What Are Maker Fees And Taker Fees In Crypto Trading

Crypto exchanges levy certain fees for trading on the platform. If you have been trading on crypto exchanges, you should have encountered certain terms like maker and taker fees. As a crypto trader, you need to know what these fees are. 

What are Maker fees?

To explain in simple terms, makers bring liquidity to the market for other traders. 

The order that a maker place adds liquidity to the order book. When another trader picks it up, it helps ‘make the market’. 

The limit order on an exchange is not executed or filled immediately. It is triggered when the asset's price falls or rises above a certain limit. When you place an order, you, as a maker, must pay a maker fee.

For your order to be a maker order, the sell order you place must be higher than the highest buy order, or the buyer needs to place a buy order that is lower in value than the lowest sell order. 

Generally, maker fees are lower than taker fees as this attracts traders, thereby generating liquidity on an exchange. One drawback of being a maker is that you often may have to wait sometime to fill your orders. This happens as the market takes time to trigger the set limit price. Makers also receive a transaction rebate for providing liquidity. The customers pay a charge for utilising that liquidity.      

What are taker fees?

Takers are those traders seeking trading options they can fill as quickly as possible. Such trading options can be market orders. As a trader, you must sell or buy orders to fill the orders in the order book. On execution, you have to pay the takers fee. 

Let’s take an example for better reference. 

Suppose a trader placed a buy order for 10 Ether. They fill a market order for this particular trade. As it is a market order, it will fill almost immediately. However, the market order will only get accepted if sufficient liquidity exists in the order book for this buy order. 

As a market order is available regardless of the prevalent asset price, takers will buy the order for 10 ETH without delay. In exchange, they have to pay a higher fee for the convenience of makers and the exchange platform. 

This fee that you pay for the easy liquefaction is the taker’s fee.

The maker and taker fees vary across exchange platforms. Considering providing liquidity or utilising it on such a platform, consider their maker and taker fees. Comparing various platforms based on fees is a good practice to help you achieve suitable profits.