Papertrade traders lose $18.6 million while stakers collect $12.57 million in rewards

Papertrade opened for business on HyperEVM on October 10, 2026, offering up to 1000x leverage on BTC and ETH perpetual contracts. Within hours, traders had racked up approximately $18.6 million in net realized losses. Meanwhile, the people on the other side of the ledger did fine. Stakers of the platform’s PAPER token collected around $12.57 million in rewards during the first 24 hours. According to The Defiant, those reported staking rewards came to about 69% of net trading losses. The catch is that the payouts don’t go back to the traders who lost the money. They flow to PAPER stakers instead. How the Martingaler machine works Papertrade is a synthetic perpetuals exchange. Traders take leveraged positions on price movements without holding the underlying assets. The engine room is a liquidity pool called the Martingaler LP. It launched with zero liquidity and gets funded entirely by what traders lose. Losing traders don’t walk away completely empty-handed, though. For every $1 they lose, the protocol mints 100 new PAPER tokens and hands them over. Stakers earn from two sources. They receive 1% of the profit and loss that traders realize. They also pocket any gains that pile up in...