Fee Tiers Definition
Fee tiers refer to a pricing structure in cryptocurrency exchanges where transaction fees vary depending on the trader’s trading volume within a specified period. The more frequently you trade, the lower your fees.
Fee Tiers Key Points
- Fee tiers apply to both maker and taker fees and often factor in all trades within the past 30 days.
- High volume traders can receive substantial discounts, making this model attractive to active traders.
- They incentivize trading activity, helping exchanges grow their overall trading volumes
What are Fee Tiers?
Under a fee tier system, the cost of buying, selling, or trading cryptocurrency relies on the trader’s activity level. This system is used predominantly on cryptographic and digital asset exchanges. The fees adjust dynamically based on the user’s trading volume during the past 30 days.
Why Fee Tiers Exist
Fee Tiers exist to incentivize trading and to encourage traders to use one platform over another regularly. High-volume traders can gain significant discounts on their trading costs, encouraging them to continue their trading activity.
Who Benefits from Fee Tiers?
Fee tiers benefit both cryptocurrency traders and the exchanges. Exchange users can decrease their trading costs substantially through continuous and high-volume trading. On the other hand, exchanges can attract more users, hence boosting their overall trading volumes and enhancing liquidity.
When do Fee Tiers Apply?
Fee tiers apply to each transaction made on the cryptocurrency exchange and are applied at the point of transaction. The tier level applied to the transaction is calculated from the user’s trading activity during the past 30 days.
Where are Fee Tiers Used?
Fee tiers are used on cryptocurrency exchanges. Some exchanges may have only a few tiers, while others may have several. Each exchange sets its own fee tier structure, resulting in variations across different platforms.
How are Fee Tiers Calculated?
Fee Tiers are calculated based on the user’s trading activity during a set period (often the past 30 days). The higher the volume of trades, the lower will be the user’s fees. Each exchange has a tiered table that illustrates how much a user needs to trade to qualify for each tier and the corresponding fees.
