Maker/Takers on Kwenta
Last updated
Last updated
In derivatives trading, makers are traders who create orders that add liquidity to the market, while takers are those who accept those orders, taking liquidity away, commonly via an order book system. Makers help keep the market running smoothly by ensuring there are enough orders (liquidity) on the order books, while takers help execute those orders and keep the market active.
Often, makers will receive a discount for having preset "resting" orders (liquidity) executed vs. market buying (taking) liquidity.
Imagine you're at a lemonade stand in a marketplace. The people who set up the stand and put up a sign with the lemonade price are like "makers" in derivatives trading. They create offers in the market, providing liquidity. The people who come to buy the lemonade at the displayed price are like "takers." They accept the offers created by makers, quickly filling orders and removing liquidity.
Kwenta uses an automated market maker, or AMM, which fills all orders at a skew-adjusted oracle price by leveraging the Synthetix liquidity pool. In the Kwenta system, "maker" orders are those placed against the current market skew, which results in a trader paying lower maker fees. "Taker" orders are placed with the skew, and result in higher taker fees. If a trade causes the overall market skew to change from positive to negative, a trader may have an order partially filled at each fee tier.
Example
The market above has $4,000 higher short open interest than long open interest, indicating a short skew of $4,000.
All short traders will pay taker fees.
Long traders up to $4,000 will pay maker fees.
A long trader opening a trade larger than $4,000 will pay maker fees on the first $4,000, and taker fees on the remaining size of the position.
