In 2015, a simple hiking trip in Hong Kong led to one of the most significant innovations in crypto trading. Ben Delo, BitMEX co-founder and mathematician, was walking with Bavik, a derivatives trader, when they wrestled with a persistent problem: existing futures contracts kept frustrating users because they expired too quickly, causing positions to close unexpectedly.
The idea hit Delo on the trail what if a futures contract never expired? Bavik quickly pointed out the math problem theoretically, such a contract would have infinite value because carrying costs accumulate without end. Yet, Bavik suggested a workaround: charging traders the bitcoin overnight interest rate, similar to how LIBOR works in traditional finance. Delo didn’t even know that rate existed, so he ended up creating it himself.
From Startup Struggles to Market Revolution
BitMEX launched the first perpetual future in 2016 without much fanfare. As Delo later recalled, they were a "scrappy startup" just pushing the product out to see if it would catch on. Their early attempts included futures that expired weekly, monthly, or even every 24 or 48 hours. None satisfied customers who wanted exposure resembling spot market trading but with use.
Before this breakthrough, BitMEX founders Hayes and Delo targeted institutional hedgers like bitcoin miners and payment companies rather than retail traders chasing extreme use. Hayes, a former Deutsche Bank trader, and Delo, with experience building high-frequency trading systems at JP Morgan, sought to create liquidity and hedging tools tailored for the emerging crypto space.
Today, perpetual swaps dominate crypto derivatives markets, offering continuous exposure without expiry dates a radical departure from traditional futures. This innovation paved the way for the explosive growth of crypto derivatives, although the market dynamics and risks have evolved since BitMEX’s early days. For more on BitMEX’s role in shaping derivatives, see how BitMEX’s innovation created the crypto derivatives market it couldn’t sustain.
This material is for informational purposes and should not be taken as financial advice.
