Uniswap V2 pool priceImpact

Question

How do you calculate the priceImpact on Uniswap v2 pools? I can't find documentation to help me. The price impact appears on the UI when you select two tokens you want to swap.

Answer 1

You can calculate the price impact using the constant product formula.

Imagine you have a pool with 2,000,000 USDC and 1,000 ETH. The price of 1 ETH is 2,000 USDC.

Using the constant product formula (x*y=k) where x is USDC and y is ETH, k is 2,000,000,000.

Now, I'm going to swap 10,000 USDC for ETH.

2,000,000 USDC + 10,000 USDC = 2,010,000 USDC

x * y = k => y = k/x = 2,000,000,000/2,010,000 = 995.02 ETH

We receive 1,000 ETH - 995.02 ETH = 4.98 ETH

Price Impact = 4.98 ETH / 995.02 ETH = 0.5%

This article covers price impact in more detail.