Bitcoin Exchange Fees Explained

HodlHodl is a P2P Bitcoin trading platform that charges a fee on each successfully completed trade. The fee structure depends entirely on whether you are using traditional On-chain or Lightning Network (LN-BTC) offers.

On-chain Bitcoin Exchange Fees

When an on-chain contract is created, each counterparty pays their own respective fee rate independently. For example, if the seller has a fee rate of 0.75% and the buyer has a rate of 0.5%, each party pays their own rate - the seller pays 0.75% and the buyer pays 0.5%.

HodlHodl receives fees in Bitcoin only. The fees are calculated from the Bitcoin deposit and deducted upon release from escrow - and only if the contract was completed successfully.

• The seller deposits Bitcoin into escrow including their trading fee on top of the contract amount.
• The buyer receives slightly less Bitcoin than was deposited in escrow, with their trading fee deducted from the release amount.
• In turn, the buyer sends the agreed fiat amount to the seller.

This way, both buyer and seller each pay their own respective share of the fee.

There are also On-chain Bitcoin network (transaction) fees. One is paid by the seller when depositing bitcoin in the escrow and another one is deducted from the deposit upon release. The seller selects the fee to be paid in their wallet when initiating the transaction and the buyer can adjust the fee in the settings, choosing from high, medium, low or custom.

How Much Does On-chain Trading Cost?

There are different trading fee rates depending on the user's status:

• Standard registered user — 0.75%
• User registered with a referral code — 0.5%
• User who has referred at least one active trader — 0.5%

💡 Using a referral code when registering permanently reduces your on-chain fee from 0.75% to 0.5%.

What Is the Minimum On-chain Trading Fee?

All on-chain trades are subject to a minimum trading fee, which applies when the standard percentage-based fee would be too low to cover transaction costs.

On small trades, the standard percentage can result in a very low absolute amount — in those cases, the minimum fee floor kicks in instead.

The minimum fee is dynamic and depends on:

• Current Bitcoin network congestion (mempool state)
• The size of the transaction in bytes

Under normal conditions, it does not exceed the equivalent of 5 USD in BTC. During periods of high network activity, it may be slightly higher.

⚠️ Important: As stated in HodlHodl's Terms of Service, the final fee (platform fee + Bitcoin network fee) only becomes visible after the seller sends Bitcoin to the escrow address. Before that, only an estimated fee is shown during contract creation — because the actual Bitcoin network fee cannot be predicted in advance and may vary based on current blockchain conditions.

HodlHodl is not responsible for the Bitcoin network transaction fee.

On-chain Practical Example

Trade: 1 BTC at $10,000 — Seller fee: 0.75% — Buyer fee: 0.5%

• Seller side: The seller deposits 1.0075 BTC ($10,075,0) into escrow. Of that, 0.0075 BTC ($75.00) is their trading fee, and 1.0000 BTC ($10,000.00) is the contract value.
• Buyer side: The buyer receives 0.9950 BTC ($9,950.00). Their trading fee of 0.005 BTC ($50.00) is deducted from the release, while they send $10,000 fiat to the seller.

Total fees withheld from escrow: 0.0125 BTC ($125.00)

In summary: the seller deposits 1.0075 BTC → escrow withholds 0.0125 BTC in fees → the buyer receives 0.9950 BTC, while sending $10,000 fiat to the seller.

Lightning Network (LN-BTC) Exchange Fees

For LN-BTC offers, the system utilizes the Lightning Network coupled with secure Arkade escrows and atomic swaps. The fee structure for these lightning-fast offers is split into two components:

• Trading Fee: A fixed 0.75% service fee for the platform or 0.5% if you sign up using a referral link.
• Swap Fee: A tiny, dynamic network fee required by Satora to perform the atomic swap between the Lightning Network and the secure Arkade escrow.

How Much is the Swap Fee?

The swap fee is minimal and depends on the trade amount and network conditions. To give you an idea of the scale:

• For a 10,000 USD trade, the swap fee is typically around 1 USD.
• For a 100 USD trade, the fee is a negligible fraction of a cent.

Because this fee is dynamic and handled by Satora, the exact amount is calculated at the exact moment of the trade.

How Does the Seller Pay Lightning Fees?

The funding process is completely transparent. To fund the escrow, the seller deposits:

[Trade Amount] + [Trading Fee] + [Swap Fee]

This initial Swap Fee covers the cost of moving the Bitcoin into the secure Arkade escrow. Once funded, the Bitcoin is locked and the trade proceeds.

How Does the Buyer Pay Lightning Fees?

The buyer receives their Bitcoin net of fees.

• In the Interface: You will see the "Amount to be received", which accounts for the platform fee:

[Trade Amount] - [Trading Fee]

• In your Wallet: When the Bitcoin is released, you will receive that amount minus the tiny Swap Fee required to route the funds from the escrow to your Lightning wallet.

💡 Note: The amount shown in the trade chat is an estimate; the final amount received in your wallet will vary slightly due to the dynamic nature of the network swap.

What Happens to Lightning Fees if a Trade is Cancelled?

If a trade is cancelled after the Bitcoin has already reached the escrow, the following rules apply:

• Trading Fee: HodlHodl does not charge this fee for cancelled trades. It is fully returned to the seller.
• Swap Fees: These are network costs paid to move Bitcoin between layers and are strictly non-refundable. Because the Bitcoin was moved into the escrow and must now be moved back out to the seller, the seller pays the Swap Fee twice (once for entry and once for exit).

Refund calculation for the Seller:

[Deposit] + [Trading Fee] - [Exit Swap Fee]

Essentially, the seller receives their full deposit and trading fee back, minus the two small network fees consumed to bridge the funds in and out of the escrow.