How Does a “Volume Tier” System Interact with the Maker-Taker Model?
A volume tier system typically lowers the maker and taker fees (or increases the maker rebate) as a trader's cumulative trading volume over a period increases. This is a further incentive for high-volume traders, especially market makers, to increase their activity.
It magnifies the benefits of the maker-taker model, allowing high-frequency trading firms to operate with even tighter margins.
Glossar
Volume Tier System
Volume ⎊ A tiered pricing structure prevalent in cryptocurrency derivatives markets, particularly options and perpetual futures, it directly correlates trading fees to the aggregate trading volume of an account over a defined period.
Taker Fees
Fee ⎊ Taker fees represent a transaction cost levied by cryptocurrency exchanges and derivatives platforms, specifically on orders that execute against existing limit orders, thereby "taking" liquidity from the order book.
Tier System
Structure ⎊ Describes the hierarchical categorization of market participants, often based on volume, capital commitment, or compliance adherence, for access or fee purposes.
Cumulative Trading Volume
Metric ⎊ Cumulative trading volume represents the total quantity of a specific cryptocurrency, option contract, or derivative instrument transacted over a defined period.