Papertrade, a perpetual futures exchange built on HyperEVM, is preparing to go live after opening pre-deposits yesterday. Live trading is scheduled for Oct. 10. The project was co-founded by semi-anonymous traders Jez and Blurr.
The protocol stands out because it does not rely on a traditional order book or external market makers. Instead, every trade faces a shared USDC pool. Under that structure, losing traders gradually become owners of the casino’s future revenue.
How the protocol works
When Papertrade was first broken down in May, its design already looked unusual: up to 1000x leverage, zero slippage, no funding rate, and a token called PAPER that traders earn through losses.
At the center of the system is a shared USDC pool known as Martingaler LP. The pool starts at $0 and is filled by trader losses, while also serving as the counterparty to every trade.
- Opening a trade: Users deposit USDC, with a $10 minimum and a one-time $1 activation fee, then trade BTC or ETH with leverage of up to 1000x.
- Profitable trades: If a position makes money, the trader can withdraw the original margin and claim profits from the pool. If the pool does not have enough funds, unpaid profits are queued on a first-come, first-served basis. If a trader is owed $100 and the next losing trader contributes $60, the profitable trader receives $60 first and waits for the remaining $40.
- Losing trades and PAPER issuance: If a position loses money or is liquidated, the loss is sent into the pool and PAPER tokens are minted to the trader. When the pool is below $2 million, each $1 of eligible losses can earn up to 100 PAPER. That rate falls as the pool grows.
- Staking PAPER: PAPER can be staked to earn a proportional share of exchange fee revenue in USDC. Once the pool exceeds $5 million, additional pool yield can also be distributed to stakers.
That structure turns liquidations and trading losses into token distribution and future revenue rights, which is the main reason the launch has attracted attention.
Launch weekend plan
Papertrade expects a gradual rollout rather than letting everyone trade at once, because HyperEVM could become congested if activity spikes.
Phase 0
Pre-deposits opened on Thursday and will remain available until launch. Depositing early does not improve trading priority, but users who wait until launch may face delays if the chain gets congested.
Phase 1
Trading through the Papertrade website is set to begin on Saturday. Orders signed on-chain by users will be submitted by approved service providers, a setup meant to limit bots from cutting in line. Liquidations will take priority over new positions, and smaller trades may wait longer.
Later phases
Bots and AI agents will later be allowed to trade directly. Third-party apps will also be able to earn fees by referring traders. PAPER will eventually become transferable, but it will not be sellable at launch.
Trading is expected to start around one hour after Saturday’s HyperEVM upgrade. No exact time has been announced, and there is still a small chance the launch slips to Sunday.
Projects forming around Papertrade
An ecosystem is already taking shape around the launch for users who do not plan to trade directly.
- DX Research Group / DXAP: The team behind DX Terminal runs DXAP, an invite-only app that lets AI agents trade users’ Hyperliquid accounts. Founder poof said the Superclip agent plans to trade with DXAP user funds, though the exact method has not been explained.
- PaperStrategy: This anonymous project uses 90% of the 10% trading tax on its PSTR token to fund a strategy that accumulates and stakes PAPER. Of the resulting USDC staking income, 90% is used to buy back and burn PSTR, while 10% goes to the team.
- PaperDAO: PaperDAO completed fundraising through daos.world on Oct. 7. It pools user funds into a vault and plans to mine PAPER at launch, then stake it for USDC income. Its PULP token represents a proportional share of the vault and will be redeemable once PAPER transfers are enabled.
Risks already on the table
The excitement around the launch has not removed the risks.
- Delayed payouts: If too many traders are profitable, the pool may run short of funds and winning traders could wait indefinitely to be paid.
- Price manipulation: If Hyperliquid pricing is manipulated, and that price effectively acts as the oracle for Papertrade positions, traders could pull funds from the pool unfairly.
- PAPER farming dilution: Delphi Digital’s tempest said paired long and short positions could let traders mint PAPER at low cost, diluting existing holders without adding much cash to the pool. PAPER itself may also never be worth what traders spend to obtain it.
- Extreme leverage: At 1000x leverage, a move of roughly 0.1% against a position can wipe out margin.
Why the market is watching
Papertrade combines perpetual futures, a shared counterparty pool, loss-based token incentives and staking income in one system. Whether that design works in practice will only become clear after live trading begins.
Still, the attention around the launch shows the market is taking the experiment seriously. For traders and DeFi builders, it is a live test of incentive design and risk limits.
Whether Papertrade succeeds remains to be seen. But its structure is clearly different from a standard perpetual exchange, and that alone has made it one of the more closely watched DeFi launches this weekend.