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, co-founder of BitMEX and a mathematician, was discussing a persistent problem with a friend named Bavik, a derivatives trader. At the time, BitMEX had been experimenting with various types of futures contracts, including quarterly, monthly, weekly, 48-hour, and even 24-hour contracts, but none of them were meeting customer needs. Customers were complaining that their positions were being closed without warning, and they wanted a product that combined the benefits of spot trading with the leverage of derivatives.
Delo asked, 'What if a future never expired?' Bavik's response was that it would be mathematically worth infinity, but he also suggested a solution: charge traders the bitcoin overnight rate. However, Delo realized that such a rate did not exist at the time, so he decided to create it. This innovation would go on to become one of the most significant financial products of the 21st century.
The story of BitMEX and the perpetual swap is one of innovation, adaptation, and the relentless pursuit of solving the problems faced by traders in the emerging crypto market.