The concept of the perpetual swap, also known as a perpetual future, was conceived in 2015 on a hiking trail in Hong Kong. Ben Delo, BitMEX's co-founder and a mathematician, was discussing a persistent problem with a friend, Bavik, a derivatives trader. BitMEX had experimented with various futures contracts, but customers continued to express frustration over their positions being closed without warning.
They desired a product that mimicked spot trading but offered the leverage of a derivatives exchange. Delo posed a question: what if a future never expired? Bavik's response was that it would be theoretically worth infinity due to the compounding carrying cost.
However, he suggested charging traders the bitcoin overnight rate to mitigate this issue. Delo decided to build this concept, which ultimately led to the creation of one of the most significant financial products of the 21st century.
The story of BitMEX's evolution and the perpetual swap's impact on the crypto trading landscape is a testament to innovation and the power of responding to customer needs.