> For the complete documentation index, see [llms.txt](https://docs.zofinance.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.zofinance.io/trade-on-zo/start-trading/price-impact.md).

# Price Impact

### Overview

Price impact on ZO is a **simulated spread** that adjusts execution price based on **open interest (OI) skew**. It behaves like orderbook slippage: the more crowded one side (long or short), the worse execution gets for new trades on that side. It does not change the underlying oracle price; it applies a configurable spread on top of it at execution time.

Typically you can see the simulated spread for a market in the **depth tab** of the **chart section**:

<figure><img src="/files/NkOXCbwGqgF8ApJwNdc3" alt=""><figcaption><p>Simulated Spread for SUI-USD Perps Market</p></figcaption></figure>

### Why it exists

* **Fairer execution** — Trades that add to the crowded side get a worse price; trades that reduce skew can get a better effective price.
* **LP protection** — Reduces adverse selection by making it more expensive to pile into the same direction when OI is already skewed.
* **Predictable caps** — Spread is bounded by a configurable maximum (e.g. up to 10% total spread cap in the implementation).


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