How a Chance Encounter on a Hong Kong Hike Revolutionized Crypto Trading

In 2015, Ben Delo, co-founder of BitMEX, was on a hike in Hong Kong with a friend, Bavik, a derivatives trader, when they stumbled upon an idea that would change the face of crypto trading. Delo was struggling to find a solution to the problem of futures contracts expiring, causing customer positions to close without warning. Bavik's suggestion to create a futures contract with no expiry date sparked a conversation that led to the invention of the perpetual swap. The concept was simple: a futures contract that never expired, with a daily funding rate to keep it anchored to the spot price. 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 can be attributed to its ability to provide traders with a leveraged product that never went away, allowing them to speculate with ease. The funding rate mechanism, which was dynamically adjusted to reflect market conditions, played a crucial role in keeping the swap price aligned with the spot price. Today, the perpetual swap is a staple in the crypto derivatives market, with every major exchange offering its own version of the product. The story of the perpetual swap serves as a testament to the power of innovation and the importance of listening to customer needs. As traditional finance regulators begin to take notice of the product, it's clear that the perpetual swap is here to stay, and its impact on the world of finance will only continue to grow.