A wallet identified as 0x2025...840e extracted about $1.28 million from Papertrade within hours of the perpetuals platform’s Saturday launch, using trades on Hyperliquid’s ETH market that appeared to move the price feeding Papertrade’s highly leveraged positions.
The activity exposed a structural risk in Papertrade’s launch configuration: the venue priced trades from Hyperliquid’s best bid and offer while allowing positions with as much as 1,000x leverage. Small moves in the reference market could therefore produce outsized gains or losses in Papertrade’s shared liquidity pool.
Papertrade said Sunday that it had begun tightening open-interest limits after detecting what it called overnight attempts to manipulate its Hyperliquid-based price feed. The measures include restrictions implemented both onchain and through the platform’s relayer, which helps process trade orders.
The platform launched at 10 a.m. ET Saturday on HyperEVM, Hyperliquid’s smart-contract layer. It takes the other side of users’ perpetual positions through a pooled USDC reserve funded by trader losses. Traders whose positions lose also receive PAPER tokens under the platform’s design.
Eth trades coincided with Papertrade position changes
Blockchain records and account data show 0x2025...840e repeatedly opening large ETH positions on Papertrade before trading thousands of ETH on Hyperliquid, where the resulting price changes affected Papertrade’s reference price.
Between 6:01 p.m. and 6:02 p.m. ET on Saturday, the wallet bought roughly 6,060 ETH on Hyperliquid as ETH rose by about $3, or 0.12%. At 6:03 p.m., it sold about 5,210 ETH as the price fell by roughly $3.50.
At 1,000x leverage, a price move of 0.1% can erase the margin posted against a position. That arithmetic gave a trader able to influence the reference market an unusually direct route to changing the value of much larger positions on Papertrade.
The wallet traded approximately $231 million of ETH on Hyperliquid during Saturday evening’s activity and paid about $52,000 in fees, according to its transaction history. Papertrade’s account page for the address showed $3.18 billion in trading volume and around $1.28 million in profit.
The address deposited about $1.2 million and withdrew about $2.48 million from Papertrade during the day, including a $1.54 million withdrawal recorded at 6:06 p.m. ET. Its net withdrawals remained about $1.28 million above deposits, based on the platform’s displayed records.
A later short position ended in liquidation
The wallet did not win every trade. At 7:13 p.m. ET, it opened 30 ETH short positions at 660x leverage, with combined notional exposure of about $297 million. It then sold around 6,590 ETH on Hyperliquid over the next three minutes, while ETH fell to $2,504.40.
Those shorts remained open for more than three hours before being liquidated at 10:31 p.m. ET, when ETH traded at $2,509.95. Papertrade’s interface recorded a loss of about $450,000 and the minting of roughly 17.6 million PAPER tokens to the wallet.
The losing trade illustrates a feature of Papertrade’s model that complicated the weekend episode. A trader could realize USDC gains from successful positions while also receiving PAPER tokens from losses. The exact economic value of those tokens depends on their market and protocol conditions, but the mechanism means losses do not necessarily leave a trader with no residual asset.
Users first raised alarms on X during Saturday evening. An account named Boblob wrote that two wallets were making roughly $20 million ETH trades on Hyperliquid. Another user, butler, later posted the 0x2025 address and published a transaction-by-transaction breakdown of its activity.
Launch limits left room for large positions
Papertrade said BTC and ETH manipulation attempts were possible because its initial open-interest caps had been set loosely to accommodate launch demand. The platform added that a launch queue made the exact timing of position openings and closings less predictable, a factor it presented as limiting an attacker’s ability to execute precisely.
Lee, cited in the material accompanying the platform’s response, said Papertrade’s initial rules allowed up to $1 billion in open interest on each side of the market, while individual positions were capped at $10 million. Such limits may have been intended to avoid turning away early users, but they created a large potential gap between the size of a position on Papertrade and the cost of moving the external market used to value it.
Papertrade said its liquidity pool held $5 million and had paid $25 million to PAPER stakers. A chart shared by the platform showed the pool falling from about $5 million to roughly $2.4 million before recovering. The company also said some users had agreed to reverse manipulated trades in exchange for retaining their PAPER allocations.
The design places the pool in a familiar position for onchain perpetuals venues: it becomes the counterparty when users cannot be matched against each other. If price formation is drawn from a market that can be moved with a relatively manageable order, a trader may be able to transfer losses to the pool rather than merely trade against other market participants.
Hyperliquid has faced vault losses before
Hyperliquid’s own liquidity vault has previously absorbed losses linked to concentrated leveraged positions. Its HLP vault lost roughly $4 million after a leveraged ETH position was liquidated in March 2025. In November 2025, the vault lost about $4.9 million in a POPCAT-related event that prompted a temporary pause in deposits and withdrawals.
The 0x2025 wallet was already an active Hyperliquid trader before Papertrade’s launch. Hyperliquid data shows the address has generated around $14.2 billion in lifetime volume and approximately $13.1 million in profit. It began trading on the platform in February 2025 after depositing about $2 million and had traded daily in the week before Papertrade went live, including ETH, ZEC, NEAR, and perpetuals tied to CrowdStrike and Intel.
Papertrade now holds about $79.46 million in total value locked across 13,221 active daily addresses, according to industry monitoring data cited in the supplied material. During its initial launch phase, 11,473 accounts deposited about $137 million on the underlying network.
Tightening open-interest caps can reduce the payoff available from short-term reference-price moves, though it does not remove the underlying dependence on Hyperliquid’s order book. The early trading episode puts pressure on Papertrade to show that its revised limits can protect the shared pool when volatile markets and heavily leveraged positions meet a thin or rapidly moving reference price.
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