How a Hong Kong Hike Paved the Way for a Revolutionary Crypto Trading Product

The concept of the perpetual swap, also known as a perpetual future or 'perp,' was conceived in 2015 on a hiking trail in Hong Kong. Ben Delo, BitMEX co-founder and mathematician, was discussing a problem with a friend, Bavik, a derivatives trader. BitMEX had tried various futures contracts, but customers kept complaining about positions closing without warning. They wanted a product that resembled spot trading but offered the leverage of derivatives. Delo asked, 'What if a future never expired?' Bavik replied that it would be mathematically worth infinity, but suggested charging traders the bitcoin overnight rate. Delo built this concept, inventing one of the most significant financial products of the 21st century. Initially, BitMEX targeted institutional hedgers, but retail traders dominated the platform. By Halloween 2015, the exchange offered 100x leverage, thanks to Delo's real-time margining system. The perpetual swap launched in May 2016, with a daily funding rate that kept the contract price aligned with the spot price. The early funding rate was derived from external lending markets but later became dynamic, looking inward at the swap's trading. This mechanism is now used by major derivatives exchanges worldwide. By 2017, BitMEX was the most liquid bitcoin market, processing $3-4 billion daily, with the perpetual swap at its core. The product's success has been validated by its adoption across the crypto industry, with traditional finance regulators now taking notice.