What is a maker fee vs a taker fee?

Understanding Maker and Taker Fees in Cryptocurrency Trading

Trading in the cryptocurrency market involves various costs, and one of the most important is the fee structure applied by exchanges. Two primary types of fees—maker and taker fees—are used to incentivize certain behaviors on trading platforms. These fees are not arbitrary; they are designed to encourage liquidity provision and efficient order execution. Understanding the difference between them is essential for traders aiming to minimize costs and maximize returns.

What Is a Maker Fee?

1. A maker fee is charged when a trader places an order that does not immediately get filled—this is known as a limit order. By placing such an order, the trader adds liquidity to the market, effectively 'making' the market for others.

2. Because this order sits on the order book and waits to be matched, it contributes to market depth, which benefits other traders looking to execute trades quickly.
3. Exchanges often reward this behavior by charging lower fees—or sometimes offering rebates—to makers. This incentivizes users to place limit orders rather than market orders.
4. For example, if the current bid for Bitcoin is $40,000 and a trader places a sell limit order at $40,500, that order will only execute if the price reaches that level. Until then, it remains on the books as liquidity.
5. The maker fee is typically a percentage of the trade value and can range from 0.02% to 0.3%, depending on the exchange and the user’s trading volume.

What Is a Taker Fee?

1. A taker fee applies when a trader places an order that is immediately executed against an existing order on the book—such as a market order or a limit order that crosses the spread.

2. This action removes liquidity from the market because it fills an existing maker order, thus 'taking' liquidity away.
3. Since takers benefit from the availability of orders placed by makers, exchanges charge them a higher fee to balance the ecosystem.
4. For instance, if a trader buys Bitcoin instantly at the best available ask price, they are acting as a taker and will be charged the taker fee.
5. Taker fees are generally higher than maker fees, commonly ranging from 0.05% to 0.4%, again varying by platform and user tier.

How Fee Structures Influence Trading Behavior

1. The distinction between maker and taker fees encourages traders to think strategically about how they enter and exit positions.

2. High-frequency traders and market makers often design their algorithms to place limit orders and earn lower fees or even rebates, especially on exchanges with maker rebates.
3. Retail traders who prioritize speed and certainty of execution may opt for market orders despite the higher taker fee, accepting the cost for immediate results.
4. Some exchanges offer tiered fee models based on 30-day trading volume, where high-volume traders receive reduced maker and taker rates.
5. Traders who consistently place limit orders can significantly reduce their overall transaction costs over time by benefiting from lower maker fees or rebates.

Frequently Asked Questions

Can a limit order ever be charged a taker fee?Yes. If a limit order is placed at a price that immediately matches an existing order on the opposite side of the book, it will execute instantly and be classified as a taker, incurring the taker fee.

Do all cryptocurrency exchanges differentiate between maker and taker fees?Most major exchanges do, including Binance, Coinbase Advanced, Kraken, and Bybit. However, some smaller or beginner-focused platforms may apply a flat fee regardless of order type.

What is a maker rebate?A maker rebate is a negative fee—essentially a payment from the exchange to the trader—for providing liquidity. Certain high-volume exchanges offer rebates to attract market makers, meaning the trader earns a small amount instead of paying a fee.

How can I check whether I’m being charged a maker or taker fee?Trading platforms usually indicate the fee type in the transaction history or order details. Users can also review the executed price and compare it to the order book at the time to determine if the order was filled immediately (taker) or waited (maker).