Seasoned crypto traders and newcomers both have one thing in common: they want to pay the lowest trading fees possible.
Whether trading on a centralized exchange or decentralized exchange you want the most bang for your buck, and so it has become important to pick an exchange with low fees. But then you come across two different types of fees: Maker and Taker.
Generally speaking, Maker fees are always lower than Taker fees, but why is that and what is the difference between the two? We will answer both of those questions in this guide.
What Are Maker Fees?
To put it simply, Maker fees are the fees charged to the person who puts the order on the book.
The order has to be one that is not already able to be filled. In essence this means that they add more money to the exchange because they are another person looking to buy, but they are creating a new order rather than buying assets someone else already has for sale.
Overall, this means more money for the exchange because rather than taking an order off the book by buying it for that price, there is a new order in addition to the ones already on the books.
What Are Taker Fees?
As you might have surmised from the section on maker fees, Taker fees are the fees charged to the person who takes an order off the book.
This means that they are buying assets at a price already available on the exchange, rather than creating a new order for a price that is different than current market prices.
In contrast to with a maker order, this taker order takes liquidity off the books without providing anything new, so the net profit for the exchange is less than if you made a new order for a price not currently available.
Why Are They Different?
Net profit is the main reason that exchanges often charge less for Maker orders than Taker orders. In fact, some exchanges charge no fees for Maker orders as a way to incentivize users to put more money onto the books.
Think about it like this, when you create a Maker order, you are depositing X amount of dollars or cryptocurrency onto the exchange, increasing the amount of assets they have because there are already other orders (to simplify it think of it as one order/price available becoming two; you made a new order). In contrast when you take an order that is on the books you are decreasing the amount of assets available (one order/price available would become zero; you took an existing order).
So, exchanges want to incentivize you to put more orders on the books and therefore charge less for maker orders, and this creates more profit for them because then there are more orders to then earn taker fees on as those maker orders are taken.
Is There a Way to Reduce These Fees?
Yes! Almost all centralized exchanges (such as Binance or Crypto.com Exchange) offer lower fees for both maker and taker fees for varying reasons.
Trading volume is one way to get lower fees, with the fees going down the more your volume goes up. Holding the exchange’s proprietary token can also be a way to reduce the fees you pay for maker or taker orders, again with fees going down as the amount of the token you hold goes up.
Some exchanges also offer no fees for new users for their first month.
