How does makers/takers work?

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1

How does makers/takers work? can help me understand?

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  • Makers place limit orders on an exchange, specifying the price at which they want to buy or sell an asset.
  • Makers provide liquidity to the market and are often charged lower fees.
  • Takers place market orders or take existing orders from the order book.
  • Takers consume liquidity and are usually charged higher fees.
  • Makers add, takers take.

In Degate, Makers are free, takers need to pay 0.01% on stable-coin pairs and higher(0.05%) on mainstream pairs.

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Maker Orders:

  • A maker order is an order placed on the order book that adds liquidity to the market.

  • It specifies a price at which the trader is willing to buy or sell an asset, but it is not immediately matched with an existing order.

  • Maker orders are typically placed away from the current market price, either above the market price for sell orders or below the market price for buy orders.

  • Because maker orders provide liquidity to the market by creating depth in the order book, they often incur lower fees compared to taker orders.

  • Taker Orders:

    • A taker order is an order that matches immediately with an existing order on the order book.
    • Taker orders remove liquidity from the market since they are executed against existing orders.
    • Traders placing taker orders do not wait for a match; instead, they take the best available price from the order book.
    • Taker orders typically incur higher fees compared to maker orders since they consume liquidity from the order book.

In summary, makers add liquidity by placing orders on the order book, while takers remove liquidity by executing orders that match with existing orders.