What Are Crypto Trading Fees?
Sep 13, 2021
Trading fees are a necessary part of trading cryptocurrency, and even interacting with public blockchains like Bitcoin and Ethereum will incur network fees.
Common questions like “how much are exchange fees?”, or “what am I paying for?” “How much are network fees”, and even “what is their purpose?” all come across our desk here at MEX Digital, and in this post we want to answer some of those.
When it comes to crypto trading, there are two types of fees that will be incurred:
Exchange fees and network fees. Let’s start with the first, exchange fees…
These are fees charged by exchanges like us here at MEX Digital and allow us to stay in operation and ensure we can provide you with the best possible infrastructure and safest trading experience. Let’s start with the basics:
Maker and Taker
A maker is a trader who “makes” a new trade on an exchange by placing their trade into the order book via a “limit order”. A “taker” is a trader that matches the maker’s trade.
Fees for either of them are in most cases different, which is exactly how we at MEX Digital have structured our fees:
The average Maker’s Trading fee on MEX Digital is 0.09%, while the average Taker’s Fee (classified as a “Trader”) is 0.1% (fees reduce the higher the volume). So you can see that a Taker (or Trader) is charged one tenth more for placing their trade than a Maker is. This is structured in a way so as to incentivise traders to place orders in our orderbook and encourage liquidity.
What does that mean?
Well, a “Maker” places a limit order above the highest sell price or below the lowest buy price. For instance, if the last traded price of Bitcoin on MEX Digital is $50,000 exactly, and a “Maker” wanted to buy some Bitcoin, their buy order price would need to be $49,999 in order to get placed in the order book and benefit from a Maker’s fee. The trader’s on the other side of that trade will then decide if they want to “take” it or not. On MEX Digital, that unfilled trade (an order) would then show as a “green number” below the fold of the main price indicator, and stay there until someone “took” that trade.
If we flipped that Maker as a seller, the Maker would be selling their Bitcoin at just slightly above the last traded price of $50,000, at $50,001 for instance. The order would go into the order book as a “red number” above the fold, and stay there until someone “took” the trade and bought their Bitcoin at that price.
So again, to summarise: A “maker” is someone who is essentially “making” the market by creating orders in the order book, and a “taker” (or in our platform’s terminology a “trader”) is someone who buys or sells at a price already set by a previous maker.
These fees quoted above are for MEX Digital traders who trade less than $50,000 total volume in a month. MEX Digital offers considerable discounts for traders who trade with higher volume, with these fees reducing as the trader reaches certain tiers of volume traded. The full tiers of trading fees can be found at this page here.
Another fee that is important to keep in consideration in the cryptocurrency industry is that of “withdrawal fees”. These kinds of fees are primarily used by exchanges like us here at MEX Digital to cover the cost of a blockchain network fee.
There has to be some form of even minor cost when doing a transaction, or else the node supporters and network operators would have no incentive to support the network. These are called “transaction fees”, and each blockchain has different fee structures.
Bitcoin’s transaction fees can be quite expensive at times, with Ethereum’s being one of the highest, while Ripple is one of the lowest (almost 1% the price of Ethereum’s fees at times!) Bitcoin and Ethereum have such high fees due to the high level of decentralised security they employ.
What is interesting to consider is that both Bitcoin and Ethereum are working on “off-chain” transactions in order to reduce fees significantly. Bitcoin’s project is called the “Lightning Network” while Ethereum’s is called “Plasma”, and both of these could see faster crypto transactions and much lower fees. So keep an eye out for those here on this blog as news becomes available.
A withdrawal fee will be charged to your account when you want to take cryptocurrency out of your MEX Digital crypto wallet into your personal wallet such as a Hardware Device or alternative storage facility. The fee is a flat figure, so no matter how much you are withdrawing, you will only be charged at that specific fee listed.
Withdrawal fees here on MEX Digital are as follows:
Bitcoin: 0.001 BTC (IE. You will be charged 0.001 Bitcoin for every withdrawal you make out of your MEX Digital Bitcoin account.)
USD Tether: 5 USDT
Bitcoin Cash: 0.00015 BCH
Litecoin: 0.002 LTC
Ripple: 1.001 XRP
Ethereum: 0.01 ETH
Please ensure you take these fees into consideration before making any withdrawals from your MEX Digital account.
Fees are a standard aspect of crypto trading and transacting, and allow the various infrastructure providers to operate sustainably. MEX Digital has structured our fees in a way to ensure you pay highly competitive fees but still experience the highest standard of crypto trading. If you want to find out more, visit our FAQ page, or keep an eye on our Twitter, Facebook, LinkedIn and Instagram pages.
Trading cryptocurrency carries significant risk and losses can exceed deposits. Refer to our Terms and Conditions and disclosure material.