Papertrade Outpaces Pump and Hyperliquid Combined in Revenue in Its First Week

The newly launched onchain derivatives platform Papertrade has made waves following its debut on Hyperliquid’s smart contract layer, HyperEVM, on October 10. Data from DefiLlama shows that within just four days, the protocol generated $37.03 million in revenue. By comparison, Pump.fun brought in $16.06 million over seven days, while Hyperliquid recorded $14.56 million. Combined, the two established protocols trail the earnings Papertrade printed in its first week.

When evaluated over a 24-hour timeframe, Papertrade secures the third position among more than 2,600 protocols tracked by DefiLlama, trailing only Tether and Circle.

Every Papertrade Trade Runs Against a Shared Pool

Traditional exchanges match buyers with sellers and collect a minor fee for the service. Papertrade operates differently by eliminating the counterparty matching process. Instead, users speculate on whether the price of BTC or ETH will rise or fall, with a shared USDC pool acting as the opposing side.

Winning trades are paid out directly from the pool. Conversely, when a trade loses, the funds are absorbed by the pool, and the trader is issued newly minted PAPER tokens at a baseline rate of 100 PAPER per $1 lost. According to the platform’s official documentation, the token features no allocations for teams, venture capitalists, or airdrops, meaning trading losses represent the sole mechanism for token creation. Once the pool exceeds $5 million, all excess funds are directed to PAPER stakers. At present, these tokens cannot be transferred between wallets or sold on secondary markets.

Because the platform permits up to 1000x leverage, financial losses can accumulate rapidly. At that leverage level, a $100 deposit creates a $100,000 position, meaning an adverse price movement of just 0.1% can completely liquidate the trade.

The vast majority of Papertrade’s revenue stems from this overflow of trader liquidations. Consequently, the $37 million revenue milestone primarily reflects the total capital lost by users since Saturday.

One Wallet Moved the ETH Price and Took $1.28 Million

Papertrade does not utilize an order book; instead, it derives its BTC and ETH pricing from Hyperliquid using the midpoint between the highest active buy offer and lowest active sell ask. Because of this architecture, fluctuations in Hyperliquid’s prices directly impact Papertrade’s pricing.

It took less than a day for wallet 0x2025…840e to exploit this mechanism. Between 6:01 and 6:02 PM ET on October 10, the wallet purchased approximately 6,060 ETH on Hyperliquid while simultaneously holding large leveraged long positions on Papertrade. Ethereum’s price ticked up by about $3—a modest 0.12% move that would normally have minimal impact, but one that yielded substantial gains when amplified by 1000x leverage. The wallet subsequently sold its holdings, flipped to short positions, and executed the reverse strategy.

The strategy incurred roughly $52,000 in trading fees on Hyperliquid across $231 million in ETH volume, while generating a $1.28 million payout on Papertrade. In response, Papertrade lowered its open position limits.

New Losses Pay Out To Earlier Losers

The PAPER token reimagines the traditional role of the house. While stakers collect surplus funds from the pool, they obtain their tokens exclusively by enduring a losing trade. Once the asset pool surpasses $2 million, the token mint rate decreases, meaning traders who experience losses later receive fewer PAPER tokens per dollar than early participants. When the pool crosses $5 million, subsequent losses flow back to previous losers.

This mechanism does not function as a direct refund. A user who loses $1,000 receives non-transferable PAPER tokens, though staking them yields payouts in USDC.

The entire economic model relies on a continuous influx of new losses. If the pool lacks sufficient funds to cover a winning trade, Papertrade queues the unpaid profits and settles them using capital from future liquidations. Should trading losses decline, winning users face longer wait times for payouts and stakers receive reduced yields.

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