How a Hong Kong Hike Led to a Revolutionary Change in Crypto Trading

In 2015, Ben Delo, a mathematician and co-founder of BitMEX, was on a hike in Hong Kong, discussing a problem that had been plaguing him for months. His friend Bavik, a derivatives trader, suggested that a futures contract that never expired could be the solution. However, this would theoretically make the contract's value infinite. Bavik proposed charging traders the bitcoin overnight rate to mitigate this issue. Delo decided to build this concept, which ultimately became the perpetual swap, a financial product that has had a profound impact on the crypto industry. The perpetual swap was launched in May 2016 and allowed traders to buy and sell contracts with no expiry date, anchored to the spot price through a daily funding rate. This innovative product enabled BitMEX to become the most liquid bitcoin market in the world, processing $3-4 billion in daily transactions by 2017. The concentration of liquidity was a direct result of the swap's design, which consolidated market maker capital into a single instrument. The success of the perpetual swap has been so significant that it has attracted the attention of traditional finance regulators, with the CFTC reportedly making room for perpetual swaps under its framework. Delo believes that once traditional finance recognizes the benefits of this financial product, it will be truly impressive.