fix: Auto-slippage logic (#6167)

* range auto slippage from [.1% to 5%] and multiply gas by 110% instead of 10%

* remove newline

* no multiplier on gas, add comments

* consolidate constant variables

src/hooks/useAutoSlippageTolerance.ts

@@ -13,10 +13,7 @@ import { InterfaceTrade } from 'state/routing/types'
 import useGasPrice from './useGasPrice'
 import useStablecoinPrice, { useStablecoinValue } from './useStablecoinPrice'
 
-const V3_SWAP_DEFAULT_SLIPPAGE = new Percent(50, 10_000) // .50%
-const ONE_TENTHS_PERCENT = new Percent(10, 10_000) // .10%
-const DEFAULT_AUTO_SLIPPAGE = ONE_TENTHS_PERCENT
-const GAS_ESTIMATE_BUFFER = new Percent(10, 100) // 10%
+const DEFAULT_AUTO_SLIPPAGE = new Percent(1, 1000) // .10%
 
 // Base costs regardless of how many hops in the route
 const V3_SWAP_BASE_GAS_ESTIMATE = 100_000
@@ -67,8 +64,10 @@ function guesstimateGas(trade: Trade<Currency, Currency, TradeType> | undefined)
   return undefined
 }
 
-const MIN_AUTO_SLIPPAGE_TOLERANCE = new Percent(5, 1000) // 0.5%
-const MAX_AUTO_SLIPPAGE_TOLERANCE = new Percent(25, 100) // 25%
+const MIN_AUTO_SLIPPAGE_TOLERANCE = DEFAULT_AUTO_SLIPPAGE
+// assuming normal gas speeds, most swaps complete within 3 blocks and
+// there's rarely price movement >5% in that time period
+const MAX_AUTO_SLIPPAGE_TOLERANCE = new Percent(5, 100) // 5%
 
 /**
  * Returns slippage tolerance based on values from current trade, gas estimates from api, and active network.
@@ -102,12 +101,12 @@ export default function useAutoSlippageTolerance(
     // if not, use local heuristic
     const dollarCostToUse =
       chainId && SUPPORTED_GAS_ESTIMATE_CHAIN_IDS.includes(chainId) && trade?.gasUseEstimateUSD
-        ? trade.gasUseEstimateUSD.multiply(GAS_ESTIMATE_BUFFER)
-        : dollarGasCost?.multiply(GAS_ESTIMATE_BUFFER)
+        ? trade.gasUseEstimateUSD
+        : dollarGasCost
 
     if (outputDollarValue && dollarCostToUse) {
-      // the rationale is that a user will not want their trade to fail for a loss due to slippage that is less than
-      // the cost of the gas of the failed transaction
+      // optimize for highest possible slippage without getting MEV'd
+      // so set slippage % such that the difference between expected amount out and minimum amount out < gas fee to sandwich the trade
       const fraction = dollarCostToUse.asFraction.divide(outputDollarValue.asFraction)
       const result = new Percent(fraction.numerator, fraction.denominator)
       if (result.greaterThan(MAX_AUTO_SLIPPAGE_TOLERANCE)) {
@@ -121,6 +120,6 @@ export default function useAutoSlippageTolerance(
       return result
     }
 
-    return V3_SWAP_DEFAULT_SLIPPAGE
+    return DEFAULT_AUTO_SLIPPAGE
   }, [trade, onL2, nativeGasPrice, gasEstimate, nativeCurrency, nativeCurrencyPrice, chainId, outputDollarValue])
 }