Papertrade Keeps PAPER Non-Transferable, Citing Perp Attack Risks

Papertrade said Monday it has no current plans to make its PAPER token transferable, arguing that external perpetual-futures markets could make attacks on the platform’s trading bankroll profitable.

“At this juncture we do not have plans to allow off-contract token transferability,” the team wrote on its verified X account at 6:30 p.m. ET on Oct. 19.

The decision leaves traders who earned PAPER by taking losses with a token they cannot move between wallets or sell. Its current economic benefit is staking for USDC distributions from trading fees and liquidity-pool surplus, according to Papertrade’s documentation. Staking and unstaking remain available; unstaking returns PAPER to the holder’s wallet, not a tradable asset.

That changes the outlook set out in the team’s Oct. 1 rollout plan. The plan assigned token transfers to a fourth phase after launch, saying they would be enabled “after a sufficient period of time has passed.” It gave no date and initially justified the restriction as a way to encourage trading participation and reduce onchain congestion.

Why PAPER Shorts Worry the Team

Papertrade runs on Hyperliquid’s smart-contract network, HyperEVM. Its trades settle against a liquidity pool funded by cumulative user losses, using prices read from Hyperliquid’s order books, rather than placing the trades on Hyperliquid itself, its docs explain.

The team argued that a PAPER perp becomes “a leveraged bet on bankroll solvency.” An attacker could potentially combine gains from manipulating the prices Papertrade uses with profits from a short position against PAPER, increasing the payoff beyond the bankroll alone. Papertrade can cap its own bankroll, the team said, but cannot control external derivatives exposure.

In the team’s hypothetical example, spending $15 million to attack a $10 million bankroll would lose money. Adding $10 million of PAPER short exposure could make the same attack profitable. These figures illustrated its risk argument, not a reported attack.

PAPER derivatives are already being offered despite the token’s transfer restriction. Aster said Monday it had launched PAPER pre-launch perpetuals with up to three times leverage. MNX announced PAPER pre-market futures with three times leverage on Oct. 18. Those contracts are distinct from transferring or selling holders’ PAPER balances.

The same Papertrade statement also outlined a planned issuance change that the team said would gradually dilute older PAPER holders in favor of more recent users, bringing the token closer to a trading-rebate mechanism. The team said it would publish full documentation over the coming day and announce when the contract upgrades entered a timelock, with activation scheduled 24 hours after that point, pending final security checks.