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What is a Perpetual Swap? | Taking a Look at the New OKEX Launch

perpetual swap

On December 3rd at the Grand Hyatt Hotel in South Korea, Mr. Jay Hao, the CEO of OKEX, announced the upcoming launch of a new product. The new product is a special type of futures contract dubbed perpetual swaps. The product officially launches on December 11th, 2018. The product release affords OKEX an opportunity to capture a valuable new market. It also provides OKEX the chance for a new beginning.

Negative Publicity and New Markets

OKEX has been in the news a lot recently. Unfortunately, the news is never good. Most recently, OKEX future contracts came under fire during the hard fork of Bitcoin Cash. From a public relations perspective, OKEX really needed to clear the air. The large public relations campaign for the launch of perpetual swaps is the Malta-based cryptocurrency exchange’s attempt to put a new foot forward.

Not only does OKEX have a chance to get future contracts right, but also it has a chance to capture some of BitMex’s lucrative futures business. According to the analysts at TokenInsight, most of the transactions on BitMex are boutique futures contracts called perpetual contracts.

What is a Perpetual Swap?

BitMex offers perpetual contracts. OKEX offers perpetual swaps. The difference between the two is essentially marketing. Except for the difference in funding, a perpetual swap is effectively OKEX’s version of BitMex’s perpetual contract.

Perpetual contracts are futures contractswith no expiry or settlement. Futures contracts are essentially bets on the future state of something. These things are typically commodities, like pork bellies. However, on cryptocurrency exchanges like BitMex and OKEX, futures contracts are bets on the future value of a cryptocurrency (like BTC, LTC, BCH, EOS, ETH, and other very liquid cryptocurrencies). Futures contracts are, therefore, derivative financial instruments, or derivatives. Their existence is derived from some other financial instrument.

Expiration and Settlement

Typically, futures contracts expire and need to go to settlement. At settlement funds are credited or debited from the trader’s account. Perpetual swaps do not expire and therefore do not go to settlement.

Prior to providing the opportunity to enter into perpetual swaps, futures contracts on OKEX would expire within a week, two weeks, or one quarter.

Margin and Leverage

In order to make the bet, the trader needs to make a deposit. That deposit is called the margin. It is typically the collateral for making a much bigger bet. The ratio of the value of the bigger bet over the margin is called leverage. For example, on a 50% margin (or “2x leverage”), the trader can borrow funds from a lender to enter into a futures contract for $100 when they only have $50 to deposit.

Like BitMex, OKEX allows traders to leverage up to 100 times the margin on deposit.

Incidentally, $100 is the actual face value of OKEX’s perpetual swap. This means that one of these special, non-expiring futures contracts is redeemable for the BTC equivalent of $100 at that point in time. A swap could also be redeemed in ETC, or any other cryptocurrency eventually allowed by OKEX.


When the trader borrows funds from a lender for a contract, they are receiving a loan. On OKEX, the loan for the perpetual swap is provided by the OK PiggyBank. The OK PiggyBank is a peer-to-peer lending service.

The OK PiggyBank will lend traders up to 100 times the margin. Traders are not required to take a loan. However, if they do, their contract is leveraged.

Once the contract is leveraged, the trader must pay interest on the amount borrowed. Payment is due every 24 hours on OKEX. This payment is called funding. On BitMex, funding occurs in fixed 8-hour intervals.


Even the Chicago Mercantile Exchange (CME) and the Chicago Board of Exchange (CBOE) allow speculators to trade Bitcoin futures. Futures contracts on Bitcoin are not new. However, OKEX has to improve its service and might even need this new product to survive.

OKEX’s perpetual swaps are competitively priced. Those traders that provide liquidity to the exchange are generally better off going with BitMex. Those that aren’t will enjoy OKEX’s lower fees.


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Munair Simpson is a business developer and marketing strategist. He started Useful Coin LLC (Wyoming) in 2017 to help new ventures strategically position themselves for success and also raise capital.

Munair is originally from Kingston, Jamaica. He graduated from the Wharton School with an MBA in Marketing.