Papertrade: the price borrowed from Hyperliquid turned against it

A $5 million pool, 1,000x leverage and a price copied from the neighbor. Papertrade, a new perpetual futures platform built on Hyperliquid, opened its doors on Saturday, October 10. That night, according to Journal du Coin, one wallet was already walking away with $1.28 million in profit. Without any hack: the trader simply pushed the price of ether up 0.12% on Hyperliquid.

One pool against everyone, a price read elsewhere

According to Journal du Coin, Papertrade's model rests on two choices. First, no order book and no market maker: a shared USDC pool acts as the counterparty to every trader. When a trader wins, the pool pays. When he loses, the pool collects, and the loser receives a few PAPER tokens as a consolation prize.

Second, the price. Papertrade does not calculate it itself: it takes it from Hyperliquid, using the midpoint between the best bid and the best ask. Yet at 1,000x, a 0.1% move wipes out the margin on one side and doubles it on the other. Journal du Coin's conclusion: whoever can move Hyperliquid's price sets Papertrade's.

The mechanism, minute by minute

The sequence of events, according to Journal du Coin, which draws on The Block (New York time):

• Between 18:01 and 18:02: the trader buys about 6,060 ETH on Hyperliquid. The price rises by about $3. On 1,000x long positions, that represents more than 100% of margin, according to The Block.
• Within the minute: he sells 5,210 ETH back.
• 18:06: he withdraws $1.54 million.
• 19:13: he goes the other way. He opens 30 short positions at 660x, for a combined notional value of about $297 million, then sells 6,590 ETH in three minutes.
• 22:31: his shorts are liquidated, costing him about $450,000.

In total, again according to Journal du Coin, the maneuver cost the trader $52,000 in fees on $231 million traded. On the other side, he withdrew 2.48 million from Papertrade against 1.2 million deposited. During the operation, the pool fell from about $5 million to $2.4 million before recovering, according to a Papertrade chart. And the wallet is no beginner: it has been trading on Hyperliquid since February 2025, with $14.2 billion in volume and $13.1 million in net profit on the books.

Papertrade pleads an overly generous launch

In a post published Sunday on X, Papertrade explains that its open interest caps were "extremely permissive," to absorb the launch-day rush. The team promises to tighten them, without giving a figure, and insists that these attempts were "not an oversight" in a mechanism prepared over six months. According to the platform, the trader allegedly returned almost everything through new accounts. The Block was unable to verify this: according to the platform's records, the wallet's withdrawals still exceed its deposits by 1.28 million.

For TechFlow, cited by Journal du Coin, tightening the screws solves only half the problem: stricter caps reduce the payoff of the attack, but do not cure the dependence on an external price. Hyperliquid, Journal du Coin points out, "has been here before": its HLP vault lost about $4 million in March 2025 on an ETH position, then 4.9 million in November on the POPCAT token. Contacted by The Block, Hyperliquid had not responded by the time the article was published.

Papertrade, for its part, claims $25 million paid out to PAPER stakers. TechFlow credits it with nearly $70 million in TVL and more than 10,000 active addresses.

What the episode reveals about new platforms

For a Swiss reader drawn to DeFi, the affair is not about a code flaw, but about architecture. Where does the price the platform uses come from, and how much does it cost to move it? Who pays the gains, and what happens when that shared pool melts by half in a single evening? What caps govern positions, especially on launch day?

As Journal du Coin points out, highly leveraged products expose investors to the rapid and total loss of the capital committed. At 1,000x, a 0.1% move in the wrong direction is enough to liquidate a position. This article does not constitute investment advice.

Sources: "Crypto: How a $3 gap on ETH earned a trader 1.28 million," Journal du Coin, which cites The Block, TechFlow and Papertrade's post published on X.