What is price impact?

Price impact refers to the immediate effect your swap has on a token's price. Swapping a large amount relative to the liquidity available in the pool will result in a greater price impact.

For example, if you attempt to buy 1,000 CTC in a CTC/USDC liquidity pool that holds only 5,000 CTC and 5,000 USDC, your trade will significantly move the market. This results in receiving fewer USDC per CTC compared to swapping a smaller amount, such as 10 CTC Price impact can be seen on Penguinswap on each swap as shown below: