Why Maker Rebates May Not Outweigh the Spread
Maker rebates can easily be outweighed by the spread because you must first place a limit order to earn the rebate; if the price moves against you, your paper loss will quickly eat up that tiny rebate. In simple terms, if you misjudge the market direction or the spread itself is too wide, chasing rebates is like "stepping over dollars to pick up pennies."
Why Is It Easy to "Lose Dollars While Picking Up Pennies"?
The core of this issue lies in understanding the risk of placing limit orders.
The rebate is a reward for providing liquidity: By placing a limit order, you supply liquidity to the market. The exchange rewards you by returning part of the trading fee (maker rebate). In some altcoin programs, rebates can be as high as -0.010%.
The spread is the cost of taking liquidity: When you use a market order or "take" someone else's limit order, you pay the spread. This spread is essentially the gap between the bid and ask prices.
The absolute value of a rebate is typically very small, while the loss from the spread or a directional move against you can be huge.
| Comparison | Maker Rebate | Spread Loss |
|---|---|---|
| How It Occurs | Earned when a limit order adds liquidity to the market | Occurs when you take liquidity or misjudge the direction of your limit order |
| Typical Magnitude | Usually a negative fee, e.g. -0.005% or -0.010% | At least half the spread (spread/2), potentially above 0.01% |
| Risk | Order may not be filled; price may move against you while waiting | Losses scale linearly when direction is wrong, with no cap |
How the Spread Eats Your Rebate
Among transaction costs, besides the visible trading fee, there is a hidden cost — the bid-ask spread. When you use a market order, there is always a gap between the best bid and the best ask, and that gap is part of your cost. Even if you use a limit order (maker order), if the price does not move in the direction you expect, the waiting time may cause the spread to widen or the direction to turn completely against you.
Here is an example:
You place a buy limit order at 100. Because you are a maker, once filled, the exchange gives you a rebate of 0.01%, effectively making your cost 99.99.
But after you place the order, the market suddenly drops to 99.80. Now, if you abandon the limit order and buy at the market, your execution price is 99.80. However, your original order may not have been filled yet. If you cancel and rebuy, you essentially suffer the full drop from 100 to 99.80 — a loss of 0.20, far exceeding the 0.01 rebate.
Quantitative research also notes that when forecasting transaction costs, failure to accurately estimate order book liquidity costs and bid-ask spreads will lead to results that differ significantly from reality. Simply put, if you focus only on the rebate while ignoring the wide spread of an illiquid altcoin, your order might get stuck halfway up the trend and eventually trapped.
How to Confirm Whether the Operation Is Worth It
Before placing an order, do a quick calculation:
Check the order book spread: Look at the current best bid and best ask. If the spread is significantly larger than the rebate you can earn (e.g., rebate 0.01% but spread 0.1%), the risk-reward of the limit order strategy is very low.
Assess the market trend: Limit orders require time to get filled. If you judge that the market is in a strong trending phase, waiting for a fill may cause you to miss a better price or even force you to bear the risk of a trend reversal. In such cases, using a market order for a quick execution is more reliable.
