Papertrade trader nets $1.28 million on launch day through alleged price manipulation

On October 10, 2026, perpetuals exchange Papertrade launched on HyperEVM offering up to 1,000x leverage. Hours after launch, wallet 0x2025...840e netted $1.28 million by taking high-leverage positions while executing large trades on Hyperliquid to move reference prices. The protocol relies on Hyperliquid's midpoint price, exposing a manipulation vector. Papertrade subsequently tightened open interest limits both onchain and at the relayer level.

Trader profits and withdrawals

• ▪Wallet 0x2025...840e netted approximately $1.28 million in profit on $3.18 billion in trading volume within hours of Papertrade's launch on HyperEVM on October 10, 2026
• ▪Wallet 0x2025...840e withdrew approximately $2.48 million from Papertrade against $1.2 million in total deposits on October 10, 2026

Trader short position and liquidation

• ▪Wallet 0x2025...840e held 30 ETH short positions open for over three hours before they were liquidated at $2,509.95 on October 10, 2026, resulting in a $450,000 loss
• ▪At 7:13 p.m. ET on October 10, 2026, wallet 0x2025...840e opened 30 ETH short positions at 660x leverage on Papertrade with a total notional value of $297 million
• ▪The liquidation of wallet 0x2025...840e's 30 ETH short positions minted approximately 17.6 million PAPER tokens to the account

Trader activity on Hyperliquid

• ▪Wallet 0x2025...840e traded approximately $231 million worth of ETH on Hyperliquid on October 10, 2026, incurring about $52,000 in trading fees
• ▪Between 6:01 p.m. and 6:02 p.m. ET on October 10, 2026, wallet 0x2025...840e bought 6,060 ETH on Hyperliquid, driving the reference price up roughly 0.12%

Midpoint pricing manipulation vector

• ▪Industry observers noted that pricing trades off Hyperliquid's midpoint bid and offer created a price manipulation vector for high-leverage trades on Papertrade
• ▪Papertrade prices every perpetual trade at the midpoint of Hyperliquid's current best bid and offer on HyperEVM

Papertrade responses to launch issues

• ▪Papertrade stated on October 11, 2026, that it began tightening open interest caps onchain and at the relayer level following launch-day manipulation attempts on BTC and ETH
• ▪Papertrade stated on October 11, 2026, that some traders agreed to reverse launch-day manipulated trades in exchange for keeping their earned PAPER tokens
• ▪Papertrade stated on October 11, 2026, that launch queue delays made the timing of opening and closing positions on the platform unpredictable

High leverage mechanics

• ▪On Papertrade's 1,000x leverage setting, a 0.1% price movement against an open position represents the position's full margin and triggers liquidation
• ▪Papertrade launched live trading on HyperEVM on October 10, 2026, offering up to 1,000x leverage on synthetic Bitcoin and ETH contracts

Liquidity pool and loss tokens

• ▪Papertrade takes the counter-side of user positions through a shared USDC liquidity pool funded exclusively by trader losses and liquidations
• ▪Traders who realize losses on Papertrade receive PAPER tokens at an initial rate of 100 PAPER per $1 lost while the liquidity pool remains under $2 million

Launch day metrics

• ▪Papertrade generated over $14.4 billion in notional volume and recorded between $18 million and $18.6 million in net realized trader losses on its October 10, 2026 launch day
• ▪Open interest in Bitcoin contracts on Papertrade reached $3 billion on its October 10, 2026 launch day

Debatable claims

• ▪Papertrade should reverse all launch-day trades executed through price manipulation
• ▪Offering 1,000x leverage on synthetic crypto derivatives poses unacceptable risk to protocol liquidity
• ▪Papertrade's oracle pricing model creates an unacceptable vector for price manipulation