What are Market Makers and Takers

Crypto markets consist of two main participant types: makers and takers. Market makers generate buy or sell orders that become part of the order book and are not executed immediately. For instance, a market maker might place a limit order to sell 1 BTC when the price reaches $50,000. By doing so, they enhance market liquidity, making it easier for other traders to swiftly buy or sell BTC when the specified condition is met. The traders who execute transactions instantly are referred to as takers. In essence, takers fill the orders created by the makers.

To encourage market makers to provide liquidity, exchanges often offer lower fees for their orders. Hata, for example, employs a fee schedule that differentiates between maker and taker fees. VIP users, who have a higher trading volume, enjoy even more favorable fees for their maker orders compared to taker orders. Now, let's delve further into the roles of both makers and takers.

Taker:

If you place an order that is instantly executed without entering the order book, you are considered a taker, irrespective of whether the order is partially or fully fulfilled. Market orders always fall under the category of taker trades because they are executed immediately without being added to the order book. Such trades "take" volume off the order book, making them taker trades.

Additionally, limit immediate or cancel (IOC) and limit fill or kill (FOK) orders, which are available via the API, are also classified as taker orders, as they are executed immediately without being placed on the order book.

Maker:

When you place an order that is partially or fully recorded on the order book, such as a limit order, any subsequent trades originating from that order will be categorized as maker trades.

These orders contribute to the volume on the order book, facilitating market activity, and are hence referred to as makers for any subsequent trades.

It's important to note that a limit Good Until Canceled (GTC) order, accessible via the API, can be traded both as a taker and maker order.

Using a limit order doesn't guarantee that your order will be classified as a maker order.

If you wish to ensure that your order is recorded on the order book before being filled, you can select the "Post only" option when placing your order.

For further information, please refer to the "Market Makers and Market Takers Explained" article.