Whale Moves Ethereum Price, Earns $1.28 Million: New Platform Tightens Limits
After a whale earned about $1.28 million on the new derivatives platform Papertrade by moving Ethereum prices with trades on Hyperliquid, the platform began tightening its open-position limits.
An investigation by The Block, based on trading data and account records, uncovered a series of trades that took advantage of the price link between the two platforms. The whale opened large positions on Papertrade, then bought and sold thousands of ETH on Hyperliquid to move the price Papertrade used as its reference.
Papertrade, which went live on Saturday, offers up to 1,000x leverage. The platform calculates its price from the midpoint between the best bid and ask on Hyperliquid, while a shared USDC pool takes the other side of trades.
A move of a few dollars affected large positions
In one of the trades reviewed, the wallet bought about 6,060 ETH on Hyperliquid, pushing the price up by about $3. Shortly afterward, it sold about 5,210 ETH, sending the price down by about $3.50. At 1,000x leverage, a 0.1% price move can wipe out a position’s entire margin.
By Saturday evening, the wallet’s ETH trading volume on Hyperliquid had reached about $231 million, while its trading fees totaled $52,000. The Papertrade account page showed $3.18 billion in volume and $1.28 million in profit. Against about $1.2 million in deposits on the same platform, a total of $2.48 million had been withdrawn.
30 short positions closed at a $450,000 loss
The whale later opened 30 separate ETH short positions with 660x leverage. Their combined notional value was $297 million. It then sold about 6,590 ETH on Hyperliquid, pushing the price there down to $2,504.40.
Unlike the initial trades, the short positions remained open for more than three hours before being liquidated when the price reached $2,509.95. The trades resulted in a $450,000 loss. According to the Papertrade interface, the liquidations earned the wallet about 17.6 million PAPER tokens.
Platform tightens limits
In a statement on Sunday, Papertrade argued that the factor enabling attempted manipulation was the total open-interest limits, which had been set loosely to meet demand at launch. It said it had begun tightening these limits both on-chain and at the layer where orders are routed.
The platform also claimed that the profitable trader lost nearly all of its gains back to the pool through new accounts. However, The Block said it could not verify this claim and noted that the amount withdrawn from Papertrade by the wallet it reviewed still exceeded its deposits by about $1.28 million.