BitStone Partners

Founder at BitStone, Ex-@Ripple @AlibabaGroup and @GoldmanSachs. Husband & Father. Member @CFR_org. @UVA @Stanford @Harvard alum. My views only.

[BitStone Partners @PaulChenTech]

In 2000, @amazon was down 80%. @JeffBezos ' letter ignored the price and asked one question: is usage growing? Is the tech improving? We ran that test on #crypto in 2026. The answers are still yes.
Full letter: https://t.co/vzdpNJXwso

[BitStone Partners @PaulChenTech]

We don't give a price target. We give you the reasoning. @HyperliquidX @CryptoHayes @chameleon_jeff
The full 14-page letter — including a complete Chinese summary — is at https://t.co/ceYllwxfWs
Free to subscribe. Goes straight to your inbox.

[BitStone Partners @PaulChenTech]

Hyperliquid's ratio: 1.5x — the lowest among major perp venues.
The Binance-backed rival's ratio: 12.4x
Translation: most of that "volume" was wash trading and rebate farming. The moment incentives stopped, it vanished.
By early 2026 Hyperliquid had reclaimed the lead.
Money can rent volume for a season. It couldn't rent the committed crowd.

[BitStone Partners @PaulChenTech]

The strongest bear case — stated plainly:
No identity checks. Anyone in the world can use it.
That's the largest regulatory exposure. A venue without KYC is exactly what sanctions rules are built to scrutinize.
Interesting counter-fact: no major dirty-money scandal has surfaced publicly. We don't know if that's quiet screening or luck. It's the question we'd most want answered.

[BitStone Partners @PaulChenTech]

The moat was tested in public last year.
A Binance-backed rival threw money at stealing volume. For a few months the headlines said it was working.
But volume is the easiest number to fake. The real metric is daily volume ÷ open interest.
Open interest = money actually committed to live positions. You can't fake it.

[BitStone Partners @PaulChenTech]

Why are the margins so unusual?
A centralized exchange holds your money — so it needs custodians, bank relationships, licenses in every country, compliance teams, legal staff.
Hyperliquid holds none of your money. You keep your keys.
That entire layer of cost simply never gets built.

[BitStone Partners @PaulChenTech]

There's also a second engine most people miss.
A trading venue holds billions in idle collateral. Idle dollars earn interest.
In 2026 Hyperliquid routed most of that interest back to the protocol through Coinbase.
Two engines: trading fees boom in hot markets. Interest income prefers calm ones. They offset each other.

[BitStone Partners @PaulChenTech]

First, how it makes money.
Every trade pays a tiny fee. Multiply that by enormous volume and you get real money.
But where the fees go is the unusual part — almost all of it automatically buys the token on the open market and destroys it.
No person signs the checks. The code does it.

[BitStone Partners @PaulChenTech]

Eleven people. No offices. No marketing. No cloud bill.
Close to $1 billion a year in fees.
We spent months applying a value investor's lens to Hyperliquid. Here's what we found. 🧵

[BitStone Partners @PaulChenTech]

14 pages. Free.
Sign up here→ https://t.co/ceYllwxfWs

[BitStone Partners @PaulChenTech]

The Howey Test shaped investing for 80 years.
The CLARITY Act may need a new one.
We built it. 🧵

[BitStone Partners @PaulChenTech]

We ran 7 major tokens through it.
One passes cleanly. Several fail in ways their communities haven't faced yet. Two could become the most interesting cash-flow assets in crypto — after one decision.
cc: @APompliano @RaoulGMI @nic_carter @CaitlinLong_ @balajis @HyperliquidX

[BitStone Partners @PaulChenTech]

8 pages. Free for subscribers.
Sign up→ https://t.co/ceYllwxfWs

[BitStone Partners @PaulChenTech]

@circle reported Q1 last week. Stock +16%.
$694M in revenue. $55M in net income.
We wrote up the quarter the way a value investor would. 🧵

[BitStone Partners @PaulChenTech]

Then @JeremyAllaire announced @arc — a new L1 blockchain, $222M raised, backed by @BlackRock and Apollo.
It's the most ambitious thing Circle has ever attempted. We took it seriously.