By Erin Langs, Co-Founder, Head of Business Development, Symetria

Building the most user-friendly cryptocurrency wallet & exchange platform requires an in-depth analysis of the competitive landscape to understand trends and norms. Taken a step further, for us to create a wallet and exchange platform that people actually want to use, we have to know exactly what we are planning to disrupt for the better, and how we’ll go about doing so.

When we started this journey months ago, we kicked off by having conversations with cryptocurrency traders of varying levels of proficiency. We spoke with users who are reluctantly standing on the sidelines, excited but not quite sure. We also talked with active traders using multiple platforms who were all interested in cryptocurrency. We found that some were in it to make money and don’t care about the technology or its potential, and others who have an unwavering conviction in the future of the blockchain economy. Certainly, we had a lot of different views, but we also had a consensus.

One thing that most everyone agreed on: fees are a pain-point when trading cryptocurrencies, not because the cost is incurred, but because there is a general lack of transparency and clarity on what the fees are, how they are charged, and why.

To understand these mechanisms, we set up a research framework and took a deep-dive into the top 20 exchanges by volume, seeking to learn how fees are communicated and applied and where the discrepancies are. We want to share some of these findings.

These findings that are by no means exhaustive, but they will help to inform our decisions on what to charge, and one thing is for certain: we will be transparent regarding our fees. They will be clearly displayed, and easy to understand. They will be rationalized and in line with the fair value of the services that we will provide.

Below is a break-down of the fees on the top-20 exchanges by volume (calculated in mid-May). We looked at deposit fees, withdrawal fees, maker-taker fees, and volume discounts offered by some exchanges.

Here is a summary of these findings. We hope that this will make for more informed trading decisions.

Deposit Fees

Some exchanges charge a deposit fee, this is surprising, because you would assume that an exchange would welcome the incoming volume, but to each their own. In any case, we advise users to do basic research of their own before signing up to make sure they’re factoring in this cost before deciding whether or not they are prepared to pay it to use a wallet or exchange.

In our research, we found that while most exchanges allowed users to make a deposit for free, only four in the top 20 required a payment.

Of those four:

One exchange applied a minimum threshold. Any deposit under that required the user to pay a small fee (which varied based on the cryptocurrency). These fees were fully disclosed and generally minuscule.

(which varied based on the cryptocurrency). These fees were fully disclosed and generally minuscule. One exchange charged a fee on deposits under 1000 USD in value. They claim that the fee varies based on the cryptocurrency that the user deposits but they do not disclose how these fees are calculated. This means that the fee is essentially arbitrary and determined at the whim of the exchange. This is not a transparent practice, and it’s not something we’d do.

in value. They claim that the fee varies based on the cryptocurrency that the user deposits but they do not disclose how these fees are calculated. This means that the fee is essentially arbitrary and determined at the whim of the exchange. This is not a transparent practice, and it’s not something we’d do. Another one of the four didn’t charge for deposits, with one exception: Bitcoin. For these, they charged a flat rate of 0.0006 BTC , regardless of how big the deposit was. It is worth noting that it took a fair bit of digging to find this information, and no justification was provided. So, while we urge users to conduct research, we would expect that exchanges list their fees clearly, somewhere that is easy to find.

, regardless of how big the deposit was. It is worth noting that it took a fair bit of digging to find this information, and no justification was provided. So, while we urge users to conduct research, we would expect that exchanges list their fees clearly, somewhere that is easy to find. Finally, one exchange didn’t charge a fee on deposits made in cryptocurrencies, but it did charge for fiat deposits except those made in USD. This fee varied between 1% to 2.5%. Interestingly, this was not a US-based exchange.

Withdrawal Fees

Withdrawal fees (the cost to take funds out of an exchange) can be a little tricky. They’re normally only found in the small print and can be adjusted at any time and with no notice by the exchange which often only publicizes a minimum fee schedule. Surprisingly, in some cases, the charges don’t match the provided justification, and we advise traders to be careful and make sure they find out what fees they’ll incur before conducting a trade. If you find that the fees on your exchange don’t match the listed justification, consider switching to a more transparent platform. While it won’t save you this time, it may save you both time and money in the long run; regardless, this practice should not be tolerated.

All but one of the 20 exchanges we looked at charged withdrawal fees.

One of the exchanges (a decentralized exchange) charged a flat rate of 0.05% for all withdrawals.

for all withdrawals. Twelve of the exchanges reviewed offered variable rates based on “the network fee associated with crypto transfers.” They also had minimum thresholds and charged a minimum amount if the network fee were to fall below that threshold. These tended to vary based on the currency being traded.

based on “the network fee associated with crypto transfers.” They also had minimum thresholds and charged a minimum amount if the network fee were to fall below that threshold. These tended to vary based on the currency being traded. Six of the exchanges provided no fee schedule, so it was the luck of the draw — you either found yourself pleasantly surprised or enraged. This lack of transparency should make users cautious.

While some exchanges claim that their withdrawal fees are dependent on network charges and conditions, in some cases these didn’t actually match the market rate.

For example, one of the biggest exchanges charged a network fee for withdrawal equal to ETH 0.01. As of mid-June 2018, ETH 0.01 equated to USD 4.74. The actual network fees for that transaction should be $0.595. While this doesn’t seem huge by dollar amount, it’s 696.69% more than the real market rate.

Maker-Taker Fees

Maker-Taker fees are applied based on whether the trader adds or removes liquidity. The rates can vary quite a bit between exchanges and can end up being the highest of all transaction costs.

We’ve said it before, and we’ll say it again: do your research before trading to understand the fees, especially maker-taker fees.

