How a Hong Kong Hike Revolutionized Crypto Trading Forever

In 2015, a conversation on a Hong Kong hiking trail between Ben Delo, BitMEX co-founder, and his friend Bavik, a derivatives trader, led to the creation of the perpetual swap. Delo was struggling to find a solution to customers' complaints about their positions closing unexpectedly. They wanted a product that resembled spot trading but offered the leverage of derivatives. The concept of a future that never expires was born, with the challenge of determining its value. Bavik suggested charging traders the bitcoin overnight rate, but such a rate did not exist at the time. Delo decided to create it, thereby inventing one of the most significant financial products of the 21st century. The story of BitMEX and the perpetual swap is one of innovation and adaptation, as the company moved from targeting institutional hedgers to catering to retail traders seeking high leverage and speculation. The introduction of the perpetual swap in 2016, with its dynamic funding rate mechanism, marked a turning point. This mechanism, which looks inward at the swap's trading rather than outward at external lending markets, has become the standard for major derivatives exchanges worldwide. By 2017, BitMEX had become the most liquid bitcoin market, processing billions of dollars daily, with the perpetual swap at its core. The product's success has been so profound that it has attracted the attention of traditional finance regulators, with the potential for it to be listed on equities, marking a significant validation of Delo's innovative creation.