Hidden Costs & How to Save

Crypto exchanges are the most popular platforms in the industry, serving millions of users worldwide. More often than not, these trading apps are the first point of entry for new users exploring the crypto space.

They make it easy for users to engage with digital assets by offering a range of services.

However, users are expected to pay some fees when using these services.

While this makes sense because these platforms need to generate revenue to run their businesses, understanding how crypto exchange fees work will help users make the most of their trading activities and save money.

This article discusses everything you need to know about crypto exchange fees and why they matter. It also highlights ways to reduce these costs, bolstering users’ gains.

What Exchange Fees Are and Why They Matter

Crypto exchange fees are the costs users incur when buying, selling, or transferring cryptocurrencies. But it goes beyond that. It also encompasses fees from crypto activities such as trading, staking, mining, lending, borrowing, and many more.

These fees are revenue that the exchanges use to keep their business running. Each crypto trading platform has its own fee structure, based on several factors, such as transaction type, trading volume, and even a user’s VIP status.

Crypto exchanges also charge fees to avoid spam orders. Some malicious users often use bots to place spam orders, which can cause congestion and falsify the platform’s trading volume. When these bad actors realize they would incur fees for executing spam transactions, they may reconsider and stop their actions.

When crypto users know exactly how much crypto exchanges charge in fees, they can plan their trading accordingly. It helps them to know how much of their capital is going to the platform. Knowing this, users can determine whether to trade fewer times to reduce the fees they would pay, and hopefully increase their profits. In our guide on crypto trading tips, we pay specific attention to how fees can stack up and chip away from your profits, so make sure to check that out.

Not only that, but fees are recognized as an expense. In other words, most of the good crypto tax software will factor them and offset the taxable gain accordingly, so you don’t overpay on your yearly tax bill.

Some crypto exchanges may appear to have low fees, while others seem expensive. However, in some cases, these platforms with so-called low fees may have hidden costs. Knowing this is where the real cost-effectiveness lies. Understanding fees will help users compare platforms effectively and make informed choices.

Trading Fees: Maker, Taker, and Tiered Structures

Anyone who trades on crypto exchanges knows that the most common fees they pay are maker and taker fees. There are also tiered fee structures that reward users for trading frequently. Let’s break each of them down.

Maker

A maker is a trader who adds liquidity to the market. This happens when you place an order that does not get filled right away, most commonly a limit order. When you place this kind of order, it sits on the order book and becomes part of the pool from which other orders are filled. In other words, you are helping to create a deeper and more liquid market by adding to the list of available orders. Because of that, market makers are typically rewarded with lower crypto fees.

Taker

A taker is a trader who removes liquidity from the market by buying and selling directly from the order book. This occurs when you place an order that is filled immediately – typically through a market order. When you act as a taker, you remove orders that other traders (makers) have already placed. Hence, you are reducing the number of available options in the market. Because your order is processed instantly and requires the exchange to match and complete the trade immediately, the exchange charges a slightly higher fee for this service.

Tiered Fee Structures

Crypto exchanges use tiered fee structures to provide trading fee discounts to traders. In this structure, the more users trade on the exchange, the more they become entitled to enjoy higher discounts on fees. This structure also benefits those who trade on exchanges with large amounts. The idea is to incentivize traders to be more active on the exchange and also spend more on trading. Each crypto exchange has its own fee structure. As a result, it is helpful for users to compare the tiered fee structures of different platforms to make wise choices.

Deposit and Withdrawal Fees Across Different Exchanges

Whenever users deposit or withdraw crypto assets, a fee is often attached.

Most crypto exchanges charge a deposit fee when users send fiat money into their accounts, especially via bank transfer, debit/credit card, or other third-party payment platforms. However, funding your account with crypto assets is free for most exchanges. Of course, you will have to pay a network fee, and the amount depends on the assets and blockchain.

Withdrawals, on the other hand, mostly come with a cost. Crypto platforms charge withdrawal fees when users transfer funds from their exchange account to their local banks and other crypto platforms. Each crypto exchange has its own unique withdrawal fees. Some charge a fixed fee, while others charge a percentage of the amount withdrawn.

That said, let’s take a look at the deposit and withdrawal fees of some of the most popular crypto exchanges, including Binance, Bybit, Coinbase, KuCoin, and OKX.

Binance

Deposits: Crypto deposits are free.

Withdrawals: Binance charges a flat fee for each cryptocurrency withdrawal. However, the fee depends on the network and asset involved. For example, withdrawing USDT via the BNB Chain costs 0.01 USDT, while withdrawing USDT via Ethereum and TRON costs 1 USDT.

Bybit

Deposits: Crypto deposits are free.

Withdrawals: Bybit charges $0-$1 for USDT withdrawals across all networks and 0.00011 BTC ($10) for BTC withdrawals.

Coinbase

Deposits: Crypto deposits are free. However, fiat deposits may have charges depending on the payment method. For instance, users pay a $10 fee on wire transfers.

Withdrawals: Coinbase charges two types of fees when you withdraw your assets from the platform.

