The Birth of a Revolutionary Trading Concept: How a Hong Kong Hike Changed Crypto Forever

The concept of the perpetual swap, also known as a perpetual future or 'perp', was conceived on a hiking trail in Hong Kong in 2015. Ben Delo, a mathematician and co-founder of BitMEX, was discussing a problem that had been plaguing him for months with his friend Bavik, a derivatives trader. BitMEX had been experimenting with various types of futures contracts, but none of them seemed to be working. Customers were complaining that their positions were being closed without warning, and they wanted a product that could offer them the leverage of a derivatives exchange without the hassle of expiring contracts. Delo asked, 'What if a future never expired?' Bavik's response was that, mathematically, it would be worth infinity. However, he also suggested a solution: charge traders the bitcoin overnight rate. The problem was that such a rate did not exist at the time. Undeterred, Delo decided to create it, and in doing so, he invented one of the most significant financial products of the 21st century. The story of how BitMEX built and launched the perpetual swap is a fascinating one, filled with twists and turns that ultimately led to the creation of a product that would change the face of crypto trading forever.