A 1,000x Exchange Opened, and a Trader Moved Hyperliquid's ETH Price for $1.28M
Papertrade, a perpetuals exchange built on HyperEVM, promised traders up to 1,000x leverage. Hours after going live, one wallet turned that promise into about $1.28 million.
How the trick worked
The wallet opened large positions on Papertrade, then bought or sold thousands of ETH on Hyperliquid to drag the reference price before closing. Papertrade prices every trade at the midpoint of Hyperliquid's best bid and offer, so the midpoint sets every position on its books. At 1,000x leverage, a 0.1% price move wipes out the entire margin on a trade. Over Saturday evening the wallet pushed about $231 million of ETH through Hyperliquid and paid roughly $52,000 in fees.
The price feed was the weak spot
Papertrade's own documentation says its contract reads Hyperliquid's BBO mid through a precompile and locks that price as your entry, with no funding costs and no slippage. Hyperliquid's own engine does not work that way: it uses a separate mark price to calculate unrealized profit and loss, margin requirements and liquidations. Traders flagged the gap on X, arguing the documentation had already admitted the risk. Papertrade responded on Sunday by tightening its caps on open positions.
The sequel went badly
The same wallet later opened 30 ETH shorts at 660x leverage with $297 million in notional value, then sold about 6,590 ETH within three minutes to push the price down to $2,504.40. Those shorts stayed open for more than three hours and were liquidated at $2,509.95 for a $450,000 loss. That loss minted about 17.6 million PAPER tokens to the wallet, which is how the venue pays losing traders.
Why this matters
Papertrade has no order book and no external market maker. A shared pool called the Martingaler LP takes the other side of every trade and pays winners purely from other traders' losses, minting 100 PAPER per $1 lost while the pool sits under $2 million. The venue booked $14.4 billion in notional volume in its first 10 minutes and pulled over $137 million in pre-deposits from more than 11,000 addresses. On a venue where a 0.1% move is a full liquidation, the price feed is not a detail, it is the product. The manipulation claims themselves remain allegations, not established findings.