1. Network fee: The fee paid to a miner or validator for processing a transaction on the blockchain. The network fee depends on the asset and blockchain, and Coinbase usually displays it at the time of withdrawal.
2. Processing fee: Coinbase charges this fee to process the transaction on its platform. The exchange charges 0.2% (of the transferred amount) for BTC withdrawals via the Lightning Network and 0.01% (of the transferred amount) for USDT withdrawals, capped at 20 USDT.

KuCoin

Deposits: Crypto deposits are free.

Withdrawals: KuCoin charges withdrawal fees based on assets and the blockchain used for the withdrawal. USDT withdrawals, including taxes, can cost as much as $5 or as little as $0.5, depending on the network. And when withdrawing BTC via the Bitcoin network, KuCoin charges a fee of 0.000963 BTC.

OKX

Deposits: Crypto deposits are free

Withdrawals: Fees depend on the network cost for the coin you are withdrawing. For example, the minimum and maximum withdrawal fees for USDT are 0.001 USDT (Berachain and Plasma) and 1 USDT (Solana), respectively. On the other hand, those using local bank transfer pay $30 for the withdrawal service.

Hidden Costs Traders Often Overlook

Aside from the pronounced fees we have discussed so far, such as maker-taker fees, some exchanges go further and charge users hidden fees that are not mentioned. These are subtle and are not readily labeled as fees, but will still cost users money. Here are some common ones among them:

Currency conversion charges

Whenever a user converts a crypto asset to another cryptocurrency or to fiat currency, the crypto exchange may apply conversion fees that are added to the total cost before the trade is executed.

Slippage

During times when the crypto market is experiencing rapid volatility or liquidity is low, the price at which traders place their orders may differ from the price they receive from the order book. This difference is called slippage. The sad part is that traders may end up getting worse prices than expected due to slippage. While technically not a “fee,” this is highly correlated with the exchange’s liquidity and market depth. It’s one of the most important considerations when choosing a venue to trade. The best crypto exchanges have the lowest slippage.

Network fee markups

Every transaction that passes through a blockchain network comes with a network fee. However, crypto exchanges may add their markup to this cost, especially for trades on blockchain networks like Bitcoin and Ethereum.

Spread markup

In crypto trading, a spread is the difference between the actual market price of a cryptocurrency and the price at which a trader bought it. This is one of the most common hidden fees that exchanges use. Even when they claim to offer zero-fee transactions, the spread markup could be the exchange’s way of making up the difference.

Network Fees and Their Impact on Transactions

Network miners or validators are incentivized with payments called network fees whenever they confirm transactions and add blocks to the mainnet. Their actions help secure the blockchain, keeping its decentralization intact.

In most cases, these fees are unpredictable since they are affected by network congestion. This happens when the blockchain is experiencing heavy usage. When the system is congested, its fees tend to skyrocket.

Most blockchain networks use either a proof-of-work (PoW) or proof-of-stake (PoS) consensus mechanism. Those using the PoW model are known to be slower and come with higher fees during network congestion. On the other hand, PoS models are known for their cheap and fast transaction settlements.

Spread Markups and Price Execution Differences

A spread is the difference between the current trading price of a cryptocurrency and the price at which a user buys it. Traders pay this cost whenever they buy or sell crypto immediately. This applies even in cases where the platform advertises low or zero trading fees. Some crypto exchanges adjust the spread to bolster their gain without mentioning it as a separate fee – because technically it’s not. This happens without the user’s knowledge. Traders who are not observant may even use crypto exchanges for years without knowing about these spreads. Factors that can affect the spread include trading volume and the availability of orders on the exchange.

As the spread increases, traders end up paying more to buy a cryptocurrency and receive less when selling it. This hidden markup is not always obvious. This may be because most traders are focused only on the advertised fee rates, overlooking how the spread affects their total cost. When traders understand this, they will know how to ditch unnecessary expenses.

Conversion and Cross-Asset Swap Charges

Conversion fees are the fees one incurs when converting one cryptocurrency into another within the same platform. Whether at a centralized exchange or a wallet, users will incur a fee to process the transaction.

Cross-asset swap fees, on the other hand, are slightly different. Users usually pay these fees when using a bridge or specialized protocols to swap assets across different blockchains.

How KYC Levels Influence Fee Structures

Since most centralized crypto exchanges are regulated, they require users to submit Know Your Customer (KYC) information for verification.  This means that users must submit their personal credentials, such as a government-issued document and proof of address, to verify their identity. This helps to scare away malicious users, since they have to divulge their identity, which can be used to track them down.

KYC levels can affect what users pay in several ways. Most exchanges have different verification levels. For instance, basic KYC enables access to standard trading features while those with higher KYC get to enjoy extra benefits from the platform, including lower fees.

Strategies to Reduce Trading and Transfer Costs

While one cannot entirely escape fee payments, there are strategies to help reduce costs. These include:

Consolidate transactions to limit costs

Some users often send cryptocurrencies in bits to other accounts. This always comes with fees on each transaction. Instead of taking this approach, users can send assets in larger chunks. This way, they cut down on costs.