Fixed rates are best for traders who want to keep things consistent and not worry about fees, whereas variable rates might be best for traders who engage in higher transaction volumes and want to keep rates low. There can be volume discounts for large volume traders, and we’ll look at that in more detail later on.

Here’s what we found:

For Market Makers (those who add liquidity):

Rebates (in the form of a lower rate) are generally given to those who provide liquidity. The fixed rates varied between the top 20 exchanges between 0.1–0.25%. For one decentralized exchange, it was free, with users only required to pay the network fee, while another exchange charged a variable fee of 0.05% for fiat pairs and 0.25% for crypto pairs.

For Market Takers (those who take liquidity): Symetria is a blockchain technology company based in Vancouver, Canada. The company is developing the first cryptocurrency wallet and exchange service built using personal blockchains. Its proprietary technology combines the speed and privacy of centralized services with the fairness of a decentralized exchange. Symetria’s mission is to bring accountability to the industry, making the blockchain economy more accessible to everyone. Symetria’s MVP will launch in early 2019.

Those who remove liquidity generally face a charge in the form of a higher rate. There was a fixed rate between 0.1–0.3% for the exchanges we looked at, and the free DEX we mentioned above actually charges the highest market taker rate of 0.3%.

for the exchanges we looked at, and the free DEX we mentioned above actually charges the highest market taker rate of 0.3%. One of the exchanges didn’t charge a fee for customers using their wallet, and a “ network fee ” was applied to everyone else but not clarified. We’ve seen discrepancies between actual network fees and charges from the exchange, so would urge caution here.

for customers using their wallet, and a “ ” was applied to everyone else but not clarified. We’ve seen discrepancies between actual network fees and charges from the exchange, so would urge caution here. One of the exchanges charged no exchange fees at all and makes its money by taking a cut of fiat deposit and withdrawal fees.

Volume Discounts

As mentioned, some exchanges offer discounts to users who trade larger volumes. This can be a great way to keep costs manageable when trading big. Some exchanges also have native tokens which allow discounts on trading fees, and we’ll cover this in more detail in a later post.

We found that discounted fees were offered by nine of the top 20 exchanges we reviewed.

Of these, six offered discounts in bracketed rates, based on USD or BTC values. The rates differed based on maker or taker transactions, and in general larger trades mean lower fees.

For market makers

Only eight of the top 20 exchanges offered this. Five of these used a similar system: once the size of the trade passed the eligibility threshold, the rates varied from 0.24% to a complete waiver , depending on the transaction size. The larger the trade, the lower the fee.

, depending on the transaction size. The larger the trade, the lower the fee. One exchange did things a little differently, offering a fee schedule that varies based on the trade pairs. It applied to both crypto-crypto and crypto-fiat/fiat-crypto.

based on the trade pairs. It applied to both crypto-crypto and crypto-fiat/fiat-crypto. One exchange offered discounts instead of lower rates . These ranged from 5% to 50% depending on the size of the trade. These are calculated in BTC.

. These ranged from 5% to 50% depending on the size of the trade. These are calculated in BTC. Another exchange only offered discounts to paying members. They were paid in the exchange’s own token and used tiered discount brackets ranging from 10% — 50% based on how many tokens the user-owned.

For market takers

Nine of the 20 exchanges offered discounts for market takers. Once above the eligibility threshold, traders were looking at rates between 0.24% and 0.1% depending on transaction size. As before, larger trades mean lower fees. Six of the nine exchanges used this model.

depending on transaction size. As before, larger trades mean lower fees. Six of the nine exchanges used this model. One exchange had a fee schedule based on trade pairs , which applied to both crypto-crypto and crypto-fiat/fiat-crypto.

, which applied to both crypto-crypto and crypto-fiat/fiat-crypto. Once again, one exchange gave discounts instead of lower fees . They ranged from 5% to 50% depending on the size of the trade and were calculated in BTC.

. They ranged from 5% to 50% depending on the size of the trade and were calculated in BTC. Another exchange offered trade discounts to paying members only. As with market makers, this fee was paid in the exchange’s native token, and discount brackets ranged from 10% to 50% based on how many tokens the user-owned.

Make an informed decision

It’s clear to see that some exchanges are better than others when it comes to fees. Some share information clearly and transparently but use a complex and confusing fee structure.

Some exchanges are clear and open across the board while others are dubiously opaque and withhold lots of important information.

There’s clearly a lot of variances, so users should take the time to learn about the different options and pick an exchange they feel comfortable with based on its transparency, consistency, and track record.

At Symetria, as we work on designing, developing, and delivering a cryptocurrency exchange and wallet that people want to use, a big part of our focus is on making the trading experience as smooth as it can be.

To do this, we want to make sure that fees easy to find, clearly presented, and free of any surprises. This is important to users, so we won’t be treating it as an afterthought.

Special thanks to Edmund Ng who was instrumental in the research and data collection process for this blog post!

Learn more at https://welcome.symetria.io/

Connect with us!

Twitter: @Symetria_io

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Reddit: https://www.reddit.com/r/Symetria/

LinkedIn: https://www.linkedin.com/company/symetria-exchange/

About Symetria

Symetria is a blockchain technology company based in Vancouver, Canada. The company is developing the first cryptocurrency wallet and exchange service built using Personal Blockchains. Its proprietary technology combines the speed and privacy of centralized services with the fairness of a decentralized exchange. Symetria’s mission is to bring accountability to the industry, making the blockchain economy more accessible to everyone. Symetria’s MVP will launch in early 2019.