As BitMEX Reaches Its 10th Anniversary, the Perpetual Swap Still Holds Market Gratitude

BitMEX CEO Stephan Lutz embraces the idea of competitors replicating the exchange’s breakthrough invention, the perpetual swap.

“Good artists copy, great artists steal,” a saying attributed to Steve Jobs, has found relevance in the crypto world. Jobs famously used this phrase to describe Apple’s practice of drawing inspiration from other technologies. Now, in the Web3 era, Lutz, who became CEO of BitMEX in late 2022, expresses no concern about other crypto exchanges adopting the perpetual swap, the innovative financial instrument that underpins the crypto derivatives market. He sees this as a sign of success and market maturity—the more traders who use the tool, the more it benefits the entire market.

“It was copied by everyone, because that’s just open-source know-how,” Lutz told CoinDesk. “The whole world works on it, which is the highest form of flattery we can hope for.”

Unlike futures contracts, which settle at a predetermined price on a set date, perpetual swaps allow for continuous trading without expiration. They operate similarly to margin trading, using a funding rate—a payment exchanged between long and short positions—to maintain price parity with the underlying asset. This key feature provides greater flexibility and eliminates the need for expiration dates.

For Lutz, the perpetual swap is a cornerstone innovation that addressed early challenges in crypto trading. “Before the perpetual swap, crypto traders faced significant counterparty risk and lacked a clear structure to connect long and short positions,” he explained. “The introduction of the perpetual swap with its funding mechanism and insurance fund behind it was the spark that ignited the entire futures trading market.”

In crypto, speed is paramount, and the perpetual swap allows traders to react quickly to market changes, something that’s crucial in a market that can shift dramatically within hours.

“If you talk about a seven-year cycle in traditional finance, in crypto, it’s more like six months,” said Lutz, drawing from his experience at Deutsche Börse. “The ability to react to market events at lightning speed is essential in this space.”

While BitMEX is no longer the dominant force in the derivatives market—centralized exchanges like Binance have adopted the perpetual swap—the platform still enjoys a loyal following. A key reason for this loyalty is BitMEX’s policy of not operating its own market-making desk. This means the exchange doesn’t trade against its own users, offering a level of transparency and fairness that appeals to traders.

“Our funding rates can occasionally vary, but this is because we ensure that price discovery is independent and unbiased,” Lutz stated. “It’s all about maintaining neutrality and fairness.”

In times of high volatility, especially during market declines, BitMEX often experiences an increase in market share, as traders trust the platform to handle their derivative positions effectively.

Looking to the future, Lutz envisions BitMEX continuing to focus on Bitcoin derivatives while gradually expanding its offerings. And, as the exchange celebrates its role in the development of the perpetual swap, Lutz is confident that BitMEX will continue to innovate, inspiring the industry to follow suit once again.