How a Chance Encounter on a Hong Kong Hike Revolutionized Crypto Trading

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, BitMEX co-founder and mathematician, was discussing a persistent issue with a friend named Bavik, a derivatives trader. BitMEX had experimented with various futures contracts, including quarterly, monthly, weekly, 48-hour, and 24-hour contracts, but none of them met customer demands. Customers complained about positions closing without warning, seeking a product that mimicked spot trading but offered the leverage of a derivatives exchange. Delo's question, 'What if a future never expired?' sparked a pivotal conversation. Bavik's response, 'Mathematically, it would be worth infinity,' highlighted the theoretical implications. However, Bavik proposed a solution: charge traders the bitcoin overnight rate, similar to LIBOR in traditional finance. Delo built this concept into a product, inventing one of the most impactful financial products of the 21st century. The story of BitMEX's evolution and the creation of the perpetual swap is a testament to innovation in the crypto space.