How To Fix Price Impact Too High on a PancakeSwap Transaction

Decentralized cryptocurrency exchanges like PancakeSwap make it easy to buy and sell digital currency. However, these platforms also have their challenges. The “Price Impact Too High” is an error encountered when carrying out a transaction on PancakeSwap. This problem usually occurs on the V2 version of the exchange. Facing this issue can be very frustrating as it means you will be unable to liquidate your tokens.

This tutorial will look at why the “Price Impact Too High” error occurs and what you can do to fix it.

What Is Price Impact Too High on PancakeSwap?

The price impact mechanism in decentralized exchanges like PancakeSwap, causes the purchase price of a token to be inversely related to its value.

For example, if you want to buy a token that costs $10, the exchange will consider what percentage $10 represents. If $10 is 20% of the liquidity pool, the price impact mechanism will raise the transaction price. The higher fee discourages large trades from taking place and offers stability to the trading pool. When you receive a “Price Impact Too High” error, it means that you will lose a large portion of your money to complete the transaction.

Price impact directly relates to the liquidity pool. It measures your transaction’s effect on the funds allocated to the pool. Therefore, the price impact is high when you try to buy tokens in limited supply.

Why Does Price Impact Too High Occur in PancakeSwap?

The “Price Impact Too High” error began to occur in PancakeSwap when the platform migrated to the new exchange version in April 2021. The migration period from V1 to V2 meant that some liquidity pools were still in V1 and had not switched to the new platform. The result was less capital in V2, causing the price impact mechanism to kick in with large transactions.

PancakeSwap is no longer supporting the V1 version of the platform. As more developers move their funds to the upgraded exchange, “Price Impact Too High” errors should decrease as liquidity in the pools increases.

How to Resolve Price Impact Too High on PancakeSwap

You can use several methods to resolve the “Price Impact Too High” on PancakeSwap. These troubleshooting techniques will allow you to swap or liquidate your tokens.

Switch to the Older Version of PancakeSwap

The “Price Impact Too High” message occurs in PancakeSwap because there isn’t enough liquidity in the V2 platform. While waiting for developers to migrate to V2, you can switch back to V1 to carry out your transactions. Although developers are moving to the updated exchange, some still have most of their funds in V1. Check out how to switch back to the V1 version of PancakeSwap.

1. Open PancakeSwap and connect your cryptocurrency wallet.
   
2. Scroll down to the bar at the bottom of the PancakeSwap page.
   
3. Tap V1 (old) located at the center of the bar.
   
4. A pop-up message will appear informing you that V1 is no longer supported.
   
5. Tick the box that says you understand the pop-up message.
   
6. Hit the “Continue to V1 anyway” button.
   

You will now have moved from the V2 platform, which is the default setting. You can now carry out transactions without the “Price Impact Too High” error. The token you are trying to swap will probably be available in the old version of the exchange as the developer prepares to migrate.

Make Smaller Transactions

The price impact mechanism calculates the percentage of liquidity you are interested in buying or swapping. The higher the percentage, the higher the fees.

A workaround for the “Price Impact Too High” error would be to carry out smaller transactions. They will equate to a smaller percentage of the liquidity pool and should not trigger the price impact mechanism.

Smaller trades may be more cumbersome to deal with as you will have to make several transactions. However, by following this method, you will be able to liquidate your tokens without losing a huge chunk of your money.

Increase Slippage Tolerance

Changing the price slippage on PancakeSwap could solve the “Price Impact Too High” error message. “Slippage” is the difference between the expected price of the trade and the price at which the exchange occurs. It usually happens when there is high volatility or as a result of a lengthy transaction process.

Increasing the slippage tolerance of a transaction may help clear the “Price Impact Too High” message. Here’s how to do that on PancakeSwap.

1. Open PancakeSwap and go to “Settings,” located in the top left corner.
   
2. Scroll down to “Slippage Tolerance.”
   
3. Input the slippage tolerance you desire.
   

There will be more flexibility to carry out your trade with a higher slippage tolerance. Also, changing the tolerance should clear the “Price Impact Too High” message.

It is essential to find the sweet spot when choosing the slippage tolerance.

A tolerance that is too high will complete the transaction but may leave you vulnerable to front-runner attacks. A front-runner attack is when another user spots your trade after it is broadcast and before it is finalized. They will then have their transaction confirmed before yours, earning a significant profit in the process. On the other hand, a slippage tolerance that is too low will cause the transaction to fail.

Check Your Internet Speed

Slow internet speed may be why you receive a “Price Impact Too High” message. A slow connection can lengthen the time it takes to complete a transaction. Longer transactions allow for price fluctuations which can trigger the price impact mechanism.

Carry out a speed test on sites like SpeedTest to ensure that your connection is operating optimally.

Change Your Browser

Sometimes, your browser may be responsible for the “Price Impact Too High” error. Switch to a different browser and relaunch PancakeSwap to see if that rectifies the problem.

Additional FAQs

Can price impact be advantageous?

Yes, there are instances where the price impact mechanism can work in your favor. If the token swap you are looking to make adds to the liquidity pool, you may trade at a discounted rate. This is known as an arbitrage opportunity and can be pretty profitable.

Retrieve Your Tokens

You may sometimes encounter a “Price Impact Too High” message when attempting to swap or buy tokens on PancakeSwap. This error usually occurs due to limited liquidity in the trading pool. As more developers migrate from the older version of the exchange, the capital supply problems in V2 should resolve themselves. Meanwhile, you can use the tips outlined in this guide to retrieve your tokens without surrendering a large amount of money.

Do you trade on PancakeSwap? Have you encountered a “Price Impact Too High” error? Let us know how you resolved it in the comments below.