Did you know that every Centralized Cryptocurrency Exchange (CEX) has a fixed transaction fee/rate that is calculated based on the total transaction amount (buy or sell)? Let me give you an example. If you buy or sell a token worth $100, you would expect to pay the exchange fee at around 10-20 Cents. It is quite normal today for any exchange to charge you around 0.1-0.2% from the total amount transacted. Your mileage may vary but the most popular exchange in the world, Binance, has a base fee of 0.1% which can be used as a good bench mark. While 0.X% might not sound like a lot at first and even many traders shrug them off as a cost of the transaction, these fees could quickly add up over time. This statement is especially true for those that use a crypto trading bot that executes trade for them 24/7 and they often have no idea how many exact trades would be done over a period of time. In addition, it is important to keep in mind that every time you trade, whether you win or lose, the exchange will always get paid. So, it is essentially a variable cost of running your trading “business” which means the more you save, the more you earn. Today, we will look into 5 top tier exchanges in the world and try to see how to save some money on these inevitable expenses. Let’s jump in and start putting those savings in to your pockets!
1. Saving by choosing the right Exchange to trade
Table 1: Entry Level Fee (Spot Trading) – As of 18 Mar 2022 (Note that you are a taker when buying at a market price (MARKET order). You are a maker (providing liquidity to the market) when you are setting a sell/buy LIMIT order.
|Trading Fee (maker/taker)||0.4%/0.6%||0.1%/0.1%||0.1%/0.1%||0.02%/0.07%||0.2%/0.2%||0.2%/0.2%|
As you can see from the table 1 above, the fee you pay on one exchange could vary significantly from the one you pay to the others even though you are trading the exact same pair i.e. BTC/USDT. To put it in a different way, if you trade on Gate.io, you would pay twice as much on the fees compared to doing the same transaction on Binance or Kucoin. Another more extreme example would be if you are using FTX to trade the same pair with sell/buy limit orders (paying the maker fee), you would save 20 times of the exchange fee (0.02% vs. 0.4%) that you would have paid doing the same on Coinbasepro on each and every single trade executed! If you are using a crypto bot to trade for you, you might want to look into the ways to save on those fees as it could very well impact your bottom line! Having stated these facts, we are aware that many users don’t have many choices available in their location and often have a very limited option due to geographical restrictions (because of the local centralized authority law and regulations). If it is the case for you, then let’s take a closer look on how to further save on those fees. Please read on!
2. Saving by using the Exchange Token or using the Exchange “point” to pay for the fee
Most exchange often has its token and they often offer a pretty good discount on those who hold/stake or pay the fees using them in order to incentivize the people to use their tokens. Below are the fee when using the exchange token (TICKER of the token is shown in the parentheses).
Table 2: Trading Fee if paying with the exchange tokens (for Tier 1) or simply holding for FTX
|Exchange||Binance ($BNB)||Kucoin ($KCS)||FTX ($FTT)||Gate.io ($GT)||Huobi ($HT)|
|Discount Rate (maker/taker)||25%||20%||Varies*||25%||10%|
*FTX allows you to get a discount from 3% up to 60% off by simply hold a certain value of the $FTT token ($100 to $5 million) in your wallet
Next, it is important to note that some exchanges like Gate.io and Huobi have a point where could you buy and use it to pay for the exchange fee with significant discount rate. For example, Gate.io currently offer 30-70% off if you use its point to pay for the fee. You might want to explore that option further if you rather choose not to hold the exchange token in your spot wallet.
If you are more experienced traders with a high monthly trading volume (> $1million – 30 day), let’s explore further into the exchange of your choice in order to see which one would give a high volume trader the best rate/service when one is willing to hold their tokens. Often times, the exchange will look into your trading volume, the amount of exchange token that you are willing to buy/hold/stake, and/or your total account size. You, on the other hand, will need to decide which exchange is right for you.
Table 3: The amount of exchange token (and/or trading volume) required to move you up to the VIP level that matches the Binance VIP1 (Price USD calculated as of 13 February 2022)
|VIP Level||VIP1||LV1||Tier 1||VIP10||Pro.1|
|Exchange Token Required (Value USD)||25 BNB (~$10K)||1000 KCS (~$20K)||0 FTT*(~$0)||40000 GT (~$280K)||2000 HT (~$20K)|
|Trading Volume Required (30 day)||And $1million||Or 50 BTC||n/a||Or 2500 BTC||And >700 BTC|
|Effective rate (Paid with the Exchange token)||0.0675%/0.075%||0.072%/0.08%||0.02%/0.07%||0.052%0.058%||0.0362%/0.0462%|
Final thoughts: If you are a trader that wants to save the operating cost (transaction fee), I would run to FTX without looking back. It’s maker/taker fee rates are second to none. The main restriction would be if you are in the US, you will be limited by the numbers of token pairs you could trade. You would have to go with its US subsidiary or the FTX.US site. If you are outside the US, you then can just use FTX.com (link below) and you will be saving a ton of fees every time your trade executed. Good luck and happy trading!
If you are new and looking to signup for any of the exchange mentioned above, please make sure you are using the link(s) below to signup in order to receive a special signup bonus.