Binance Futures to Reward Market Makers With Negative Fees on Specific Trading Pairs

Francisco Memoria
  • 4 Feb 2020

Major cryptocurrency exchange Binance has revealed it’s adjusting its fee structure on Binance Futures to reward market makers with negative fees for adding liquidity to the platform

According to an announcement Binance published, its revised Binance futures Market Maker program will see market makers who qualify receive a negative fee on selected trading pairs. Market makers are users who add liquidity to the market by placing orders below and above the current market price, effectively adding depth to the order book.

On the other hand, a market taker is a user who takes liquidity from the market by filling already placed trades. Exchanges often boost their liquidity by attracting market makers with lower fees. Binance’s offer is to seemingly reward them with negative fees to improve liquidity on its binance Futures platform.

Details on the negative fees aren’t yet clear, as Binance’s announcement only addresses the requirement market makers will have to meet to be eligible to receive the rewards. To join the program, users will need to have a 30-day trading volume of over 1,000 BTC ($9.1 million) on Binance. The announcement reads:

"If your 30-day trading volumes exceed 1,000 BTC on Binance, and have quality market maker strategies, we would like to invite you to join the Program. Evidence of similar volumes on other exchanges will also be accepted."

The cryptocurrency exchange will also accept market makers with evidence of large trading volumes on other trading platforms. Those accepted will be subject to a weekly performance review based on various metrics, including on the order duration, market making time, total order sizes, volumes, and bid/offer spread.

Binance’s move to reward market makers comes shortly after it started adding various new perpetual contracts to Binance Futures. As CryptoGlobe reported, over the past few days it added a perpetual contract for Cardano (ADA), for Zcash (ZEC), and for Dash.

According to CryptoCompare’s December 2019 Exchange Review, Binance has been successfully gaining market share in the crypto derivatives space since it launched its futures products in September 2019. The exchange’s BTC perpetual future became the third most traded product by total volume late last year thanks to its growth.

Featured image by Mark Finn on Unsplash.