How a Hike in Hong Kong Invented Crypto Perpetual Swaps
In 2015, BitMEX co-founder Ben Delo invented the perpetual swap during a Hong Kong hike. Frustrated by futures expiry complaints, he and a friend devised a contract that never expires, using an overnight bitcoin rate. This innovation became a foundational crypto derivatives product.
Quick Take
Ben Delo invented perpetual swaps on a 2015 Hong Kong hike to solve futures expiry frustrations.
He implemented an overnight bitcoin interest rate, a novel concept in crypto at the time.
BitMEX’s 100x leverage and perp contracts attracted speculative traders, reshaping crypto trading.
Market Impact Analysis
NeutralHistorical feature with no current market implications.
Speculation Analysis
Key Takeaways
- Ben Delo invented the perpetual swap on a 2015 Hong Kong hike after customer complaints about expiring futures.
- He built an overnight bitcoin interest rate — a first in crypto — to create a derivative that never expires.
- BitMEX offered 100x leverage on perps, attracting speculative traders and reshaping crypto market structure.
What Happened
In 2015, on a hiking trail in Hong Kong, BitMEX co-founder Ben Delo cracked a problem that had plagued the exchange. Customers hated futures expiries — positions closed unexpectedly, contracts reset constantly. Delo asked: "What if a future never expired?" His friend Bavik noted it would mathematically be worth infinity, but suggested charging a bitcoin overnight rate. That rate didn’t exist, so Delo built it. BitMEX launched the perpetual swap, a derivative that trades like spot but offers leverage, with no expiry. It became the exchange’s flagship product.
The Numbers
The perpetual swap launched in 2015. BitMEX offered up to 100x leverage, made possible by a real-time margining system Delo coded himself. The overnight bitcoin interest rate — now known as the funding rate — was constructed from scratch. Initially targeting institutional hedgers, BitMEX instead attracted retail speculators, turning it into the most liquid bitcoin market at the time. Today, perps dominate crypto derivatives volume, with billions traded daily.
Why It Happened
Traders wanted a leveraged product that mimicked spot trading. Existing futures — weekly, monthly, 48-hour — expired, forcing rollovers that caused slippage and unexpected closures. Delo’s experience building high-frequency trading systems at JP Morgan and Hayes’s background at Deutsche Bank shaped their initial institutional focus, but retail demand drove the perp’s creation. The hike conversation crystallized the solution: charge a periodic rate to keep the contract tethered to spot price.
Broader Impact
Perpetual swaps became the backbone of crypto derivatives markets. They enabled 24/7 leveraged trading without rollover costs, fueling exchanges like Binance and Bybit. The funding rate mechanism is now a core DeFi primitive, powering protocols like dYdX and Hyperliquid. Delo’s invention, born on a trail, redefined how billions in crypto assets are traded.
What to Watch Next
- Perp designs evolve with more sophisticated funding rate models resistant to manipulation.
- Regulatory scrutiny on 100x+ leverage offerings intensifies as jurisdictions tighten rules on crypto derivatives.
- Decentralized perpetual platforms continue gaining market share, reshaping on-chain trading.
This article is for informational purposes only and does not constitute financial advice.
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