Maker-Taker Fee Model
The maker-taker fee model charges lower fees to limit orders that add liquidity (makers) and higher fees to market orders that remove it (takers).
Key Takeaways
- Makers place limit orders that rest on the order book, adding liquidity. Takers place market orders that execute immediately, removing liquidity. Exchanges charge takers more and makers less to incentivize deeper order books.
- Fee tiers are volume-based: most crypto exchanges charge 0.10% or more at the base tier, but high-volume traders can reach 0% maker fees or even earn rebates for providing liquidity.
- The model originated in 1997 on the Island ECN for equities and is now the dominant pricing structure across both traditional and cryptocurrency exchanges, though critics argue maker rebates can create conflicts of interest around order routing.
What Is the Maker-Taker Fee Model?
The maker-taker fee model is a tiered pricing structure used by exchanges where traders pay different fees depending on whether their order adds or removes liquidity from the order book. Traders who place limit orders that rest on the book are called makers because they "make" liquidity available. Traders who place market orders or immediately executable limit orders are called takers because they "take" that liquidity away.
The economic rationale is straightforward: liquidity benefits everyone. A deep order book with tight bid-ask spreads means better prices for all participants. By charging makers less (or paying them rebates), exchanges incentivize traders to post resting orders. Takers pay a premium for the convenience of instant execution against that liquidity.
The model was invented in 1997 by Joshua Levine for the Island ECN, an early electronic communication network for U.S. equities. Island charged takers $0.003 per share and paid makers a $0.002 rebate, keeping $0.001 per share as revenue. Within two years, Island's market share grew from 3% to 13%, and every major U.S. equity exchange adopted variants of the model within five years.
How It Works
Every trade on an order book exchange has two sides: the order that was already resting on the book (the maker side) and the order that matched against it (the taker side). The exchange applies different fee rates to each side at the moment of execution.
- A trader places a limit buy order at $29,500 when Bitcoin is trading at $30,000. This order rests on the book and adds liquidity: the trader is a maker.
- Another trader places a market sell order. The exchange matches it against the resting buy order at $29,500. The seller is a taker: they removed that resting order from the book.
- The exchange charges the maker a lower fee (for example, 0.02%) and the taker a higher fee (for example, 0.10%). On a $29,500 trade, the maker pays $5.90 and the taker pays $29.50.
The distinction depends entirely on whether an order adds to or removes from the order book at the time of execution. A limit order that crosses the spread and fills immediately is treated as a taker order, even though it is technically a limit order.
Fee Tiers on Major Exchanges
Crypto exchanges structure fees across volume-based tiers, calculated on 30-day rolling trading volume. Here are representative base-tier and top-tier rates:
| Exchange | Base Maker | Base Taker | Top Maker | Top Taker |
|---|---|---|---|---|
| Binance | 0.10% | 0.10% | 0.011% | 0.023% |
| Coinbase Advanced | 0.40% | 0.60% | 0.00% | 0.04% |
| Kraken | 0.40% | 0.80% | 0.00% | 0.05% |
| OKX | 0.08% | 0.10% | — | — |
| Bybit | 0.10% | 0.10% | 0.005% | 0.015% |
These rates can shift further with exchange-native token discounts. For example, Binance offers a 25% reduction on fees when paying with BNB. Most exchanges also offer separate, lower fee schedules for futures and derivatives trading.
Volume-Based Fee Discounts
Exchanges universally use 30-day rolling volume to determine a trader's fee tier. The structure follows a common pattern:
- Exchanges define 8 to 17 tiers with progressively lower fees as volume increases
- Maker fees decrease more steeply than taker fees across tiers, reaching 0% at institutional volumes
- Some exchanges qualify traders by either volume or assets held on the platform, whichever produces the better tier
- The highest tiers often require direct application and may involve individually negotiated rates
As a concrete example, Binance structures nine VIP tiers from less than $1 million (0.10% maker / 0.10% taker) to over $4 billion in 30-day volume (0.011% maker / 0.023% taker). Kraken provides 17 tiers ranging from 0.40% maker / 0.80% taker at the base level to 0.00% maker / 0.05% taker for traders with $500 million or more in monthly volume.
Maker Rebates
At the highest volume tiers, some exchanges flip maker fees negative: instead of charging makers, the exchange pays them a rebate for every trade. This practice originated in equity markets (Island ECN paid $0.002 per share to makers) and has carried over to crypto:
- Kraken Futures offers up to a -0.006% maker rebate at the elite tier
- Bybit provides up to -0.015% in its market maker program
- Binance Futures pays 0.01% rebates at the highest VIP tiers
These rebates are typically gated behind $100 million to $500 million or more in monthly volume, platform token holdings, and direct application processes. For most retail traders, maker fees are simply lower than taker fees rather than negative.
Why It Matters
The maker-taker model creates a self-reinforcing cycle that deepens liquidity and improves price discovery. Lower maker fees incentivize traders to post resting limit orders. More resting orders mean deeper order books with more liquidity at each price level. Competition among makers to earn lower fees (or rebates) drives them to quote at tighter spreads, closer to the midpoint. Tighter spreads attract more takers who want better execution prices. More taker volume generates fee revenue that funds the maker incentives.
