How to Reduce Price Impact on Uniswap: A Comprehensive Guide

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A price impact error is a problem that you need to address. It is not something you should ignore. Because if you do so, you will lose your investment.

Moreover, It is a standard error, especially in crypto.

On the Ethereum blockchain, Uniswap decentralized exchange has become one of the most rising platforms for swapping tokens. Despite this, consumers still meet several issues in terms of user comfort.

One of the issues is that a pop-up message that says “price impact too high” appears. If you’re having the same issue, worry no more.

The good news is that there are just a few steps to fix this issue.

This article will learn why the error appears. You will also discover how to solve it.

Without further ado, let’s discuss ways to reduce Uniswap’s price impact and why you’re seeing it.

What is Price Impact?

The impact of trade (buy or sell) on the current market price of an underlying asset pair (e.g. Ethereum Blockchain) is known as price impact.

It is relative to the amount of money available in the pool. Moreover, there can be a “price impact too high” error in some decentralized exchanges. It causes traders to lose a large portion of their money.

The Price Impact Mechanism, on the other hand, may be able to resolve this problem. Using this mechanism, the buy or sell transaction of a crypto asset on a DeFi Exchange becomes inversely connected to its trading amount.

It also prevents an entity from buying or selling a big amount of tokens. Furthermore, it adjusts the selling price based on the order quantity.

What are the Causes of High Price Impact on Uniswap?

You need to know what the “Price Impact too High” error implies. It would help if you also understood why you see it on UniSwap when you try to trade many tokens.

“Price Impact too high” signals that the Ethereum Blockchain is congested. It can also mean a few liquidity pools of the token you want to trade.

If you try to trade a token on a busy chain or have a little liquidity pool, Uniswap will not finish the transaction. More liquidity, less price impact.

Hence, it will result in an error.

Furthermore, consumers can determine gas fees by the amount of congestion at the moment of the transaction rather than the volume of transactions.

If you exchange a small desired amount, Uniswap is not the best option.

How To Fix Price Impact on Uniswap?

“Price Impact Too High” error is a problem taking place in Uniswap decentralized exchanges.

There are several ways to fix this issue. We’ve outlined the greatest ones below:

Transfer to various Uniswap versions

Switching to other versions is one of the best solutions to fix Uniswap’s “Price impact too high” error. Uniswap is now available in three versions: V1 (the old version), V2, and V3 (the new version).

In UniswapV1 or UniswapV2, some token pairs may have many big liquidity pools, but not in UniswapV3.

Liquidity issues are the most common reason for mistakes. Thus, moving to other versions with big liquidity pools is an excellent step.

It is an excellent answer to fixing the problem.

To switch Uniswap versions, pick V1 from the bottom navigation bar as the version you wish to use to complete the trade.

Then, you need to check the box. It is to verify that you’ve read and understood the disclaimer before proceeding with the transaction with V1.

Break transactions down into smaller amounts.

A cryptocurrency can have a very low price. It will allow you to buy them for very small amounts.

Price impact mechanisms can be difficult for large trades because there aren’t many enough liquidity pools.

The immediate solution is to reduce the number of crypto tokens available to buy and sell.

For example, Using Uniswap, you wish to take out 100,000 tokens as a single trade. It would be best if you stopped for a while. Divide that into five small parts; each small transaction can buy 20,000 tokens.

When buying tokens in bulk, this will have less price impact.

Adjust the Price Slippage Tolerance

Change the price slippage to complete the trade. It is the real fix if you have trouble trading cryptocurrencies on Uniswap because of the “Price too high” error.

The rise in price slippage helps in the completion of trades. It is helpful to lessen excessive price fluctuations. It also is beneficial for the lengthy process of recording transactions on decentralized exchanges.

To execute this, click on the gear icon in the Uniswap DEX, then try to adjust the price slippage tolerance and verify it. To determine the appropriate slippage tolerance, read the white paper of the token you wish to trade.

Final Thoughts

Traders can also use other easy methods, such as ensuring high-speed internet or updating their devices. Changing to a different browser can also help with the Price Impact Too High error.

On Uniswap, liquidity concerns are the most likely cause of the “price impact too high” error. If the token you’re trying to swap has these issues, you’ll almost surely get an error message.

Fortunately, various workarounds for this problem on Uniswap work, and we’ve identified a few of them for you.

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