Today, we have two interesting characters on the agenda: Maker and Taker. Who are they and why is it important to know about their roles? Let's figure it out! $GALA
Imagine a cryptocurrency exchange as a large online marketplace where sellers and buyers meet to exchange one cryptocurrency for another (for example, buying Bitcoin for hryvnias or selling Ethereum for dollars). In this market, there is a special place – the order book. This is essentially a list of all buy and sell orders for a particular cryptocurrency at various prices.
This is where our heroes appear – Maker and Taker. Their names come from the English words "make" (to create) and "take" (to take). $FLOKI
💰 Maker – the one who "makes" the market.
Who is a maker? A maker is a person who places an order in the order book that is not executed immediately at the current market price. For example, you want to buy Bitcoin for less than it currently costs or sell it for more. By placing such an order (for example, "buy 1 Bitcoin at a price of $60,000 when the current price is $62,000"), you add liquidity to the order book. Your order "waits" for someone who is ready to execute it.
The main idea of the maker: Create a new offer in the order book that expands trading opportunities for other participants.
🪙 Taker – the one who "takes" liquidity.
And who is a taker? A taker is a person who places an order that is executed immediately at the best current price available in the order book. For example, you want to urgently buy or sell cryptocurrency and are not willing to wait. You look at the order book and see an offer that suits you, and you accept it immediately. You "take" the liquidity that was created by the maker.
The main idea of the taker: Quickly execute a trade at the current market price using already existing offers in the order book.
What is the key difference?
The main difference between a maker and a taker lies in how their orders interact with the order book:
♨️ Maker: Adds liquidity, their order is not executed immediately.
♨️ Taker: Takes liquidity, their order is executed instantly.
This difference is very important due to trading fees. Cryptocurrency exchanges usually charge different fees for makers and takers. Generally, the fee for makers is lower and can sometimes even be zero or negative (the exchange pays the maker a small amount).
Why is that? Exchanges benefit from incentivizing makers, as they fill the order book with offers, making the market liquid and attractive for trading. The more liquidity there is, the easier it is for sellers and buyers to find each other, and the smaller the spread (the difference between the best buy and sell prices).
Takers, on the other hand, use existing liquidity for the quick execution of their trades, for which the exchange charges them a slightly higher fee.
👉 A simple example:
Imagine that you want to buy 1 Ethereum (ETH). The current market price is $3000.
🔸️ You are a Maker: You place an order to buy 1 ETH at a price of $2950. This order appears in the order book and waits for someone to want to sell ETH at this price. When such a seller is found and the deal occurs, you were the maker in this transaction.
🔸️ You are a Taker: You see an offer in the order book to sell 1 ETH for $3000 and immediately buy it at that price. Your order is executed instantly, and you were the taker$NOT
Understanding who makers and takers are is a fundamental step in mastering cryptocurrency trading. It helps to understand how prices are formed on the exchange and why there are different trading fees. If you plan to trade actively, a maker strategy can help you save on fees. If, however, your priority is the speed of trade execution, you will likely often act as a taker.