If you’re a crypto trader, you’ll likely know how frustrating transaction fees can be.
But there are now crypto exchanges that claim to charge zero trading fees.
So, how is this possible?
Can you really trust a free crypto exchange, or should you steer clear?
The most common throw in of exchange fee model is known as maker-taker.
On an exchange, you have liquidity makers and liquidity takers.
In short, crypto exchanges love liquidity.
It is how they run accurate technical analyses, stabilize asset prices, and remain in business.
This is why some exchanges charge lower maker fees than taker fees.
For example, FTX charges a 0.02% maker fee, while the taker fee stands at 0.07%.
Some crypto exchanges charge the same maker and taker fees, such as Binance, Bittrex, and Huobi.
But some exchanges use a spread fee model.
Like maker-taker fees, spread fees vary depending on the platform you’re using.
For example, eToro charges a 0.75% spread fee instead of maker and taker fees.
Some exchanges even charge maker, taker, and spread fees, like River and Swyftx.
Exchanges can charge various other fees, including deposit and withdrawal fees.
Most crypto exchanges do not charge deposit fees, but withdrawal fees are more common.
However, some exchanges don’t charge maker, taker, or spread fees.
Can such exchanges really be trusted, or are they scams in hiding?
Can Zero-Fee Exchanges Be Trusted?
It’s important to note that when an exchange claims to be free, you should still be wary.
Take Robinhood, for example.
Robinhood claims to charge no maker, taker, or spread fees for crypto transactions.
This sounds great, but there are underlying catches.
This way, the exchange can skim a profit off the top of each crypto purchase.
While Robinhood certainly isn’t a scam,its trustworthiness has been questioned.
The same goes for some other exchanges like BlockFi.
But if you make large or regular withdrawals, these fees quickly add up over time.
However, these exchanges are not necessarily untrustworthy.
Rather, it is how you interpret the marketing language that matters.
Of course, there are crypto exchanges out there that are a scam.
Some claim to charge zero fees across the board to lure victims.
Various illicit exchanges have been discovered in the past, such as QuadrigaCX.
This is unlikely to change any time soon, so you must be vigilant when choosing a crypto exchange.
But it isn’t all about feesmany factors determinewhether an exchange is well suited to you.
