Let’s first take a look at maker fees. Maker fees are fees that people who provide liquidity to the market have to pay. These are fees for orders that are not filled instantly and remain open until someone fills them. For instance, when placing limit orders, these orders are not filled instantly, and only when the price reaches the desired amount. So, when someone places this type of order, it creates liquidity in the market, and when the set price is reached, people who want to buy or sell crypto at that price can use your order to execute their order. With this, these types of traders are making markets, since without them, liquidity would be low and traders would need to find someone who is on the market at the same time and wants to buy or sell crypto at a certain price. 

In order for your trade to be classified as a maker trade, your sell order needs to be higher than the biggest buy order. Or your buy order should be lower than the lowest sell order. The biggest upside to maker fees is that in general, they are lower than other fees. Since makers are creating liquidity in the market, exchanges love it when these traders participate in their market. Therefore, exchanges place low maker fees, and some even remove maker fees if a trader's volume is high. 

But being one of the smallest fees does not mean that everyone should start becoming market makers. One downside to providing liquidity with limit orders is that you have to wait for your order to be filled. This can happen within minutes, but it can also take hours to execute and it all depends on whether the price reaches your limit order price or not. 

Taker fees are paid by “takers” and these takers are those that are looking to fill their orders immediately. Takers usually use market orders, which are orders that look at the current price and fill orders based on that price. With this, execution speed is very fast, since unlike makers, they don’t need to wait for the price to reach a certain mark. These are called taker fees since during these types of orders, traders are taking from the liquidity as they are executing orders immediately. 

So for example, a trader opens an order to buy 1 ETH at the market price. The system will take a look at the order book and see what is the current price of 1 ETH, then it will simply fill the order immediately and apply taker fees. If the market does not have enough liquidity to fill this market order, it will be rejected since market orders need to be filled immediately. 

Taker fees are generally higher than marker fees since these trades take from liquidity provided by makers. But just like maker fees, most exchanges will lower these taker fees the more you trade. When visiting an exchange, they will have a fee section where they show both maker and taker fees at certain trading volumes. 

There can be cases where orders placed by traders are charged with both maker and taker fees. This happens when orders are not filled fully and it takes some time for it to fill. For example, let's say that trader A wants to buy 1 ETH for $1,500 and he places a buy limit order waiting for prices to fall. At the same time, trader B wants to sell 5 ETH for $1,500 each and he also places a limit sell order. When this order is placed, trader A will automatically buy 1 ETH for $1,500 and will pay maker fees, while trader B, who just sold 1 ETH, will have to pay taker fees. But now he is left with 4 more ETH and trader C enters the market and buys the remaining Ethereum. This time-limit order is filled and trader B is charged with maker fees. 

Maker and taker fees are one of the most popular fees when trading with cryptocurrencies and there are good reasons for it. Most of the crypto exchanges don’t have spreads, meaning that buy and sell prices are usually the same, and in order to make profits, these exchanges use a maker-and-taker fee module. 

While taker fees are not that important, maker fees are what help run the exchange. We mentioned that maker fees are usually lower than taker fees in order to attract makers. Liquidity is everything when trading with cryptocurrencies and this is because of their volatility. Cryptocurrencies are volatile assets, and low liquidity will add more volatility, which is very bad. So in order to make sure that the market operates smoothly, exchanges charge lower fees to these makers since they make the market run.