The price impact of a user's individual trade on the market price of an underlying asset pair is known as price impact. It is proportional to the amount of liquidity available in the AMM. Price impact can result in fund losses if the illiquid markets are too high.
--> Let’s take the example of the price impact. In the case of the illiquid market, Alice might trade $90 worth of BNB for $70 worth of C98. It might be caused by the price impact.