How a Hong Kong Hike Revolutionized Crypto Trading Forever

In 2015, a conversation on a Hong Kong hiking trail led to the creation of the perpetual swap, a financial product that would change the face of crypto trading. Ben Delo, co-founder of BitMEX, was discussing a problem with his friend Bavik, a derivatives trader. Customers were complaining about their positions closing without warning, and Delo was determined to find a solution. The idea of a future that never expired was born, and Bavik suggested charging traders the bitcoin overnight rate to make it work. Delo built the product, and it became one of the most influential financial innovations of the 21st century. The perpetual swap launched in May 2016, and its core mechanic 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. The early funding rate was derived from third-party lending markets, but it soon became clear that a dynamic approach was needed. Delo developed a new method, looking inward at how the swap was trading rather than outward at external markets. The solution was elegant, and it gave market makers notice of how the funding rate was calculated. This mechanism is now used by every major derivatives exchange in the world. By 2017, BitMEX was the most liquid bitcoin market, processing $3-4 billion a day, and the perpetual swap was at the center of it all. The product's success has been staggering, with turnover reaching $40-50 trillion a year. Delo believes that traditional finance is starting to take notice, and the CFTC is reportedly making room for perpetual swaps under its framework. The future of crypto trading is looking bright, and it all started with a conversation on a Hong Kong hiking trail.