this news sent everyone’s excitement to zero with haste.
haven’t had the time to update my thesis on pstr. but for now, people should continue to be bearish for the token to bottom.
A note on transferability.
Papertrade is a complicated primitive, and managing it from a risk standpoint is a complicated problem. The PAPER token is far more integrated into the economics of the primitive than most tokens are in their respective protocols today, and, broadly, was designed to act as a counter insolvency incentive coupled with a rebate mechanism to losing traders. Market makers and exchanges are by far the two most profitable businesses in crypto, and our goal was to try and externalise as much of their margins back to users as possible. We are now just over a week into the life of papertrade and we are becoming increasingly confident that this is both possible, but also a likely outcome as agentic led software becomes the norm.
As it stands, the paper token traded as a perp becomes a leveraged bet on bankroll solvency - and being able to short bankroll solvency materially changes the payoff curve of a manipulation attack. The target number goes from the bankroll, to the bankroll + short side exposure on paper. We can, and do limit bankroll size specifically to control this payoff curve and ensure it never becomes existentially problematic, but external perp markets are not something we would have any control over if left to float of their own accord. For example, if our bankroll is $10m, an attack costing $15m manipulating the price of bitcoin or ether is not viable. You simply lose money. If however you were also able to put on $10m of PAPER short side exposure, suddenly an attack costing $15m is very viable indeed.
If we were to make the token transferable at this point, we are confident we would quickly enter a state too dangerous to allow any material exposure to be taken on papertrade, an end result that benefits no party beyond the wolves who have done the math on the short and are waiting in the wings with sharpened knives.
We would also like to thank the various perps teams who have reached out about pre-market listings for their understanding and patience regarding this issue, and especially to the paragon team who, despite jumping the gun on us, have behaved with the utmost integrity and transparency once a dialogue was opened.
Perps on PAPER will always act as a self-limiting exposure ceiling for a token with this type of utility, and we think it would be a shame to limit the growth of papertrade to the extent that allowing perps would necessitate. As such, at this juncture we do not have plans to allow off-contract token transferability.
Structurally, papertrade is limited by the quality of the data it receives from hyperliquid, but we strongly believe that hyperliquid has a very large part to play in the future of global exchanges, and expect their books to continue to thicken and strengthen over time.
A note on fees.
Papertrade launched with a deadband fee from entry of 0.2bps. This means you don't earn anything until the price has moved by 0.002% in your favour. Over the months before launch, we played around with many different curves and fee structures affecting exclusively positions closed very close to entry price in order to try and devise a structure that removed the edge against the bankroll low time frame scalp bots have, whilst also minimally impacting the traders around which and for whom the product was devised. We were never able to find anything we were absolutely happy with and so decided to stay with the 0.2bp deadband fee through launch. This has however meant we have had to be very restrictive when it came to certain parameters, such as OI caps.
Now, however, we have enough live data to fully understand exactly which strategies work, and to make the necessary changes to stop them. The changes we are making will have an on hours and off hours fee mode to account for the relative differences in liquidity the hyperliquid books see between these two time periods, and the ease with which low time frame moves are signalled. The changes we are making will only affect positions closed within 6bps of entry (0.06%) in on hours, and 10bps (0.1%) in off hours. Any trades closed above these threshold price shifts will see no change to their fees at all. On a look back to launch basis, these changes affect the profitability of bot strategies roughly 15x more than they do normal traders, for whom a very small proportion of overall winnings come from within this band.
These changes should serve to flatten much of the edge our microfee structure necessarily creates on low time frames, and will help with long term exchange sustainability. This should hopefully allow us to open up parameters such as OI caps a little more so those of you who wish to can put on the size you want to, when you want to.
It is possible these changes are still too lax, and that further revisions to this structure may be necessary going forwards. If so, we will notify users ahead of time.
A note on paper tokenomics.
In conjunction with the fee changes, we will also be implementing a change to the token issuance curve.
Going forward, every $1 lost mints a fixed share of PAPER's supply at that moment, roughly 0.1% of supply per $1M lost (the exact number depends on the mint rate at the time the contracts are upgraded). PAPER minting in and near insolvency will also change, switching from a flat 100 per $1 of loss, to a time weighted multiplier on the curve growing over time, effectively acting as the house running a discounted auction on its own future cash flows. This change also removes the risk of the paper-mint-straddle-attack, temporarily pushing the protocol insolvent by closing only the winning side of a large straddle position and then attempting to mint as much paper as possible.
