Bitcoin exchange Kraken (Payward, Inc.) has announced a reduction in Bitcoin trading fees, along with a new model that rewards its users who provide liquidity to the exchange with even bigger savings, which they call a “maker taker” model.

The company announced the new rates in a blog post, stating that the change comes by popular demand since many clients had told them they would like to see a maker taker model with reduced fees overall.

According to Kraken, under the maker taker model, reduced fees are applied to market “makers” who provide liquidity to the market “takers.”

The maker fee applies when a user adds liquidity to the Kraken order book by placing a limit buy below market price or a limit sell above market price. The maker fee is paid only when such orders are taken by new incoming orders.

The taker fee applies when a user removes liquidity from the Kraken order book by placing a market or limit order that executes immediately against a limit order already on the book.

All advanced orders on their exchange platform trigger either market or limit orders and the triggered market or limit order will be maker or taker.

The advantages of the new system are said to be that traders adding liquidity to the book will benefit from the reduced maker fee, on top of the overall reduced fees Kraken has now introduced. Although takers pay a little more than makers (0.10 percent more), takers still benefit from the reduced overall fee structure, as well as the extra 0.10 percent more also being offset by (in theory anyway) deeper liquidity and tighter spreads that the model is expected to provide.

Appealing idea for regular traders

Fees under the new scheme vary (see the image to the right,) with the maker fee going as low as 0 percent and up to 0.16 percent depending on the amount that a user trades. The taker fee ranges from 0.10 percent up to 0.26 percent, again depending on the amount that is being traded.

Overall Kraken has dropped their general rates, which will further make its service even more competitive than it already is, but to regular traders, in particular, the maker taker model is highly appealing as it not only embeds further discounts, but its encouragement of increased liquidity on the Kraken exchange can only be a positive in terms of the amount of trades available, particularly compared to smaller exchanges that often do struggle from the amount of traders, due to liquidity of the overall exchange, available.

The new maker taker fee structure starts on Kraken August 1.

Image credit: torley/Flickr/CC by 2.0