Ever since Circle purchased the Poloniex exchange earlier this year, the crypto community has been anticipating some major improvements to the trading platform. Thus far, the new partnership has proven itself very beneficial to the exchange. On March 26, the exchange partnered with TradingView to become the first crypto exchange on the Trading Panel. This has allowed members to trade cryptocurrencies and tokens directly from the TradingView charting platform.
In a recent blog post, Poloniex developers have listed several trading fee updates that will take effect on May 15. Poloniex hasn't updated trading fees since March 20, 2016--a surprising amount of time considering just how big cryptocurrency markets have become since then!
How Does Poloniex Categorize Users
Before we can dig into the upcoming changes, we first need to consider how the exchange categorizes its users. The Poloniex exchange sees every trade as a transaction between two separate parties: makers and takers. Makers are responsible for posting an order to the order book. Takers, when they agree on the price, very literally "take" these orders--thus completing a transaction between the two parties.
This maker-taker relationship is responsible for creating a healthy transaction environment on the Poloniex exchange. Makers are responsible for creating liquidity on the Poloniex exchange and are rewarded with fee discounts. Makers have extraordinarily high incentives to "outbid" each other, which creates a very tight, competitive market spread. While takers do pay a slightly higher trading fee on the exchange, but these trading fees are offset by the better prices that a tight market spread provides.
Unwrapping the New Trading Fees
1.Trading Tiers Will Be Based on US Dollars Rather Than Bitcoin
Beginning in 2016, trading fees were determined by a rolling 30-day trading volume. This calculation would be very simply determined by the total volume of transactions that a user completed during a 30-day period. However, transaction fee tiers were calculated against the price of Bitcoin. Over the years, this has produced extremely inconsistent results due to the extreme volatility of Bitcoin's price. Beginning May 15, trading fee tiers will be stabilized by using the daily average of the BTC-USD rate.
2.Trading Fees Are Being Lowered "Across the Board"
Liquidity on the Poloniex exchange has risen significantly since the original trading fees were established in 2016. In order to better match market standards, Poloniex is planning to lower every trading fee tier. Taker fees will start at 0.20% and maker fees will start at 0.10%. But how does this compare to fees on other exchanges?
Actually, the new trading fees are EXTREMELY competitive in comparison to other exchanges. Here are how some of the major exchanges today stack up against each other:
Bittrex: All trades are charged a 0.25% commission. details here
Binance: All trades are charged a 0.10% trading fee. Trading with the Binance Coin results in a 0.05% trading fee. details here
Bitfinex: Poloniex's new trading fees perfectly match the trading fees currently charged on the Bitfinex exchange. details here
Gemini: Trading fees are nearly 10x higher on the Gemini trading exchange, with the lowest tier starting at 1.00%. In addition, the trading tiers are much more volatile since they are based on Bitcoin and Ether prices. details here
GDAX: Trading fees apply to takers only, but range between 0.10%-0.25% for BTC books and between 0.10%-0.30% for ETH books. details here Fiat currencies have a conversion rate of 1.49% for standard buys/sells and 3.99% for immediate buy/sells (using credit/debit cards). details here
3. Poloniex is Lowering Volume Thresholds for Fee Discounts
In order to access tier discounts, Poloniex requires that you trade certain volumes of currency. A similar approach is taken on the Bitfinex exchange, whereby makers are compensated in proportion to the amount of liquidity that they create on the exchange. As it turns out, Poloniex's updated tier discounts will perfectly match Bitfinex's current trading fee tiers. This should be welcoming news for crypto enthusiasts in the USA, since Bitfinex terminated functionality for US individual users on November 9, 2017.
Big Plans for Poloniex In The Future
Ever since Circle acquired the Poloniex exchange, they have been hinting towards major platform upgrades in order to better meet the needs of its customers. Considering the updates to the new trading fee tiers, it seems very likely that Poloniex is set to begin adding more currencies and tokens to its current listing of supported trading pairs. Circle has also hinted several times that they wish to expand the Poloniex exchange to services outside of cryptocurrencies. Poloniex is without a doubt poised to become a game-changer for cryptocurrency trading in 2018.
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