complex routes = more arbitrage capture potential
Cross-DEX Arbitrage: Price differences between DEXs create opportunities
Benefits for All Participants
For Traders
Immediate Benefits:
Always receive more tokens than minimum expected
Protected from negative slippage while benefiting from positive
Better overall execution vs traditional aggregators
Long-term Benefits:
Contributes to a sustainable protocol that continuously improves
Benefits from ecosystem growth driven by integrator incentives
For Integrators
Revenue Stream:
Earn from positive slippage even with zero explicit fees
Predictable revenue model aligned with user success
Incentive to drive volume and user adoption
Competitive Advantage:
Offer users better execution while earning revenue
Transparent value proposition vs traditional fee models
Growth aligned with user benefits
For the Protocol
Sustainable Development:
Revenue funds ongoing optimization and new features
Incentive structure grows ecosystem participation
Continuous improvement benefits all users
Final Remarks
Unlike traditional aggregators that keep all positive slippage, LiquidSwap:
Shares benefits with users (who keep 50%)
Rewards ecosystem participants (integrators)
Maintains protocol sustainability (development funding)
Continued development focuses on:
More sophisticated arbitrage detection
Cross-chain arbitrage opportunities
Integration with external liquidity sources
The positive slippage mechanism represents a fundamental shift from zero-sum fee extraction to value creation and sharing, aligning all participants' incentives toward better execution and ecosystem growth.
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