Liquidity Rebate

A Liquidity Rebate is a financial incentive paid by an exchange to market makers for providing liquidity. When a trader places a limit order that is executed by a taker, the exchange may credit the maker with a portion of the transaction fee.

This model is designed to encourage deep and stable order books, as market makers are compensated for the risk of being filled. It is a key component of the maker-taker fee structure and a primary revenue driver for many professional market-making firms.

By effectively lowering the cost of providing liquidity, rebates foster a more efficient market with tighter spreads. In cryptocurrency, these rebates are often essential for attracting the liquidity necessary for high-volume trading.

It is a deliberate economic design choice to ensure market functionality.