Stephan Lutz, CEO of crypto exchange BitMEX, expressed no qualms about competitors replicating the company’s creation of the perpetual swap, a financial instrument that has become central to the crypto derivatives market. In a recent interview, Lutz shared his view that widespread adoption of the perpetual swap, a tool originally pioneered by BitMEX, is a sign of success and validation.
“It was copied by everyone, because that’s just open-source know-how,” Lutz said. “The whole world works on it, which is like the best form of flattery we can wish for in the end.”
The perpetual swap, a financial instrument distinct from traditional futures contracts, has no expiration date and mirrors margin trading. It maintains price alignment with the underlying asset via a funding rate, a payment exchanged between long and short positions. Unlike traditional futures contracts, which are settled at specific times, perpetual swaps allow for continuous market engagement.
Lutz highlights the perpetual swap as a groundbreaking innovation in crypto trading, addressing key challenges in early crypto market structures. Specifically, it mitigated counterparty credit risk and created a mechanism to unify long and short positions in a more efficient way.
“You faced counterparty credit risk, and there was no real structure for bringing longs and shorts together,” Lutz said. “The perpetual swap with the funding mechanism and the insurance fund in the background sparked the whole futures trading industry.”
The perpetual swap’s flexibility also enables traders to act quickly, a vital advantage in the fast-paced crypto market. Lutz compares the speed of reaction required in crypto trading to traditional finance, noting that while the market cycle in traditional finance might span seven years, in crypto, it can be as short as six months.
Despite no longer being the largest derivatives exchange by volume—since larger platforms like Binance have adopted the perpetual swap—BitMEX maintains a strong base of loyal traders. Lutz attributes this to the platform’s neutral stance, ensuring that it does not trade against its own customers.
“Our funding rates can sometimes differ because we ensure completely independent price discovery, which is important for maintaining fairness,” he explained. “It’s a matter of neutrality.”
BitMEX often sees market share spikes during high volatility, especially in downturns, as its dedicated traders return to the platform.
Looking to the future, Lutz remains optimistic about BitMEX’s role in the crypto ecosystem. He envisions the exchange continuing to specialize in bitcoin-based derivatives while exploring selective expansion. Reflecting on the rapid evolution of the industry, he suggested that in the next decade, BitMEX could once again lead innovation in the space—and once again, see the industry follow its lead.
“In the end, it’s about being part of the conversation and contributing something new,” Lutz concluded.
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