In 2015, a hike in Hong Kong's countryside led to the creation of the perpetual swap, a financial product that would change the face of crypto trading. Ben Delo, co-founder of BitMEX, was struggling to find a solution to his customers' complaints about positions closing without warning.
They wanted a product that combined the benefits of spot trading with the leverage of derivatives. Delo's conversation with a friend, Bavik, a derivatives trader, sparked an idea: what if a future never expired? The concept of the perpetual swap was born, and with it, a new era in crypto trading. The swap was launched in 2016, and its impact was immediate.
It allowed traders to buy and sell with leverage, without the need for expiring contracts. The funding rate, a mechanism designed to keep the swap price aligned with the spot price, was a key innovation.
Today, the perpetual swap is a cornerstone of crypto trading, with every major exchange offering its own version. The product's success has attracted the attention of traditional finance regulators, and it may soon be integrated into mainstream markets.