macro · markets · China bridge · ex @zapper_fi, @tesla, China National Golf Team
Joined February 2021
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Physical Dubai crude: $153/bbl. Brent futures on your screen: ~$110/bbl.
That's a $40-50 gap. Normal spread is $0.90. Something is suppressing the paper market.
The man running the operation? He spent 40 years making billions betting against this kind of intervention.
🤖 Made with AI
The math doesn't quite work yet. $720M HYPE + $137M cash = $857M NAV against a $755M market cap. That's 0.88x mNAV - a 12% discount, not a premium.
Stock needs to hit ~$943M market cap (+25% from here) before the $1B ELOC is accretively in play at 1.1x. Right now the better move would be share buybacks, not HYPE accumulation.
China's commercial position is colder than the internet drama.
1.31 billion barrels in storage - 113 days of imports. Russian crude at a record 2.07M b/d. 127M barrels of Iranian crude pre-staged in Malaysia and Singapore before the first strike.
Zhihu celebrates Chinese ships "passing freely" through Hormuz. Tracking data: all Chinese transits were dry bulk carriers. Zero tankers. Insurance quadrupled. Chinese banks vetoed transits.
China can afford to wait.
China's investment tells the story louder than any diplomat.
BRI spending: Saudi Arabia $40B. Central Asia jumped 375% to $28.5B. Kazakhstan alone $25.8B.
Iran: zero new Chinese investment. Exports to Iran down 22%. Non-oil imports down 32%.
Meanwhile at the UN, China abstained on Resolution 2817 condemning Iran's Hormuz closure. Didn't even veto. The Gulf states got the message.
Bessent basically got pulled from the podcast and got told to do a bit of propaganda for military drafting by talking about how he would trust the military with his own son. He is so shaken by what's coming out of his mouth he became super incoherent.
This chart is Israel-only data. It's not the full picture. Total launches since Feb 28 across all targets: 500+ ballistic/naval missiles and ~2,000 drones.
UAE alone took 165 ballistic missiles and 541 drones. Kuwait got 97 ballistic + 283 drones. Qatar 65 missiles. Bahrain 61. The "decline" is just Iran redirecting fire from Israel to GCC energy infrastructure.
And that's the part the missile-count crowd is missing. Iran hit Ras Tanura - one of the world's largest refining complexes, forced to halt ops. Hit Ras Laffan - the world's biggest LNG producer, pushing global gas to a 3-year high. Hit BAPCO's 400K b/d refinery in Bahrain. Hit Fujairah oil terminal. Hit Duqm port fuel tanks.
A single missile at a refinery causes more economic damage than 50 at military bases. Crack spreads are surging because the market understands this even if the launch-count charts don't capture it.
Think lots of maxis are making imprecise comparison between Lighter and Hyperliquid so here's mine
Lighter
- LLP ate the bulk of liquidations (down 4~5%)
- No ADL was triggered.
- Post-crash, orders failed; the venue went down for ~2 hours.
Hyperliquid
- HLP absorbed some liquidations at first, then as market recovered it made $20m.
- As the selloff deepened, the system moved to ADL, closing some short positions (in profit) according to margin-ratio priority.
Why HL’s ADL felt “early”
You could argue ADL kicked in sooner than expected. But, as @chameleon_jeff noted, the HLP→ADL switch is simulation-driven. In a cascade you don’t know if price continues lower or snaps back in a V-shape. Under that uncertainty, HL's chose pool solvency—protecting HLP.
Design trade-off
If HL didn’t switch to ADL and kept everything on HLP, the pool could’ve worn losses similar to Lighter’s LLP.
In the current design, if the market kept dumping:
- Lighter: risk of LLP being significantly impaired further than 5%.
- HL: HLP remains more insulated; more profitable positions get closed via ADL.
In short, Lighter concentrates crash losses on LLP, while HL socializes part of the tail risk via ADL to directional users, explicitly limiting HLP’s downside.
IMO none of this is related to $HYPE price action; it reflects how each team allocates liquidation pain between LPs and traders in extreme moves.
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Going forward, it’d be great for both teams to disclose some high-level policies on:
- When the system flips from HLP to ADL (key triggers/sim thresholds).
- How much losses HLP is designed to tolerate before ADL escalates.
This way users could select which pools to enter / where to trade based on their risk tolerance.
i do think what happened yesterday will have profound implications on the future of the economic relationship among token holders, traders, and vault depositors
at hyperliquid tge, traders and token holders were basically the same group of people. in fact, not just the same - their ownership was even scaled based on volume and usage. that was almost perfect alignment. over time, this inevitably diverged - now you’ve got people who don’t trade at all but own $HYPE, and others who trade in huge size but own zero $HYPE
fundamentally, that’s why some traders were left with a sour taste when they saw $HYPE holders celebrating the largest buyback day and the biggest HLP vault win yesterday
had this happened before tge, alignment would’ve been easier - you’d just drop certain traders some points. post-tge, it’s much tougher, especially when the protocol doesn’t have a cash reserve (or an insurance fund)
personally, i think this likely triggers a rethink of the incentive model and possibly marks the end of the ~100% buyback era. the pendulum has likely swung too far to one side - risking the equilibrium
lighter’s approach here feels more balanced and likely more trader-friendly. LLP took the hit, and traders were protected by it
longer term though, for lighter, this does raise two questions:
- if LLP becomes a quasi-insurance fund, should there be a cap on network OI relative to LLP?
- how does it incentivize LLP to compensate for the higher risk so it stays competitive?
I think this is likely where revenue and incentive structure come in. instead of using 100% of revenue for buybacks (ie incentivizing ONLY token holders), it could perhaps be split among:
- an insurance fund to backstop system-level risks
- some incentives for the vault to compensate for higher risk while keeping a more trader-friendly risk mechanism
- cover development costs
- and finally, excess capital going back to token holders
no one knows where the future of perp dexes and the incentive model will be, but thanks to all the builders - we’ve come a long way vs a few years ago. the exciting part is, being a derivative product, it can scale to almost any asset in the world - the upside is huge for our industry if defi gets it right. i’m hopeful we get there one day. let’s all keep building!