Cryptocurrency exchanges charge certain trading fees for traders to trade on their exchange. These trading fees depend on many things, and the type of orders you place is one among them.
In addition, depending on whether you are a market maker or a market taker, you will also have to pay a certain maker and tracker fee.
In this article, we will talk about maker and taker fees, their pros and cons, and maker-taker fees charged by different crypto exchanges.
Maker vs. Taker Fee Explained
Here is something for you to understand in a simple language:
When you place an order and fill it immediately and totally, you are called a “taker,” and you are eligible for a “taker” fee for the concerned trade.
When you are a taker, you are “taking” the price you want, at the immediate moment, by buying or selling limited orders you hold on the books.
On the other hand, when you place an order that doesn’t fill immediately, you are a “maker,” and you are subject to a reduced “maker” fee for this.
The taker fee is usually on the higher side than a maker fee. This builds an incentive to place orders on the books, and other traders can buy them via market orders.
So, you might want to be a “maker” in a market that runs on a maker/taker fee structure and rewards makers. Though every exchange runs a maker-taker fees model, known crypto exchanges such as GDAX and Kraken do.
Hence, if you wish to trade on credible and known exchanges, you must know about maker-taker fees on these exchanges. We will know in detail about Kraken, later in the article.
Well,
There are a few more things you should know while understanding maker-taker fees:
- Markets that deal in several high-frequency trading can be subject to rapid trading that hampers liquidity and distorts prices (This can be advantageous for short-term traders who want to make quick and big profits, however, it can hurt long-term traders).
- Exchanges can reserve the right to charge maker-taker fees to stop undesirable behaviour. Exchanges can often charge a premium for traders who trade quickly.
Market Maker
A market maker is a firm or an individual that buys or sells assets from their own account. They make the order books and add liquidity to the market.
Market makers earn from the spread between the asset’s bid and profit price as they have taken a risk of holding on to the asset, knowing that its price could decline.
Exchanges hence also offer various critical market insights to market makers, which helps them to gain a profit.
Market Taker
A market maker is a firm or an individual who completes a market order by accepting it. Market takers are also called liquidity takers as they take from the order book.
Market takers buy assets at the asking price with a hope or a belief that the bought assets would increase the portfolio’s value in the short or long run.
Pros & Cons Of Maker & Taker Fee Model
The maker and taker fee model is used by many crypto exchanges in the market, and it comes with certain advantages and disadvantages.
- Maker Fee:
Most of the exchanges keep their maker fees lower than taker fees in order to motivate traders on the platform to bring more liquidity and market depth. If a trading exchange platform has positive liquidity, it means that there is market interest.\
The presence of higher liquidity in the order books also means lower spreads between the bid and ask value. This also means other traders can open positions with minimum slippage and open large position sizes.
However, maker fees also come with certain disadvantages. One of the disadvantages is that maker orders can take time for a buyer to fill. Sometimes if the order is thin or there is no buyer willing to accept it, the order can stay in the order book and never be filled.
- Taker Fee:
The advantage of going for a taker order is the order will be filled immediately on the exchange at the present market price. Here a trader can open a trade immediately without waiting for other traders to fill the order.
However, there is one disadvantage with taker orders. Some exchanges will charge a higher fee for letting go of liquidity from the exchange and matching the order immediately.
Now that you have understood how the maker and taker fee model works, it is time to know the varied maker and taker fees charged by known crypto exchanges.
Let us start:
Maker Taker Fees In Coinbase
Coinbase calculates maker takers fees based on the pricing tier you are in at the time of placing the order and not on the tier you would be in once the trade is completed. Coinbase recalculates fee tier hourly based on your total trading volume.
The taker fee charged by Coinbase is between 0.04% and 0.50%. This means when you place an order at the market price, and it gets filled immediately, you are subject to pay a taker fee somewhere between 0.04% and 0.50%.
On the other hand, the orders that are not immediately matched by buyers’ orders are placed in the order book. If traders place an order that matches the one you placed, you become eligible for a fee between 0.00% and 0.50%. This is your maker fee.
There is a third scenario, where your placed order is immediately matched (but partially). Here, you pay a taker fee for the portion that is matched. The remainder of the order goes in the order book and will be considered a maker order when matched.
Maker Taker Fees In Kraken
Kraken Futures calculates maker-taker fees as a percentage of the notional order price for a matched trade. The fee is calculated on your 30-day rolling quantity, which means the more you trade, the lesser you have to pay on subsequent trades.
