The concept of the perpetual swap was born out of frustration with traditional futures contracts, which were not meeting the needs of BitMEX's customers. Delo and his friend Bavik were discussing the limitations of quarterly, monthly, weekly, and even 24-hour futures contracts, which were not providing the leverage and flexibility that traders desired.
The solution they came up with was a futures contract with no expiry date, which would allow traders to buy and sell with leverage while avoiding the complexities of traditional futures contracts. This innovative product, launched in 2016, has since become a cornerstone of the crypto derivatives market, with its funding rate mechanism being adopted by major exchanges worldwide. The perpetual swap's success has been staggering, with daily trading volumes reaching $3-4 billion by 2017, and its impact on the crypto market has been profound, with price discovery for bitcoin happening on the BitMEX order book rather than traditional spot exchanges.
The product's influence extends beyond the crypto space, with traditional finance regulators and institutions taking notice of its potential. As the perpetual swap continues to evolve and mature, it is likely to have a lasting impact on the financial markets, and its story serves as a testament to the power of innovation and collaboration in shaping the future of finance.