Just like any other market, crypto markets have makers and takers. The makers are known to create orders to buy and sell assets, which are not fulfilled right away. For instance, there can be an order to sell Bitcoin when the price is at $20K. As such, this creates market liquidity and makes it possible for others to buy or sell crypto assets when the conditions are met. On the other hand, the takers are the ones who buy and sell digital assets instantly. This means that both makers and takers are vital to the growth and sustainability of the crypto market.
We want to take a detailed look at these stakeholders so that you can understand the difference and place yourself on the market as a maker or taker.
Who Are Market Makers
The market value of an asset is calculated using an order book. Crypto exchanges collect all the orders to buy and sell digital assets using the order book. Makers will submit different orders based on a number of factors. When an order is submitted with conditions, it is referred to as limit order. This allows the makers to announce their requirements and intentions before they can make an order. In essence, you are considered to be a market maker because you have made a crypto market.
While anyone can easily become a maker in the crypto markets, this is a role that big traders choose to take up. Once you place a conditional order, which is not fulfilled immediately, you are categorized as a market maker.
Who Market Takers
On the flip side, once liquidity has been provided by the makers, there are those traders who will buy or sell immediately. These are referred to as market takers. When orders are placed on the exchanges, the liquidity will increase and this makes it easier for traders to buy and sell. Takers will place an instant order, which means that they will reduce the liquidity on the market.
Takers do not have any instructions and are known to buy and sell assets at the prevailing market rates. When this happens, the orders that are on the order book are filled right away. When you place an order on Bitcoin Billionaire app website and it is filled immediately at the market price, then you are a taker. However, it is important to note that you can be a taker using limit orders. When your order fills another trader’s order, you are a taker.
What Are Takers and Makers Fees?
Generally, crypto exchanges make money by charging transaction fees for all orders. Every time an order is executed there is some amount that you will be charged and this rate varies from exchange to exchange. The fees may also differ depending on your role and the size of the trade being executed. Since makers are instrumental in adding liquidity, they are offered some rebates.
This is a good business model as traders will want to be on an exchange that has more liquidity. As for the takers, since they will be taking away liquidity, they are charged higher fees for their transactions. Remember that there are no standard fees for all exchanges as the fees will differ depending on the aforementioned factors.
In summary, makers are simply traders who will create orders with some pre-existing conditions. On the other hand, takers are the ones who fill a pending order. Makers provide liquidity while takers take it away. The maker-taker relationship is essential for the crypto markets to thrive. You can choose to be a maker or taker, but in most cases, traders keep shifting between the two roles.
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