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

In 2015, on a hike in Hong Kong, Delo and his friend Bavik, a derivatives trader, brainstormed a solution to a problem that had been plaguing BitMEX. The company had tried various futures contracts, but customers kept complaining about positions closing unexpectedly. Delo asked, "What if a future never expired?" Bavik's response was that it would be mathematically worth infinity, but he suggested charging traders the bitcoin overnight rate to solve the issue. Delo built the product, inventing one of the most significant financial products of the 21st century: the perpetual swap. The concept 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. Initially, the funding rate was derived from third-party lending markets, but as demand for long exposure on BitMEX grew, the mechanism had to be adjusted. Delo developed a dynamic funding rate that looked inward at how the swap was trading, rather than outward at external lending markets. This approach has become the standard for major derivatives exchanges worldwide. By 2017, BitMEX was the most liquid bitcoin market, processing $3-4 billion daily, with the perpetual swap at its core. The product's success has attracted 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 impressive.