# 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="https://4240345497-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWPFvIGwhGu6StbcPdpCB%2Fuploads%2FiZ9BoRfVNXSkSXh7qwKs%2FScreenshot%202026-03-05%20at%203.27.34%E2%80%AFPM.png?alt=media&#x26;token=7cb0f10a-97b6-4b64-8054-a525f92d79d0" 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).