Where did my profit go? A Closer Look at Crypto Fees

Where did my profit go? A Closer Look at Crypto Fees

Most exchanges have two types of fees for orders: maker fees and taker fees. Read further to better understand what they are, why one is usually higher than the other, and to understand fee structures at a few of the top exchanges in the market.

What are maker fees?

Maker fees are imposed on orders that provide liquidity to the market, which increases the size of the order book. Maker fees are only paid by a trader if the order isn’t immediately fulfilled by the exchange. This happens when a limit buy order is placed below market price or when a limit sell order is placed above market price, which means the order stays in the order book longer until there is another order to match it.

What are taker fees?

As you might’ve guessed, taker fees are the opposite of maker fees--charged on orders that take liquidity away from the market. A maker fee is paid on all orders that occur at market price, or market orders. A stop-loss order is an example of an order that will incur a taker fee, as it converts into a market order when the stop price is hit.

Why are maker fees lower than taker fees?

Exchanges like liquidity. More liquidity means that exchanges can support larger transactions, which means they earn more fees! This is because there are more users actively trading the cryptocurrency on the exchange and they help to stabilize the price as a result.

Because makers add liquidity to the market by placing limit orders, they receive the benefit of discounted fees if their transactions are not immediately fulfilled. On the other hand, takers are required to pay higher fees because they are taking liquidity from the market by reducing the size of the order book, and reducing the stability of the price as a result. A taker fee is only charged when the order is fulfilled immediately.

So why would someone be willing to incur a taker fee when they can just use limit orders all the time and face only the lower maker fees? The problem is that limit orders aren’t always fulfilled, especially when the market is highly volatile. Market orders, however, are always fulfilled. So while you may pay a higher fee, you receive the benefit of a guarantee that your order will be fulfilled.

Maker and taker fees on top exchanges

Coinbase Pro

Both maker fees and taker fees start at 0.5% if the order is less than $10k. As order size increases, both fees decrease, with maker fees decreasing faster than taker fees. For example, If you’re trading between $50k and $100k, the maker and taker fees are 0.15% and 0.25%, respectively. Orders above $2 billion incur a 0.04% taker fee and no maker fee. Kraken

Maker and taker fees vary based on the type of trading pair. For standard trading pairs, the maker fee starts at 0.16% and the taker fee starts at 0.26%. For stablecoins and forex pairs, both the maker fee and taker fee start at 0.20%. These fees can be as little as 0.00% based on the trader’s current 30-day trading volume. Binance US

Maker fees and taker fees start at 0.100%. Maker fees can decrease to as much as 0.000% and taker fees to as much as 0.020%. Orders made using Binance Coin (BNB), Binance’s in-house currency used primarily for paying fees, receive a 25% discount.

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