Papertrade is preparing to open live perpetual futures trading on HyperEVM on Oct. 10 with a structure that places profitable traders in a queue when its shared payout pool lacks enough USDC to settle their gains immediately.
The exchange, co-founded by developers known as Jez and Blurr, will route every BTC and ETH perpetual position against a communal liquidity pool called Martingaler LP, according to Papertrade’s launch materials. Rather than matching buyers and sellers through an order book or relying on external market makers, the platform takes the opposite side of each trade through the pool.
That arrangement makes the pool’s balance central to the trading experience. Trader losses and liquidations flow into Martingaler LP, while winning positions draw USDC from it. A trader who closes a profitable trade can withdraw their initial margin, but any profit depends on cash available in the pool when the claim is processed.
If the pool cannot cover the full amount, the remainder becomes a queued claim. Papertrade’s documentation gives an example in which a trader owed $100 receives $60 after a subsequent losing trade adds that amount to the pool, then waits for another $40 in losses to cover the rest. Claims are handled on a first-come, first-served basis.
A futures venue built around a shared counterparty
The model turns liquidity into a direct measure of settlement capacity. In a conventional perpetual futures market, profitable traders generally settle against other market participants, designated liquidity providers, or an exchange’s risk system. At Papertrade, the communal pool bears that obligation.
Martingaler LP will begin with a zero balance, according to the project’s launch plan. It grows when traders lose, meaning a sustained period of profitable trading could create unpaid profit claims unless new losses replenish the pool.
Papertrade says users will be able to deposit USDC from a minimum of $10 and pay a one-time $1 activation fee. The initial market selection is limited to BTC and ETH, with leverage of up to 1,000x.
At that maximum leverage, a price move of roughly 0.1% against a position could be enough to eliminate its margin and trigger liquidation. Such positions may generate losses for the pool quickly, but the same leverage also exposes users to rapid liquidation from relatively small moves in the reference price.
The platform says it uses Hyperliquid prices as the reference for positions. That gives the integrity and availability of that price source an outsized role in determining liquidations and settlement outcomes, particularly in a system where a liquidation directly changes the pool’s ability to meet other traders’ claims.
Papertrade has also said that liquidations will be processed before new orders. Small trades may face longer waits, while trades will initially be submitted by approved service providers using transactions that users have signed on-chain.
PAPER rewards connect losing trades to fee income
Users who lose trades or are liquidated will receive newly minted PAPER tokens, subject to the project’s issuance rules. When Martingaler LP is below $2 million, every $1 of eligible losses can mint as many as 100 PAPER. The conversion rate is designed to decline as the pool gets larger.
PAPER will be non-transferable and non-sellable at launch, Papertrade says. Holders will be able to stake the token for a pro-rata share of trading-fee revenue paid in USDC. Once the pool surpasses $5 million, the project also plans to distribute additional pool returns to PAPER stakers.
The design gives users who lose money an ongoing claim on platform-generated fee revenue, while also encouraging them to retain tokens rather than sell them immediately. It also creates a mechanism that could expand token supply during periods of heavy liquidations.
Delphi Digital researcher tempest has flagged a potential dilution route involving paired long and short positions. The concern is that a trader could structure offsetting exposure so that liquidations mint PAPER while producing limited net cash for the pool. The extent to which that approach is viable will depend on Papertrade’s final eligibility rules, execution mechanics, fees and liquidation behavior under real trading conditions.
Deposits open ahead of an uncertain launch time
Pre-deposits opened a day before the planned trading debut and will remain available through launch. Papertrade says early depositors will not receive execution priority. Deposits made after trading begins may be delayed if HyperEVM is congested.
The platform expects to start roughly one hour after a scheduled Saturday HyperEVM upgrade, though it has not published an exact opening time and has acknowledged that the rollout could slip to Sunday.
Papertrade says its contracts will not use funding rates, the periodic payments commonly exchanged between long and short perpetual traders to keep contract prices aligned with spot markets. The project also describes its execution as having no slippage, though traders will still face the practical constraints of service-provider processing, liquidation priority and the pool’s capacity to pay profits.
Outside projects prepare to build around PAPER
Several third-party efforts are positioning themselves around the launch. DXAP, an invite-only application from the team behind DX Terminal, is designed to let AI agents trade users’ Hyperliquid accounts. Its creator, known as poof, has said the Superclip agent intends to trade with DXAP user funds, without publishing further details on how those strategies will operate.
PaperStrategy, an anonymous project, applies a 10% tax to PSTR token trades. It says 90% of that tax will fund a strategy to accumulate and stake PAPER. Of the USDC staking income produced, PaperStrategy plans to direct 90% toward PSTR buybacks and burns and retain 10% for its team.
PaperDAO also raised capital through daos.world on Oct. 7 for a treasury intended to acquire PAPER through trading losses at launch and stake the tokens for USDC revenue. Its PULP token is meant to represent a proportional share of that treasury and become redeemable after PAPER transfers are enabled.
Papertrade’s opening will test whether incentives tied to losing trades can attract enough activity without overwhelming the pool’s payout queue. Early users will be dealing with a venue where leverage, token issuance and liquidity for winning claims are tightly connected, making the Martingaler LP balance a more immediate risk indicator than it would be on a typical perpetual futures exchange.
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