Key facts
- On an order-book exchange, losses pay the winning trader, fees pay the exchange and liquidations feed the insurance fund.
- On Papertrade, losses refill the liquidity pool that pays every winner.
- Losing traders receive PAPER; staked PAPER earns half of trading fees and LP surplus above $5M.
- There is no team or investor allocation taking a cut of that income.
On an order-book exchange
A perp trade on a typical exchange has a trader on each side. When you lose, the trader on the other side wins your money. You also pay maker or taker fees on every trade, win or lose, and those go to the exchange. If you are liquidated, any margin left over usually goes to the insurance fund. None of that comes back to you.
On Papertrade
Papertrade has no order book. Every trade is a synthetic swap against the protocol's liquidity pool at the Hyperliquid mid price (how it works). The pool started at zero and grows only from traders' losses, and it pays every winning close. When it cannot pay a win in full, the rest waits in the payout queue.
When you lose, two things happen:
- Your loss goes into the pool, where it pays winners and clears the queue.
- The protocol mints PAPER to you.
How the income is shared
The protocol earns a 2% fee on the gain of winning closes and a 2% fee on losing closes and liquidations, taken from the pool's side. Half of these fees go to PAPER stakers while the payout queue is empty. When the pool's tracked profit passes a $5M cap, the surplus above it can also go to stakers. Since PAPER was never pre-minted or allocated to a team or investors, that income goes to the traders who hold and stake it.
Side by side
| Papertrade | Typical order-book perp exchange | |
|---|---|---|
| Your counterparty | The protocol's liquidity pool | Another trader |
| Your loss pays | The pool, which pays all winners | The winning trader |
| Liquidation leftovers | Pool; 2% fee from the pool's side | Insurance fund |
| Trading fee | Only on winning closes | Maker/taker fee on every trade |
| What the loser gets | PAPER, stakable for USDC | Nothing |
| Who shares the income | PAPER stakers | The exchange and its token holders |
What this does not mean
- It does not make losing profitable. PAPER is usually worth far less than the loss that minted it.
- Staking income depends on trading volume and the pool's state, and it pauses while there is a payout queue.
- At launch PAPER cannot be transferred, so its value to you comes from staking.
Papertrade is experimental software. Smart-contract, price-oracle and payout-delay risks apply, and nothing here is investment advice.
Try it with a small size first
Connect a wallet, deposit at least 10 USDC and start with low leverage.