Maker-Taker Incentives constitute a fee structure utilized by crypto exchanges and trading platforms to strategically encourage the provision of liquidity and discourage its removal. This model differentiates between order types that add or subtract from market depth.
Mechanism
Participants who place limit orders that rest on the order book, thereby adding liquidity (“makers”), receive a rebate or a reduced trading fee. Conversely, participants who execute market orders that immediately match existing limit orders, thus removing liquidity (“takers”), incur a higher fee.
Methodology
The strategic aim is to enhance market depth, tighten bid-ask spreads, and foster a more orderly trading environment. By financially incentivizing passive order placement, exchanges attract liquidity providers, contributing to a more robust and efficient price discovery process across crypto spot and derivatives markets.
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