BitMEX CEO Stephan Lutz is comfortable with competitors replicating the exchange’s groundbreaking invention: the perpetual swap.
The phrase “Good artists copy, great artists steal,” famously attributed to Apple’s Steve Jobs, is often used to explain the company’s habit of borrowing technology from Xerox. Lutz, who became BitMEX’s CEO in late 2022, echoes this sentiment, stating that he welcomes others adopting the perpetual swap—a financial instrument that forms the foundation of the crypto derivatives market. In his view, the more traders use it, the healthier the market becomes.
“It was copied by everyone because that’s just open-source know-how,” Lutz told CoinDesk. “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 key innovation from BitMEX, differs significantly from traditional futures contracts, which are agreements to buy or sell assets at a predetermined price on a set date. Unlike futures, perpetual swaps do not have an expiration date and replicate the experience of margin trading. These contracts use a funding rate—a payment exchanged between long and short positions—to keep the price aligned with the underlying asset, enabling continuous price action without expiration.
Lutz believes the perpetual swap was a pivotal moment in crypto trading, addressing early challenges in building derivatives in the emerging crypto landscape.
“You faced counterparty credit risk, and there was no real structure for bringing longs and shorts together,” he explained. “The perpetual swap with the funding mechanism and the insurance fund in the background sparked the whole [futures] trading industry.”
Moreover, the perpetual swap caters to the fast-paced nature of crypto markets, where traders must respond to developments at a much faster rate than in traditional finance.
“If you say it’s a seven-year cycle in TradFi, this cycle is six months in crypto,” said Lutz, drawing on his background with Deutsche Börse. “You need to react to new developments very quickly.”
Though BitMEX is no longer the dominant player in the derivatives market—larger centralized exchanges like Binance have adopted perpetual swaps and entered the space—it still retains a loyal base of traders. One reason for this is the platform’s commitment to neutrality: BitMEX does not operate its own market-making desk, meaning it doesn’t trade against its customers.
“Our funding rates can sometimes differ because we ensure completely independent price discovery, which is important for maintaining fairness,” Lutz explained. “It’s a matter of neutrality.”
In times of high volatility, such as during market downturns, BitMEX often sees its market share increase—sometimes even doubling—due to the loyalty of its traders.
Looking ahead, Lutz is confident that BitMEX will continue to thrive in its niche of Bitcoin-based derivatives, while selectively expanding its offerings.
As for the future, Lutz envisions BitMEX continuing to innovate, potentially developing new products that the entire industry will eventually adopt. Just as the perpetual swap was copied, the next big idea could inspire similar widespread adoption.