Academic research supports this effect. A 2024 study in the Journal of Banking & Finance found that maker-taker subsidies "greatly improve market depth, together with market efficiency and trading volume" and improve pricing efficiency at the national best bid and offer.
For individual traders, the practical implication is clear: using limit orders instead of market orders reduces trading costs by 20% to 100% on virtually every exchange that uses this model. Understanding the maker-taker distinction is essential for anyone actively trading on centralized crypto exchanges.
The model also explains why market makers are willing to continuously quote both buy and sell prices: they earn a spread on each round trip, and maker rebates further subsidize their activity. This combination ensures that exchanges maintain liquid markets even for less popular trading pairs.
Comparison to Other Fee Models
Flat-Fee Models
Some exchanges charge the same percentage regardless of whether an order is a maker or taker. This is simpler for traders to understand but provides no incentive for liquidity provision. Flat-fee exchanges tend to have wider spreads and thinner order books because makers receive no preferential treatment. Binance's base tier (0.10% / 0.10%) is effectively flat at the entry level, though it diverges at higher volume tiers.
Zero-Fee Models
Platforms advertising zero trading fees recover revenue through other channels: wider bid-ask spreads (the exchange earns the spread), withdrawal fees, subscription models, margin interest, or payment for order flow. Coinbase One, for instance, charges $29.99 per month to waive fees on trades up to $10,000.
The tradeoff is that zero-fee platforms often deliver worse execution prices. The costs are hidden in the spread rather than disclosed as an explicit fee, potentially costing traders more than they would pay in transparent maker-taker fees.
DEX Fee Structures
Decentralized exchanges using automated market makers (AMMs) operate differently. Instead of an order book with maker-taker distinctions, AMMs charge a flat swap fee (typically 0.05% to 1%) that goes to liquidity providers. There is no maker-taker distinction because AMMs do not use order books. Some order book DEXs on faster chains have adopted maker-taker pricing, but the model remains primarily associated with centralized exchanges.
Use Cases
High-Frequency Market Making
Professional market makers rely on maker rebates as a core part of their business model. They continuously post limit orders on both sides of the order book, earning the bid-ask spread plus maker rebates on every fill. The maker-taker model makes this strategy viable by ensuring that providing liquidity is cheaper (or profitable) relative to consuming it.
Retail Cost Optimization
Retail traders who understand the model can significantly reduce costs. Instead of placing market orders (taker), placing limit orders slightly below the current ask (for buys) or above the current bid (for sells) captures the maker rate. On a $10,000 trade at Kraken's base tier, the difference between the 0.80% taker fee ($80) and the 0.40% maker fee ($40) is substantial.
Institutional Volume Negotiation
Institutional traders and funds use the volume-based tier structure to negotiate favorable rates. By concentrating volume on a single exchange, they qualify for higher tiers with lower fees. Some institutions negotiate custom fee agreements below published rates, particularly when they provide significant maker volume that improves the exchange's overall liquidity.
Risks and Considerations
Conflicts of Interest in Order Routing
The most persistent criticism of the maker-taker model is that rebates create conflicts of interest. Brokers may route customer orders to the exchange offering the highest maker rebate rather than the exchange providing the best execution price. This concern has drawn attention from U.S. lawmakers and regulators. The SEC has stated that access fees distort quoted prices because fees and rebates are not reflected in displayed prices: a stock quoted at $10.00 might actually cost $10.003 to a taker or $9.998 to a maker after accounting for fees and rebates.
Payment for Order Flow
The maker-taker model is closely related to payment for order flow (PFOF), where brokers receive compensation for directing customer orders to specific market makers. Both create monetary incentives that can conflict with best execution obligations. In crypto markets, where best-execution requirements are less defined, these conflicts are even less constrained than in traditional equities.
Regulatory Uncertainty
In U.S. equity markets, the SEC reduced the access fee cap from $0.003 to $0.001 per share in September 2024, with a compliance deadline of November 2025. The D.C. Circuit Court upheld this rule in October 2025. However, implementation timelines remain uncertain, and further changes to the Order Protection Rule could reshape how maker-taker pricing functions in traditional markets. Crypto exchanges are largely unaffected by these equity-specific regulations, but increased regulatory scrutiny of exchange fee structures is a growing trend globally.
Complexity and Hidden Costs
Multi-tier fee schedules with token discounts, volume thresholds, asset balance qualifiers, and promotional rates make true cost comparison difficult. Traders must account for their realistic volume tier, not the lowest advertised rate. A trader doing $5,000 in monthly volume will never reach the institutional tiers where 0% maker fees apply.
Impact on Decentralized Alternatives
The complexity and conflicts inherent in maker-taker pricing on centralized exchanges have driven interest in decentralized exchanges and alternative settlement layers. Protocols like Spark enable peer-to-peer transfers without order book intermediaries, sidestepping the maker-taker dynamic entirely. As DeFi matures, the competition between centralized maker-taker models and decentralized alternatives continues to shape how traders access liquidity.
This glossary entry is for informational purposes only and does not constitute financial or investment advice. Always do your own research before using any protocol or technology.