Fee tiers refer to the fee structure that determines the amount charged when investors deposit or withdraw money and execute trades on a crypto exchange.
What Are Fee Tiers?
Fee tiers refer to the fee structure that determines the amount charged when investors deposit or withdraw money and execute trades on a crypto exchange. Each exchange has its own fee structure that often differs depending on volume and types of trades.
Some crypto exchanges provide a variety of ways to deposit fiat money ranging from bank and PayPal transfers to credit and debit card usage, which may incur fees ranging between 2% to 5%.
Trading fees are packaged in many forms depending on the amount spent, and whether the swap, convert, or trading tool function is being used. While a number of exchanges offer swap or convert options that are more convenient for new traders, these are often the most expensive ones. It is thus important to review and calculate the charges so the fees can be kept to a minimum.
Trading fees are often charged in the form of a flat fee which increases or decreases when the value of the trade is below or above a specific level (for example, a fee of $0.99 is charged for trades below $10, and more for higher trades), or a percentage fee using a “maker-taker” model.
In the “maker-taker” model, the fees are often a percentage of the total trade, and it is
For taker fees, they are incurred if the trade is matched immediately with an order on the order book. An example would be market orders (when a trader places an order at market price for cryptocurrencies and other assets on the exchange) that are usually completely fulfilled.
Lastly, there are also withdrawal fees that can be charged for users when withdrawing their assets and converting them into fiat money into their bank accounts, or shifting their cryptocurrencies from one platform to another, which vary from fixed amounts to percentages.
This encourages traders and users to make more calculated and less impulsive decisions, minimizing the likelihood of the exchange being flooded with excessive or piecemeal trade requests, and also providing revenue and funds for the platform or exchange.
Author Bio: Hisham Khan, CEO of Aldrin
Hisham Khan comes from a decade-long background in managing and building robust and innovative financial and enterprise technology. With an extensive career at Bloomberg and based in New York, Hisham has worked as a project manager with some of the world’s top engineers. It was here where he discovered the transformative impact of cryptocurrencies, and has since left Bloomberg to build comprehensive and accessible trading tools through Aldrin. His core mission is to make advanced crypto trading and strategy development available for everyone.