Avoid trading during market congestion

Most blockchain networks get congested whenever activities like airdrop or other campaigns from big projects are ongoing. In such cases, network fees increase more than usual. The blockchain network could even experience a technical glitch, such as downtime, because of the heavy usage. Because of these, it is best for traders to avoid trading or reduce their trading during these periods.

Use low-cost blockchains

Most layer-1 blockchains using the proof-of-work (PoW) consensus mechanism are known for being painfully slow. As a result, transactions often come with high fees. Hence, when sending crypto on-chain, it is helpful to choose a fast blockchain, such as those using the proof-of-stake (PoS) algorithm. These blockchains often introduce low-cost transactions, worth pennies, as long as the network is not congested. Most of the time, users opt for layer-2 blockchains, such as Polygon, Base, or Optimism.

Compare fees across exchanges

Another strategy that helps is to compare the fees of top crypto exchanges. This article highlighted the applicable costs on five major exchanges. While comparing them, look into their features so that you can make an efficient choice. It is also worth mentioning that most of these platforms offer fee discounts to those holding their affiliated cryptocurrency. For instance, BNB holders are entitled to discounts on Binance.

Explore marketing promotions offering fee rebates and zero-fee trades

Most crypto exchanges host marketing campaigns from time to time. Among the offers in these campaigns could be fee rebates and even zero-fee trades within a specific duration. To qualify, these exchanges would tell users to meet some criteria. If they do, they qualify for these discounts that help to downsize expenses.

Comparing Centralized vs. Decentralized Exchange Fees

Centralized exchanges tend to charge higher fees. Whenever users custody their cryptocurrencies with CEXs, they give the platform more control over their assets. The centralized exchanges discussed in this article, such as Binance, Coinbase, and OKX, charge fees of 0.1% to 0.2% per trade for regular users. These platforms also charge fees for services like trading, lending, and more. Many CEXs reduce their fees for users with high trading volume and users who hold the exchange’s native token.

Decentralized exchanges (DEXs) are different. They are projects that give users complete control over their assets. Developers behind these projects use smart contacts to oversee activities. They also foster anonymity. This is why users can access services without undergoing KYC verification (in some cases). A major disadvantage of DEXs is that users must have a moderate level of crypto knowledge to easily navigate them.

DEX fees are usually lower than those of CEXs. While DEXs don’t charge account-based fees, their swap fees are based on the crypto protocol and liquidity pool. Many pools charge between 0.01% and 0.3%, but some go as high as 1%. For example, Uniswap v3 and PancakeSwap v3 both offer fees ranging from 0.01% to 1%.

Notably, the total cost of a DEX trade includes network gas fees and slippage. This means that DEX trades on blockchains like Ethereum can be more expensive than CEX spot trades, especially for smaller amounts. On cheaper chains and layer-2 networks, DEX plus gas can, however, be cheaper than CEX fees for some users.

Most recently, though, there has been a notable trend in the face of decentralized perpetual futures exchanges such as Hyperliquid, Lighter, and others. Some of them go so far as to charge 0% maker fees to attract users.

Evaluating Fee Schedules Before Opening an Account

The fee schedule is another thing that crypto traders need to understand before creating a crypto exchange account. Today, when most users scout for crypto exchanges to use, they often pay attention solely to the platform’s services, trading interface, and supported cryptocurrencies. The exchange’s fee structure is often left out of the picture. In the real sense, evaluating these fee structures helps users make the right choice. This way, they don’t lose a large chunk of their potential gains to crypto exchanges.

The fee schedule comprises all the costs that an exchange charges. They include trading fees, deposit fees, withdrawal fees, network fees, spread costs, conversion charges, and even inactivity fees. Learning how to read this breakdown will help users make smart decisions before they start trading.

One of the major reasons fee schedules matter is that they directly affect your profits. For example, if you plan to trade frequently, you might choose an exchange with lower maker and taker fees so you keep more of your earnings. Knowing the withdrawal fees helps traders ditch platforms that charge high fees for sending crypto. This can be quite helpful for users who withdraw often.

Some platforms may look cheap at first, but they have high withdrawal fees. Similarly, some exchanges widen their spread while promoting zero fees. This means you pay more fees when buying and selling crypto assets on the platform.

Once users can evaluate fees, they will understand the actual costs they are likely to incur when they start using their preferred exchange. For instance, most platforms offer free crypto deposits but may charge some fees when users deposit fiat via bank transfers or cards.

Withdrawals also vary depending on the coin you choose, because blockchain networks themselves require gas fees. Knowing this ahead of time helps you avoid confusion when you see a withdrawal charge that looks higher than expected. What is the end result? It helps users to save a lot of money over time and make their trading experience clearer, smoother, and much more predictable.

Conclusion

The crypto industry offers numerous ways for investors to make money. However, users who turn a blind eye to crypto exchange fees are setting themselves up for huge losses that will accumulate over time. Not wanting to be among those who could fall prey to unexpected fees, this article discussed how crypto fees work and listed five exchanges that stick with platforms that offer the most services at the lowest costs.​