Below is how you can calculate the fee amount for your trade:
Let us understand it with one example:
Traders, namely X and Y, belong to the second level of the fee schedule, where the taker fee is 0.04%, and the maker fee is 0.015%. Trader X sends a market order for 100,000 contracts (100,000 USD) of Bitcoin-USD Futures which is matched with a limit order already sitting in the order book of Trader Y.
The trade price is 5,000 USD/BTC
The notional value of the trade in the form of BTC is 20 BTC
Trader X is subject to a taker fee of 0.008 BTC (0.04%)
Trader Y is subject to a maker fee of 0.003 BTC (0.015%)
Both amounts are transferred immediately once orders are matched.
Maker Taker Fees In Bitfinex
On Bitfinex, the amount of every transaction fee and the rebate is decided as a percentage of the trade value.
The counterparties who add liquidity to BFXD’s order books are subject to maker fees. These fees are applicable upon both the execution of a limit order placed by the counterparty and the order which was in the order book prior to the execution. If your maker fees are negative, you will have to pay a rebate.
Contradictory to maker fees, taker fees are paid by the counterparties who take off liquidity from the order book by immediately filling the order from the order book.
Maker Taker Fees In Bybit
Here is an exchange that claims to offer a cost-effective fee structure so its traders can open positions and place orders with maximum profit.
The exchange offers maker rebates to encourage market-making activities in order to offer better market depth. Bybit charges a Zero maker fee and the lowest taker fee.
The exchange charges you only a net fee of 0.05% per transaction from the taker and maker fees borne by derivatives traders.
Bybit keeps maker and taker fees separate depending on the speed at which the order gets filled.
Taker Fee: Order Value × Taker Fee Rate
Maker Fee: Order Value × Maker Fee Rate
Maker Taker Fees In Binance US
One of the USPs of Binance.US is its low fee structure. It charges you a maximum of 0.1% maker/taker fee. Below is the detailed chart showing different 30 days’ trading volume windows and maker-taker fees charged by Binance US on each volume window.
Binance is trusted by many new and expert crypto traders as it allows them to earn the maximum.
Maker Taker Fees In BitMEX
BitMEX platform charges standard trading fees for all products to maintain simplicity and transparency in trading activities. The Maker Rebate charged by BitMEX is 0.01%, and the taker fee is 0.05%.
The exchange also offers you discounted taker fees if you are a high-volume trader. These fees are applicable to all products automatically depending upon your 30-day Average Daily Volume at 00:00 UTC.
However, it keeps all the rights to update fees of individual contracts. The exchange also reserves the right to suspend or partially apply fee discounts.
From 00:00 UTC on 30 July to 23:59 UTC on 29 August, we’ll be dropping both maker and taker fees significantly on all ETHUSD products on BitMEX. The temporary fee reductions will be as follows:
Maker Fee: Reduced to 1bp from 2.5bps (1.5bps decrease)
Taker Fee: Reduced to 5bps from 7.5bps (2.5bps decrease)
Maker Taker Fees In FTX
FTX runs on a tiered fee structure where the fees you pay are based on your 30-day trading volume. It also has a maker-taker model.
Below is the fee structure on FTX.US:
Example With Bitcoin’s Price
We have talked enough about the meaning of taker and maker fees and how different exchanges charge their fees, and how much maker-taker fees are changed by them. Now is the time to understand the same with the BTC example.
Suppose trader A wishes to purchase 1 Bitcoin for 10,000 Euros, so he puts a buy limit order and wishes the price to go down to EUR 10,000 so the order gets filled.
On the other hand, there is trader B, who wishes to sell 2 BTC with a sell limit of 2 BTC at EUR 10,000. Once this order is placed, it will immediately match Trader A’s order, and A will pay a maker fee, and B will pay a taker fee for the 1 BTC.
However, as only 50% of the order is filled (1 BTC out of 2 BTC), the remaining 1 BTC stays in the order book. In the future, when trader C places an order for the remaining 50% of BTC of that order, then trader B will be subject to the maker fee.
Conclusion
Frequency and amount or percentage of fees you as a trader have to pay while trading on any crypto exchange plays an important role in deciding your profit earnings from each trade.
The maker-taker fee is one of the fees every crypto trader who is dealing in orders such as limit orders has to pay.
The article has tried to give you an idea of how the maker-taker fees work and how they can benefit your trade and profit-earning opportunities.
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