Crypto Exchange Tier Levels – understanding their requirements and differences

Each crypto exchange has their specific tier-level requirements, some very complex, some more straightforward. Your tier level is of high importance because it determines your individual fee level, which can, depending on your trading activity, cost you a double-digit percentage of your balance. What are the typical tier requirements and what should you look out for?

 

The bad news for crypto traders first: The tier level requirements differ for each exchange, which makes it very complex to compare them among each other.
The good news: Tier levels usually depend on a few common trading metrics.

So what are those common tier level requirements? Let’s deep dive into them one-by-one:

 

Trading volume (mostly last 30 days):

 

Trading volume is the most common metric used by exchanges to classify their users into different tier levels, as it gives a good picture on the trading activity and value. For trading volume, each trade counts towards the volume (with a few exceptions e.g. for zero fee trades). Hence, each spot buy and sell counts towards your trading volume. The same applies for Futures trading, both opening and closing the position each count to the trading volume.

Some exchanges (e.g. FTX) only use trading volume as the requirement for the users’ tier level. However, with spot and futures trading volume also comes the first twist on how exchanges decide on the associated tier level. There are 3 different approaches applied by exchanges:

1) Both spot and futures trading volume is added together to reach the next tier level requirement (e.g. FTX).

2) Spot and futures trading volume is looked at separate to reach the min. requirement for the tier level, however the exchange grants the higher tier level of spot and futures (e.g. Binance). For example, if the spot volume satisfies tier 2, while the futures volume satisfies tier 3, the user will enjoy tier 3 fee rates both for spot and futures volume.

3) Spot and futures tier levels separated (e.g. Cryptocom, MEXC). Users might be in tier 1 for spot, paying tier 1 fee levels, however in tier 5 for futures trading.

 

The volume requirement to reach a new tier level is defined by the exchange and mostly expressed in USD. Therefore, it is plannable for the user how many trades will reach their next tier level upgrade. When dealing with very high volumes, for example for market makers, the volume requirements are oftentimes stated as a percentage of the total exchange or specific asset volume. Normal retail traders usually do not have to worry about those tiers, as it requires very large volumes.

 

Holding (native exchange coin):

Holding a specific coin (mostly the native exchange token, e.g. BNB for Binance) is the second most common requirement for reaching the next tier level. Mostly, the holding requirement is an additional requirement to the volume requirement (e.g. Binance), however in some cases it is a different approach to reach a new tier level (e.g. KuCoin). As a result, traders which might not qualify for a high tier level through their past volume can still achieve a high tier level purely on their holding of a certain coin. This approach can give attractive fee rates to traders, which might not be able to achieve through other ways. In this case, it becomes a trade-off for the trader whether to accept the liquidity and risk effects in exchange for savings in their fees.

Unfortunately, some exchanges require the trader to stake or lock their native exchange tokens in order to enjoy the higher tier levels or fee discounts. For example, this is the case for Cryptocom and FTX.

 

Account Balance:

 

The third, and less common requirement for tier levels at cryptocurrency exchanges is the account balance. Mostly, the account balance of all wallets at the exchange will be summed up to reach the tier level requirement. In contrast to the holding requirement, the balance requirement is mostly a separate approach to reach a higher tier level. Hence, the trader does not need to qualify for both the volume/ holding and the balance. The exchange will decide on the tier level depending on which requirement yields the highest tier for the user. For traders with high account balance, this can create attractive opportunities to enjoy low fees, without worrying about balance or holding requirements. Examples of exchanges allowing for balance tier level requirements are OKX, MEXC and Bybit (up to a certain tier level).

 

As you can see, there are different strategies to optimize your tier level depending on the requirements of certain exchanges. Recently, the first exchanges are introducing an asset-specific fee level to the tiers as well, which creates an additional level of complexity (e.g. Binance US). In asset-specific fee levels, your fee depends not only on your tier, but also which asset is traded. For example, a BTCUSDT trade might be differently priced compared to a LINKUSDT trade. It remains to be seen whether asset-specific fee levels become the standard among different exchanges.

 

If you would like to analyse whether you could optimize your fee levels by changing to a different exchange, you can use our fee analysis engine. The fee analysis engine retrieves your volume, balance, and holding and automatically matches your trading activity to the respective tiers at major exchanges. Thereby, it identifies your personal fee saving potential!

 

Besides the difference in fee levels, rising in the tier levels at exchanges might also give you additional benefits. Those benefits include reduced/ waived withdrawal fees, ICO access, increased staking rewards, voting rights, and many more (e.g. for FTX).