Papertrade Tightens New Trading Limits After Hyperliquid Price Allegations

Papertrade tightened limits on new trading exposure Sunday after alleging that Hyperliquid prices used for its synthetic contracts were targeted for manipulation.

The restrictions apply to Papertrade’s on-chain contracts and to approved relayers that submit users’ instructions to the blockchain. Papertrade said its initial launch settings allowed excessive exposure and that it was tightening limits at both levels.

The platform’s synthetic Bitcoin (BTC) and Ether (ETH) contracts use the midpoint between Hyperliquid’s best bid and offer as their reference price. Papertrade’s initial configuration allowed up to $1 billion in open interest per market and side, while individual positions were capped at $10 million.

Papertrade said an alleged manipulation attempt involving BTC and ETH prices on Hyperliquid’s order book “was not an oversight” and that new parameter settings were intended to make such activity “almost unprofitable.”

Unlike an exchange that matches traders directly, Papertrade uses a protocol-owned pool. That structure links the value of its contracts to movements in Hyperliquid’s external quotes, even when no matching perpetual position is opened there.

At 1:05 p.m. ET (17:05 UTC) Sunday, Papertrade’s analytics dashboard showed $2.81 million in estimated house funds, a $4.39 million liquidity-provider balance and zero queued payout debt.