In the immediate term these changes will only have a very subtle effect on PAPER minting, but in the long run will structurally change the outlook of the system beyond the first few weeks, serving to slowly dilute out older holders and leaving more recent users with an advantage. Reconstituting the PAPER system into something much closer to the exchange rakeback it was intended to be.
We have been very reticent to touch this particular aspect of the system for obvious reasons, but ultimately we believe that these changes provide all users with the optionality to take a smaller piece of a potentially much larger pie than the current dynamic might necessarily allow.
Other, miscellaneous notes.
These contract upgrades will include a few other contract changes, including the addition of builder codes so that builders can utilise papertrade in whatever capacity they choose to. This will be a whitelist only to begin with and we will have more for you later in the week on where/how this will be rolled out. A small change to contract permissions on the reward distributor and a change on how below bust closes are processed by the exchange are also included, largely to block gas griefing attacks.
These changes will be pushed to docs in full over the coming day, and we will further announce once the changes are queued into the timelock pending final security passes, scheduled to go live 24 hours after that point.
Final note.
We'd like to thank everyone that has tried out papertrade over the last 10 days. It has been a labour of love building this product and both of us have been taken aback at all of the positive feedback we have received. We'd also like to thank all those of you who have spent considerable time musing on the system we have built, and much of your advice has been taken onboard and will likely affect the colour of what papertrade becomes going forward. We know some of these changes will be unpopular with some, but we would not be making them if we did not feel them to be absolutely necessary.
- blurr, jez
was i bullish on $pstr? yes, from the beginning.
did i buy 1% of the supply sub 1M? no, i couldn't. instead i was in tier 3 for $PULP and sold the top.
did i sold too soon? no, there's simply no feasible reason to sell pstr at current price (it's a bet that papertrade will be successful and jez will see to that)
am i pained? yes cause i'm not holding enough.
but i'm glad i understand this enough to not midcurve pstr and believed in @eth_elian from the way he spoke about papertrade 9 days before launch.
it seems my entire personality is now around $pstr.
some of you sidelinoors are probably tired of seeing me post about it.
these guys are cooking so much you just can’t stop talking about them. for every $paper tweet, there’s always PSTR somewhere in that conversation.
that pretty much tells you everything you need to know. pstr is a bet on Papertrade being successful.
they just upgraded the buybacks to happen every 30 mins. that’s enough to absorb weak hands.
i’m now more convinced this can hit $10M before end of the week.
paper farming goes on. don’t midcurve this shit
Jezelian mode
buybacks have been updated to now scale with the PAPER staking yield.
the new program:
- 9 HYPE goes into the buyback contract every 30 min
- plus 50% of the previous day's staking revenue
- capped: never more in a day than the previous day's staking revenue
so far: 50.47M $PSTR bought back and burned (5.05% of supply) for $196k.
🐐
paperstrategy is now the 4th biggest PAPER staker on papertrade
as paperstrategy closes in on the top 3 PAPER stakers, and gets closer to its goal of becoming the biggest, here's what the protocol has done 4 days after papertrade went live:
- #4 biggest PAPER staker: 123M PAPER staked, 1.74% of all PAPER
- $508k of staking revenue earned
- 50.21M $PSTR bought back and burned, 5% of supply, for $194k, with ~$294k more to come in future buybacks
- 4.2x more PAPER per dollar than burning on papertrade directly
- 2,505 trades across 100 papertrade accounts
- $1.37M deployed to papertrade
built to be the biggest. 3 to go.
$35k/day buyback on a $5.4M mcap token.
i wonder what happens when the earnings from staking go brazy.
you can rotate from wherever you are to $pstr. you just need to understand the why
about $PSTR buybacks.
every buyback goes through one address:
0x67249a0e25286A23410bE1128e9c2353bD78D5e2
the sells on that address are how the token's 10% tax works and it being sold back into the pool.
the $PSTR it buys is burned in the same transaction. you can watch every buy live on that address.
right now it buys back 9 hype of $PSTR every 30 minutes. that's ~$35k a day depending on hype's price.
so far, paperstrategy has bought back and burned 45.74M $PSTR (4.57% of supply) for $156k.
the chinese guys are buying. everyone understand the math now.
