In 2015, on a Hong Kong hiking trail, the concept of a perpetual swap, also known as a perpetual future or 'perp,' was conceived. Ben Delo, a mathematician and BitMEX co-founder, was discussing a persistent issue with a friend named Bavik, a derivatives trader.
BitMEX had tried various approaches, including quarterly, monthly, weekly, and 48-hour futures, as well as a contract that lasted just 24 hours. However, customers continued to express frustration that their positions were closing without warning, seeking a product that resembled spot trading but offered the leverage of a derivatives exchange. Delo asked, 'What if a future never expired?' Bavik replied that mathematically, it would be worth infinity. To address this, Bavik suggested charging traders the bitcoin overnight rate, similar to LIBOR in traditional finance.
Delo then built this concept, inventing one of the most significant financial products of the 21st century. The story of BitMEX's development and the creation of the perpetual swap is a testament to innovation in the crypto trading space.