Papertrade launched on HyperEVM on October 10, 2026, offering leverage up to 1000x on perpetual contracts for BTC and ETH. Within a few hours, traders accumulated about $18.6 million in net realized losses.
Meanwhile, those on the other side of the balance were not affected. PAPER token holders who staked it collected about $12.57 million in rewards in the first 24 hours. According to The Defiant, these payouts amounted to approximately 69% of the net trading losses. The catch is that the payouts do not return to the traders who lost money. They go to the PAPER stakers.
Papertrade is a synthetic exchange for perpetual contracts. Traders take leveraged positions on price movements without owning the underlying asset.
The system's engine is the Martingaler LP liquidity pool. It is launched with zero liquidity and is filled solely by what traders lose. Losing traders do not leave completely empty-handed: for every $1 lost, the protocol mints 100 new PAPER tokens and gives them to the trader.
Stakers receive income from two sources. They get 1% of the profit and loss realized by traders. They also take any surplus that accumulates in the liquidity pool beyond the $5 million cap.
On its first day, Papertrade generated over $300 billion in nominal trading volume. Liquidations during the same period amounted to nearly $13.89 billion. The liquidity pool balance quickly grew to about $5 million, reaching the cap after which the surplus starts going to the stakers. There was no payout queue, meaning the pool had no outstanding obligations from trading activity. Staker participation was nearly complete: between 94% and 95% of the approximately 3.17 billion PAPER in circulation was staked shortly after launch.
The structure provokes an obvious misinterpretation. The headline figure of rewards being 69% of losses might sound as if traders are getting back a large portion of their money. This is not the case. The rewards go to those who hold and stake PAPER, a different group than those who lost their accounts, even if the groups sometimes overlap.
This material is prepared solely for informational purposes and does not constitute financial advice or a recommendation.