Slippage Budget¶
Entry Slippage¶
Example:
Quoted price: $0.93
Max execution: $0.93 × 1.005 = $0.93465
If execution would exceed $0.93465, reduce order size or abort
If slippage exceeds budget:
1. Reduce assets in the openPosition() call
2. Wait for better market conditions (larger order book depth)
3. Do not enter the position if depth is insufficient — the market fails the selection criteria
Exit Slippage (Emergency Only)¶
This applies exclusively to emergencyLiquidate() — the only path where the vault sells NO shares.
Why 2% (not 0.5%): - Emergency liquidation occurs when the system is under stress - Market liquidity may be reduced - 2% is the outer limit; the operator should target less if possible
Slippage management for emergency liquidations:
- Sell in small increments across multiple calls
- Allow the order book to recover between calls (minutes to hours)
- If a sell would exceed 2% price impact, reduce maxShares for that call
Normal Operation: No Exit Slippage¶
In normal operation, the vault never sells NO shares. The only exit paths are:
1. Waiting for positions to settle naturally (NO wins at $1.00 — no slippage)
2. Investor withdrawals processed from idleReserve (no market interaction — no slippage)
The 2% emergency exit budget is a worst-case cost that should almost never be incurred.