How a Hong Kong Hike Revolutionized Crypto Trading Forever

In 2015, mathematician and BitMEX co-founder Ben Delo was on a hike in Hong Kong, struggling to find a solution to a problem that had been plaguing his company. Customers were complaining about their positions closing without warning, and Delo was determined to find a way to offer them a product that would give them the leverage they needed without the hassle of expiring contracts. It was during this hike that Delo had an epiphany - what if a future never expired? His friend and fellow hiker, Bavik, a derivatives trader, pointed out that mathematically, such a product would be worth infinity, but Delo was undeterred. He decided to build it, and in doing so, he invented one of the most consequential financial products of the 21st century. The perpetual swap, also known as a perpetual future or 'perp', was born. The concept 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. BitMEX took no cut, and the rate was purely a balancing mechanism. The early funding rate was derived from third-party lending markets, but as Bitcoin began its rise in 2016 and 2017, demand for long exposure on BitMEX overwhelmed the funding mechanism. Delo had to dynamically adjust how the funding rate was calculated, replacing the fixed reference point with a dynamic one that looked inward at how the swap was trading. The solution was elegant - the exchange began measuring how far the swap was trading above or below spot over an eight-hour window, treating that gap as an implied basis, and back-calculating the annualized rate from it. This funding rate mechanism is now used by every major derivatives exchange in the world. By 2017, BitMEX was the most liquid bitcoin market on the planet, processing $3-4 billion a day, and the perpetual swap was at the center of it all. The product's success was not limited to BitMEX - competitors noticed, and soon every major exchange in crypto was offering its own perpetual swap. Today, the perpetual swap is one of the most successful financial products in history, with a turnover of $40-50 trillion dollars a year. Delo's decision not to patent the product has allowed it to become a standard in the industry, and it is now attracting the attention of traditional finance regulators. The CFTC is reportedly making room for perpetual swaps under its framework, and there is speculation that the CME could eventually list them on equities. For Delo, this is the final validation of a product that started as a question on a hillside above Hong Kong, asked by someone who had grown tired of watching his customers complain about positions that kept disappearing.