The Birth of a Revolutionary Trading Concept: How a Hong Kong Hike Changed the Face of Crypto

In 2015, a conversation on a hiking trail in Hong Kong sparked an idea that would change the crypto trading landscape forever. Ben Delo, co-founder of BitMEX, was discussing a problem with his friend Bavik, a derivatives trader. BitMEX had been experimenting with various futures contracts, but customers were consistently complaining about their positions being closed without warning. They wanted a product that combined the benefits of spot trading with the leverage of derivatives. Delo's question, "What if a future never expired?" led to the creation of the perpetual swap, a concept that would become a cornerstone of crypto trading. The idea was simple: a futures contract with no expiry date, anchored to the spot price through a daily funding rate. Longs paid shorts, or vice versa, depending on whether the swap was trading above or below spot. This innovative product was the brainchild of Delo, who built it from scratch, including the order matching engine, position keeping system, margining system, and settlement system. The launch of the perpetual swap in May 2016 marked a significant turning point for BitMEX, which soon became the most liquid bitcoin market in the world. The product's success was not limited to BitMEX, as it was eventually adopted by every major derivatives exchange in the world. Today, the perpetual swap is a testament to the power of innovation in financial markets, with a turnover of over $40 trillion per year. Delo's decision not to patent the product allowed it to spread rapidly, and now, a decade later, it is attracting the attention of traditional finance regulators. The CFTC is reportedly making room for perpetual swaps under its framework, and speculation suggests that the CME could eventually list them on equities. For Delo, this is the ultimate validation of an idea that started as a question on a hillside above Hong Kong.