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Clipping is a form of distortion. It is where the waveform peaks go outside the boundaries of the digital domain in which it exists - for example, a 16bit value (like on CD audio)can be anything from 0-65,535 - Psycle mixes down to 16bits before sending to the soundcard (dithering), but uses an internal resolution of 32bits, which can have a value of 0 - bloody loads, so consequently, if a value is sent to the soundcard which is higher than the 16-bit domain, it is clipped at the maximum 16 bit value by the dithering process, and comes out looking like a square wave, or distortion. More advanced dithering processes exist which counteract this, but with care, you shouldn't need to worry about this, if you maintain sufficient headroom.