How a Hong Kong Hike Revolutionized Crypto Trading Forever

The concept of the perpetual swap was born in 2015 on a hiking trail in Hong Kong, where Delo was discussing a problem with a friend, Bavik, a derivatives trader. BitMEX had been experimenting with various futures contracts, but customers kept complaining about their positions closing unexpectedly. Delo asked, "What if a future never expired?" Bavik replied that it would be mathematically worth infinity, but 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 launched in May 2016, allowing traders to buy and sell with leverage, and its funding rate mechanism has become the standard for major derivatives exchanges. By 2017, BitMEX was the most liquid bitcoin market, processing $3-4 billion daily, and the perpetual swap was at the center of it all. The product's success has attracted traditional finance regulators, with the CFTC considering room for perpetual swaps under its framework, and speculation that the CME could list them on equities.