How a Hong Kong Hike Paved the Way for a Revolutionary Crypto Trading Product

In 2015, Ben Delo, BitMEX's co-founder, was on a hike in Hong Kong with his friend Bavik, a derivatives trader. Delo was struggling to find a solution to the issues his customers were facing with traditional futures contracts. The customers wanted a product that would allow them to trade with leverage, but without the hassle of expiring contracts. Delo asked Bavik, 'What if a future never expired?' Bavik's response was that it would be mathematically worth infinity, but he also suggested a solution - charge traders the bitcoin overnight rate. This conversation laid the groundwork for the creation of the perpetual swap, a product that would change the face of crypto trading. The perpetual swap was launched in 2016, and it quickly became a huge success, attracting a large number of traders and helping to establish BitMEX as a major player in the crypto derivatives market. The product's success can be attributed to its innovative design, which allowed traders to buy and sell with leverage, without the need for expiring contracts. The funding rate mechanism, which was developed by Delo, played a crucial role in the product's success. It allowed the exchange to dynamically adjust the funding rate, based on market conditions, which helped to maintain a stable and liquid market. Today, the perpetual swap is one of the most popular products in the crypto derivatives market, with many exchanges offering their own version of the product. The success of the perpetual swap has also attracted the attention of traditional finance regulators, who are now considering how to incorporate the product into their regulatory frameworks.