Papertrade, a synthetic perpetuals exchange operating on HyperEVM, is currently facing unconfirmed allegations of oracle manipulation. The platform utilizes the BBO mid-price from Hyperliquid as its exclusive oracle source, raising concerns about potential price vulnerability given the high leverage offered.
The exchange launched around October 10, 2026, attracting over $137 million in pre-deposits from more than 11,000 addresses. Within the first 10 minutes of operation, notional volume reached $14.4 billion, while open interest in BTC surpassed $3 billion shortly after the debut.
The platform operates without a traditional order book or funding rates, relying on a liquidity pool called Martingaler LP. This pool is funded solely by trader losses. Shortly after launch, the pool held approximately $3.15 million, which serves as a payout source for winning traders.
If the pool balance falls below $2 million, the protocol triggers the issuance of new PAPER tokens at a rate of 100 PAPER per $1 of shortfall. This mechanism aims to cover deficits but results in the dilution of existing token holders.
Data from the PaperDash dashboard indicates that net realized trader losses reached between $18 million and $28 million in the initial days. During the opening hours, PAPER stakers received USDC rewards estimated between $10 million and $12.6 million.
