Maker and Taker fees is explained for bitcoin and crypto trading with focus on Binance trading site.
What does maker and taker fee mean and how can I benefit from it?
If you asked yourself this question, then we have the answer you were looking for.
In this crypto trading guide, we go over the maker and taker fee structure for crypto trading, its benefits and how it differs from spreads.
We also provide specific maker and taker fees schedules from some of the top Bitcoin trading sites.
What is Maker and Taker Fee?
Almost all crypto trading sites charges maker and taker fees for trading. But how do they differentiate?
- A maker is a trader who adds liquidity to the order book.
- A taker is a trader who takes liquidity out from the order book.
As noticed, there are two types of investment that carry different fee structure. These are maker (when trade adds to the platform’s liquidity) and taker orders (when traders take out the liquidity from the platform).
Maker orders do not close immediately but rather linger in due to price limits. Thus, they “make” the market, keeping it active. Takers file out immediately, “taking” the value out of the market. Thus, maker fees that activate the market and keep it that way usually come with reward of low fees. Takers charge regular trading costs, most of the time.
Maker trading fees are always lower than taker fees since all trading sites appreciate when liquidity is added to their order books.
How to see makers and takers in an order book?
The order book keeps all transactions as records within the market. In that way, traders can see just how active the website is and can track down trends.
A market maker adds liquidity to the order book and a market taker removes liquidity from the order book.
It can contain order size, value price of the crypto and time released. You can check out the example of the order book in a snapshot below. The buy and sell price differences is called value spread, which we will cover in next section of this article.
Platforms that manage their own volumes for trade usually implement maker and taker cost program. Through them, the company hopes to keep liquidity high enough to attract new customers and keep old ones.
Maker and Taker Fee VS Spreads
Spreads are simple differences between buy and sell value for the cryptocurrency. They are not costs per say but they do have implications for traders to consider. If spread stands at 1.5%, it would mean that it goes both ways. With no other costs to account for, spreads become the main source of income for platforms.
As for traders, they have to catch quite large fluctuations in price value, which is not the case with fees. Maker and taker fees account for any sort of price change, allowing a trader to make a profit even from smallest price fluctuations. Spreads, however, do not, a trader needs to pass the upper/lower price limit to actually make a profit.
Who is a Market Maker?
When you add a limit order to the order book, you are a market maker.
For big traders, like institutions for instance, it´s common to take the role as market makers. Of course, small traders can become makers by placing a limit order into the order book also. However, this doesn´t add as much liquidity as an institution can be able to do.
Who is a Market Taker?
A market taker is a trader removes liquidity from the market. That liquidity was provided by the market maker.
For a taker, orders on the order book are filled immediately.
Maker and Taker Fee on Binance
Binance apply maker and taker fee to all trading fees charged by Binance.
In the screenshot below, you can see the maker and taker fee for spot trading.
Note that Binance is offering several different ways to pay a lower commission.
One way is to hold 500 BNB of the native token which will give you 25% lower fees.
The other way to get lower fees on Binance is to use our referral ID which will give you another 20% lower fees on Binance.
If you want to read further about fee on Binance you should check out our dedicated article, Binance trading fees.
Maker and Taker Fee on Bitfinex
Bitfinex – This platform employs a maker and taker fee structure according to the value traded. With higher value during the month (30 days) the lower fee would apply for the order.
Taker costs range from 0.20% down to 0.055%, as seen in a snapshot below. However, maker fees can go from 0.1% down to 0% with sufficient value traded. Read more about this platform in our Bitfinex review.
Maker and Taker Fee on Kraken
Kraken – This trading platform offers much the same program expect it uses volumes, instead of value. It serves as an example of how different marketplaces can use different metrics, depending on what they are after – value or volume.
Taker fees range from 0.26% to 0.10% while maker fees go between 0.16% and 0%. Read more about this platform in our Kraken review.
Maker and Taker Fee on BitMEX
BitMEX – Lastly, BitMEX has its own program for maker and taker fee structure. The company offers reimbursements for order types, rather than value or column traded. Thus, maker fees for leveraged orders range from -0.025% to -0.050%.
Taker fees work between 0.075% and 0.025%, depending on the cryptocurrency and type of contract. You can check out the details in a picture below. Read more about this trading platform in our BitMEX review.
Conclusion for Maker and Taker Fee
In this article, we answered the question: what do maker and taker fee means and how can I benefit from it?
In terms of benefits, maker and taker fees provide an opportunity for traders to earn as little as possible and incur smaller losses than with spreads. Furthermore, the fee program helps marketplace keep liquidity and traders a place to invest.
To complement knowledge, we would recommend our readers to check out our articles about crypto trading platforms with the lowest trading fees.