Maker and Taker Fee for Crypto Traders Explained!

Maker and Taker Fee for Crypto Traders explained!

The Cryptoverse is vast, big enough for you to learn every day about the numerous technologies and their underlying assets and still not learn enough. This also means neverending investing and trading opportunities. 

However, it is also critical to be aware of the underlying fee requirements when you are trading in these assets. Essentially, within the crypto domain, these fees are divided into two segments: Maker and Taker Fees. So what exactly are they?

There are always two individuals in any transaction, similar to how Buyers & Sellers exist in the equities world:

  • Makers “create or make a market” for other traders and help bring liquidity to any exchange.
  • Takers, on the other hand, remove liquidity by “taking” available orders that are filled immediately.

What are Crypto Trading Fees?

Trading crypto assets is always accompanied by a minor fee attached to them. And these trading fees are set in place for exchanges to work more efficiently and provide a seamless end-to-end experience for traders. Crypto trades also help in keeping tabs of the transactions taking place, thus acting as an authentication mechanism.

In general, when calculating trading fees on a crypto exchange, all orders are divided into two categories: those who are charged with maker fees and those who are charged with taker fees.

What is a Maker Fee?

An order that adds liquidity to an order book until another trader buys it helps in making the market. To explain it further, a limit order set for trade is usually not filled immediately. The limit order’s execution is only triggered once the price of an asset such as Bitcoin or Ethereum rises or falls below a certain limit already set by the trader. Thus, any trader who places an order like this makes liquidity in a market for other traders. By placing this order, the trader adds funds or liquidity to the order book and is regarded as the maker for providing other traders with new options.

Being in the role of a maker comes with having patience as it will often take makers longer to fill their orders, that is until the market activates or triggers the set limit price. 

What is a Taker Fee?

The other segment or Takers are traders who are looking for immediate trading options or trades that can be executed as quickly as possible. The easiest solution available for them is the market order, given they are also based on immediacy. Once they find an order suitable for them, the Takers place either buy orders or sell orders in order to book and pay taker fees upon execution of the same.

Market orders are available regardless of the current price of an asset. 

Note: Taker fees are usually slightly higher than maker fees to incentivize market makers.

As a whole, a crypto exchange has an essential interest in traders creating more liquidity and larger trading volume on its platform. Therefore, exchanges also incentivize their traders accordingly. 

Below is the chart depicting the dynamic Maker and Taker Fees for CoinDCX :

These fees have been structured so as to give CoinDCX customers one of the best transaction fees in the market.

Got more questions? Simply visit CoinDCX for more information.

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