PaperTrade is an onchain perpetual futures exchange on HyperEVM that mints its PAPER token to traders who lose. It offers up to 1000x leverage on BTC and ETH with zero fees, zero funding and zero slippage. Losing trades fund the liquidity pool, and the losers receive PAPER in return.
Trading goes live today, October 10, at 14:00 UTC. I made an account and deposited a small test amount. Here is how it works, and where the risks sit.
How PaperTrade Works
Most perp DEXs match buyers and sellers in an order book. PaperTrade skips that step. Instead, every trade opens and closes directly against one pool, called the house.
Prices come from Hyperliquid as a reference. However, your order never touches the Hyperliquid order book. As a result, there is no slippage and no funding rate.
The pool starts at $0. There is no team deposit, no VC money and no outside liquidity providers. Therefore, the only money in the pool is what traders lose.
That design creates one obvious problem. What happens when a trader wins before the pool has funds? In that case, your margin comes back right away. Meanwhile, the profit enters an onchain queue and gets paid in order as new losses arrive.
Critics compare this model to the bucket shops of the early 1900s. That comparison is fair, because you trade against the house. Still, everything here is public and onchain. Want a traditional setup first? Then start with our Hyperliquid review.
How You Earn PAPER on Losing Trades
PAPER is a loss rebate token. Supply starts at zero. In addition, there is no pre-mint, no team allocation, no VC allocation and no airdrop.
The mint rule is simple. Close a trade at a loss or get liquidated, and the contract mints PAPER to you. Specifically, you get 100 PAPER for every $1 lost while the pool sits below $2 million.
Above $2 million, the rate decays. For example, the curve on my dashboard shows roughly 95 PAPER per $1 once the pool reaches $5 million. So early losers get the most tokens.
At launch, you cannot transfer PAPER. You can only stake or unstake it. Transfers come later, in a future phase.
What PAPER Stakers Receive
Staked PAPER earns USDC. First, winning closes pay a small revenue share that flows to stakers. Second, the pool has a soft cap at $5 million.
Once the pool passes that threshold, every extra dollar that traders lose goes to stakers. In other words, the losers of today become the house of tomorrow. That loop is the whole pitch.
Naturally, the loop only works if people keep trading. Without fresh losses, the rewards stop.
The Fees Are Not Really Zero
Opening a trade costs nothing. However, winners pay on the way out. PaperTrade uses an asymmetric PnL fee curve inherited from Rollbit.
In short, small price moves get a bigger haircut than large ones. Consequently, scalping tiny moves at 1000x is much harder than the headline suggests. Losses, on the other hand, go to the pool in full.
Leverage this high is brutal for beginners. A 0.1% move against you wipes a 1000x position. New to leverage? Then read our trading fundamentals series before you touch it.
PaperTrade Launch Details
The team shared the launch plan on X today. Here are the key points:
- Trading opens at 14:00 UTC, after the scheduled HyperEVM network upgrade.
- Deposits pause at 13:45 UTC, so you must predeposit to trade the launch.
- Expect long confirmation times at first, especially on small trades.
- Each position has a $10 million cap, with no cap on the number of positions.
- All launch trades run through the official frontend and its relayers.
Later phases open the contract to everyone, add builder codes and finally unlock PAPER transfers.
One detail made me smile. The launch date is 10.10, exactly a year after the Binance 10/10 liquidation cascade. A casino built on liquidations picked that birthday.
My Deposit Experience
I connected a wallet and picked the username AirdropAlert. Next, I deposited 99.23 USDC from Ethereum. The transfer fee was about $0.25, plus a one-time $1 account activation.
So roughly 97.98 USDC landed as trading balance. The route runs from Ethereum through Circle to HyperCore, and then into PaperTrade. Also, at least 10 USDC must arrive after fees.
The interface has tabs for Trade, Portfolio, House, Paper and Leaderboard. For now, my Paper page shows zeros everywhere. Total supply is 0.00 until the first loser closes a trade.
PaperTrade has no referral system so far. I will keep an eye on that and update this post if one appears.
Risks You Should Know
First, the pool can run dry. In that situation, winners wait in the queue with no guaranteed timeline. Insolvency of the pool is a real possibility.
Second, admin keys exist. A 2-of-3 multisig controls the protocol, held by izebel_eth, blurr and UngusTrade. They can pause opens, freeze markets and change fee parameters. Contract upgrades, however, sit behind a 7-day timelock.
Third, PAPER has no market price yet. Because transfers are off, you cannot sell what you earn. Therefore, treat every loss as a real loss, not as a token purchase.
Finally, this is not an airdrop farm. PAPER has no airdrop at all. For actual farming targets, check our list of the best DEX airdrops instead. Farmers who hedge can also study the delta neutral farming guide.
Keep This Content Free
Testing brand new perp DEXs with real money takes time and deposits. PaperTrade pays us nothing, since it has no referral program. Want to support our work? Then use our referral links:
Final Words
PaperTrade is the strangest launch of the month. It turns losing trades into ownership of the house. Early losers get the most PAPER, and stakers collect once the pool fills.
However, the model needs a constant flow of new losses. It also hands 1000x leverage to anyone with 10 USDC. So I am treating my deposit as a test, nothing more.
Looking for venues with deeper liquidity? Our ranking of the best perp DEX platforms covers the established names.
FAQ
What is PaperTrade?
PaperTrade is an onchain perpetual futures exchange built on HyperEVM. Traders open positions against a single pool instead of an order book. It offers up to 1000x leverage on BTC and ETH.
How do you earn PAPER?
You earn PAPER by closing a trade at a loss or getting liquidated. The rate is 100 PAPER per $1 lost while the pool is under $2 million. After that, the rate decays.
Does PaperTrade have an airdrop?
No. PAPER starts at zero supply with no airdrop, no team allocation and no VC allocation. Trading losses are the only source of new tokens.
Is PaperTrade really free to trade?
There are no open fees, funding or slippage. However, winning closes pay an asymmetric fee, which hits small price moves hardest.
Can you sell PAPER?
Not at launch. PAPER can only be staked or unstaked for now. The team plans to enable transfers in a later phase.
Who runs PaperTrade?
The creator goes by izebel_eth on X. A 2-of-3 multisig with blurr and UngusTrade holds the admin keys. Upgrades have a 7-day timelock.
Does PaperTrade have a referral program?
Not yet. Builder codes are planned for a later phase, and we will update this post when anything changes.
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