The Genesis of Perpetual Swaps: How a Hong Kong Hike Revolutionized Crypto Trading

In 2015, a hike in Hong Kong's countryside led to the conception of the perpetual swap, a financial innovation that would change the face of cryptocurrency trading forever. Ben Delo, BitMEX's co-founder and a mathematician, was discussing a persistent issue with a friend, Bavik, a derivatives trader. BitMEX had tried various futures contracts, but customers kept complaining about positions closing without warning. They wanted a product that resembled spot trading but offered the leverage of derivatives. Delo's question, 'What if a future never expired?' sparked a conversation that would lead to the creation of one of the most influential financial products of the 21st century. Bavik's response, 'Mathematically, it would be worth infinity,' highlighted the theoretical implications, but also led to a practical solution: charging traders the bitcoin overnight rate. This idea laid the foundation for the perpetual swap, which would go on to become a cornerstone of cryptocurrency trading.