A market maker adds liquidity to the order book by placing limit orders that wait to be filled (providing resting offers). A market taker removes liquidity by placing orders that fill immediately against existing offers (taking from the book). Makers reduce spread and improve depth; takers execute instantly but consume available liquidity. Most exchanges charge makers lower fees as incentive.
What Is a Market Maker vs. a Market Taker?
3 min read
The short version
The maker is the vendor setting up a stall with price tags (offers waiting for buyers). The taker is the customer who walks up and grabs an item at the listed price (instant execution). The market needs both, makers create available prices, takers create trading activity. Without makers, there is nothing to trade against. Without takers, makers would never get filled.
How It Works
On a CEX order book: when you place a limit order that is not immediately fillable (e.g., buy ETH at $2,950 when current price is $3,000), it rests on the book until someone sells at your price. You are the maker. When you place a market order (buy ETH at whatever the current best ask is), you fill against existing limit orders. You are the taker. Fee incentive: most CEXs charge 0.01-0.1% for makers and 0.05-0.5% for takers. Some even pay rebates to makers (negative fees) to attract liquidity. In DeFi AMMs: LPs are effectively market makers (providing liquidity at all prices). Swappers are takers. The fee structure is flatter (same fee percentage regardless), but the economic roles are analogous.
Maker vs. taker on a Binance BTC/USDT trade
BTC last traded at $60,000. Bid: $59,990 | Ask: $60,010. (A) You place a limit buy at $59,980, it sits on the book waiting. Fee when filled: 0.02% (maker). Cost for 1 BTC: $59,980 + $12 fee = $59,992 total. (B) You place a market buy, it fills instantly at $60,010 (the current best ask). Fee: 0.05% (taker). Cost: $60,010 + $30 fee = $60,040 total. Difference: $48 for the instant execution convenience. For a professional trading 100 BTC/day: $4,800 daily difference between maker and taker fees. That is why high-frequency firms spend enormous effort to be makers rather than takers.
What People Get Wrong
Market makers are always large institutions
Anyone placing a limit order that rests on the book is technically making the market. You do not need special designation or large capital. However, professional market makers (firms like Wintermute, Jump, Citadel) dominate book depth with sophisticated algorithms.
Makers always get filled
A limit order only fills if someone trades at your price. If the market moves away from your order, it sits unfilled indefinitely. This is the maker's risk: waiting for execution that may never come (opportunity cost).
Taker fees are wasted money
Taker fees buy immediacy, guaranteed execution at the current price. For time-sensitive trades (catching a dip, executing a strategy), the cost of waiting (maker approach) can exceed the taker fee. Immediacy has real value.
Keep Reading
Sources & Further Reading
- Binance Fee Schedule
Maker/taker fee tiers showing how volume affects trading costs
Questions People Also Ask
- How do I know if my order is maker or taker?
- If your order rests on the book (not immediately filled) = maker. If it fills immediately against existing orders = taker. A limit order at current price is usually a taker. A limit order away from current price is usually a maker. Exchanges label this on trade history.
- Can one order be both maker and taker?
- Yes. A large limit order might partially fill immediately (taker portion) and partially rest on the book (maker portion). Some exchanges charge different fees for each portion in the same order.
- What is a maker rebate?
- Some exchanges (particularly futures venues) pay makers a small fee for providing liquidity instead of charging them. If the rebate is -0.02%, you earn $20 for every $100,000 in maker volume. This attracts professional market makers who profit from the rebates.