Maker / Taker Fee is a fee structure used by most centralized exchanges to incentivize liquidity on their platform. The fee you pay depends on whether you are a "maker" or a "taker" in a trade.

The Builders vs. The Buyers

Imagine an order book on a centralized exchange with buy and sell orders at different prices.

A maker is a user who "makes" liquidity by placing a limit-order that is not immediately filled. This order sits on the order book, waiting for someone else to match with it. By placing this order, the maker is adding to the market's liquidity, making it easier for others to trade. Exchanges typically reward makers with lower fees, or in some cases, even a rebate.

A taker is a user who "takes" liquidity from the market by placing a market-order that is filled immediately. The taker's order matches with an existing maker order on the order book. Since the taker is removing liquidity, exchanges charge them a higher fee. Takers prioritize speed and certainty over a lower fee.

Why It Matters

The maker/taker model is a powerful incentive system. It encourages users to act as makers and provide liquidity, which makes the market more efficient and attracts more traders. For investors, understanding this fee structure is crucial for managing trading costs. By using a limit order instead of a market order, an investor can potentially pay a much lower fee, which can add up significantly over time.