Papertrade is the latest onchain derivatives platform that’s making moves. It went live on HyperEVM, Hyperliquid’s smart contract layer, on October 10. Just four days later, its revenue has hit $37.03 million, according to DefiLlama. Pump.fun generated $16.06 million in seven day revenue while Hyperliquid made $14.56 million. Combine the two and Papertrade is already printing more than two of the biggest names in the space.
On the 24 hour timeframe, Papertrade ranks third among the over 2600 protocols DefiLlama tracks, behind only Tether and Circle.
Every Papertrade Trade Runs Against a Shared Pool
On most exchanges, one trader buys, another sells and the exchange charges a small fee for matching them. Papertrade works in a different way as there is no second trader to be matched. Users bet on whether BTC or ETH goes up or down and a shared pool of USDC takes the other side.
When a trader wins, the pool pays out. On the other hand, when a trader is on the losing side, the money goes into the pool and the trader receives newly minted PAPER tokens, starting at 100 PAPER per $1 lost. Papertrade’s official docs also state that the token has no team, VC or airdrop allocation, so losing is the only way the tokens come into existence. Once the pool tops $5 million, everything above that goes to people staking PAPER. As of now, the tokens can’t be sold or sent between wallets.
The platform offers leverage of up to 1000x and this is why losses can pile up very fast. With that amount of leverage, a $100 deposit becomes a $100,000 position and just a 0.1% move the wrong way can wipe out trades.
Most of Papertrade’s revenue is that overflow of trader losses. The $37 million figure is mostly a record of how much users have lost since Saturday.
One Wallet Moved the ETH Price and Took $1.28 Million
Papertrade does not run an order book and it takes the prices of BTC and ETH from Hyperliquid’s. It uses the midpoint between the best price buyers offer and the best price sellers ask. So in this sense, when hyperliquid’s price fluctuates, you move Papertrade’s as well.
Wallet 0x2025…840e needed less than a day to figure this out. Between 6:01 and 6:02 PM ET on October 10, the wallet bought around 6,060 ETH on Hyperliquid. At the same time, this wallet was already open with massive leveraged longs on Papertrade. ETH went up by around $3 and while a 0.12% barely registers for most traders, a position with a 1000x leverage makes this a sizable move. The wallet sold, then later flipped to shorts and did the reverse.
The bill on Hyperliquid was roughly $52,000 in fees on $231 million of ETH. The payout on Papertrade was $1.28 million. Papertrade has since cut its open position limits.
New Losses Pay Out To Earlier Losers
PAPER changes who the house is. Stakers collect the pool’s surplus, and every staker got their tokens by taking a losing trade. Once the pool tops $5 million, new losses flow back to traders who lost before.
That isn’t a refund. A trader who loses $1,000 gets PAPER that can’t be sold yet, though staking it does pay out in USDC. The mint rate also drops once the pool passes $2 million, so later losers get less PAPER per dollar than early ones.
The design needs a steady flow of new losses. When the pool can’t cover a winning trade, Papertrade queues the unpaid profit and settles it from future traders’ losses. If losses slow, winners wait longer and stakers earn less.
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