目前来看，两个基于 @papertrade_xyz 的策略代币
@paperstrategy_ 的 $PSTR完胜，市值已经跑到4.37M
而反观 @paperdao_xyz 的 robinhood:0xbc2283d12b1f2f46c1613ae672e95c55b69ca414,则赢来了史诗级大回调，冲高1.6M后，现在已经跌去近90%。市值来到了18.8万
而且两者的储备量来看，@paperstrategy_已经拥有了1亿PAPER，而@paperdao_xyz只有500万
作为一个 robinhood:0xbc2283d12b1f2f46c1613ae672e95c55b69ca414 持有者， 接下来看 @paperdao_xyz 如何优化了
just buy $pstr and chill.
as long as papertrade is successful, pstr does too.
that’s the new flywheel.
Just buy @paperstrategy_ and chill. Flywheel is real.
Acquired 1% during their launch. And added another 1% on the dips. That 2% now is 2.5% or smth due to buyback and burns.
$PSTR outpace PAPER inflation and is #6 paper staker sitting at $4M mcap.
You should've followed me on my initial purchase, sad that X algos didn't show you my original post.
xitter.cf/0x_iroh/status/2107977…
not even up to 24hrs and $pstr is back to ATH.
people still think they’re sidelined on this but they’re wrong.
treasury performance on day 1 was the signal i was looking out for between $pulp and $pstr.
i anticipated a dump on $pulp once i realized there wasn’t much accumulated in the treasury compared to pstr $850k pre paper launch.
anyone who market-bought on secondary sub $500k mcap did it to trade the attention, and it worked (i did)
no way people see that and don’t rotate into $pstr based on performance, especially since most presalers didn’t fully understand why they should be holding the token.
both have dumped through the weekend, but there’s a higher chance $pstr sends back to ATH while $pulp still struggles to hold $1M.
will share my views on why pulp probably won’t recover.
it might, maybe when more people who have no clue why they should hold it start buying.
this is the most common question asked by everyone on ct right now.
“why buy pstr instead of accumulating paper yourself”
holding $pstr is highly +ve than trying to accumulate paper yourself at current mint rate.
i ran the math in a spreadsheet (current data is probably stale) but let’s use it and put into perspective.
Papertrade LP is currently sitting at $4.97M. that’s 30 PAPER /$1 mint rate.
if you want to accumulate say 100,000 PAPER, the cost required through:
- direct liquidation: $3,238
- buy $pulp: $4,460
- buy $pstr: $1,697
- run delta neutral on $ETH at 50x lev for a 0.2% cost you around: $743
if you look deeply, you need more in direct liquidation to accumulate 100k Paper compared to running delta neutral.
and for DN, that means, you need more in margin $ for each leg at 50x or less.
holding pstr is extremely cheap cause it’s treasury keeps growing as people trade the token (read docs to understand the flywheel)
so this is easier for smaller funds if you’re looking for the same amount of paper exposure as someone liquidating $3k+ or running DN legs.
direct liquidation is +ve at the first hour of papertrade launch cause LP was under $2M. you get the 100 PAPER flat mint rate /$1
currently, pstr has no details on distribution but if you put 2 & 2 together, you can easily calculate your exposure cause the token supply is deflationary.
as pstr supply shrinks, so as your share in the paper accumulated grows + you get rewarded with price appreciation.
also this sort of give clarity on my previous post where i wrote why $pulp may never recover.
their treasury performance is weak and paper accumulated is not attractive enough for people to want to buy and hold the token.
this realization is what cause the token to dump (pstr dumps too, to around $1.23M but has now recover to $2.44M).
so ultimately, you can see the difference and the performance is reflecting in price their action.
pstr is a bet that papertrade is successful. so as long as papertrade continue to be a success and LP grows,
paperstrategy will continue to earn a larger share of the staking rewards because they currently hold 1.5% of the staked paper supply which put them as the 7th biggest paper staker on Papertrade.
psa: i do not hold enough pstr. it just piques my interest.
treasury performance on day 1 was the signal i was looking out for between $pulp and $pstr.
i anticipated a dump on $pulp once i realized there wasn’t much accumulated in the treasury compared to pstr $850k pre paper launch.
anyone who market-bought on secondary sub $500k mcap did it to trade the attention, and it worked (i did)
no way people see that and don’t rotate into $pstr based on performance, especially since most presalers didn’t fully understand why they should be holding the token.
both have dumped through the weekend, but there’s a higher chance $pstr sends back to ATH while $pulp still struggles to hold $1M.
will share my views on why pulp probably won’t recover.
it might, maybe when more people who have no clue why they should hold it start buying.
day one on papertrade and @paperstrategy_ already minted 50M+ $PAPER and still has $850k left for other strategies.
accrued yield is currently sitting at $271.7k USDC, and 90% goes to buybacks.
only $58k has been claimed so far and $52k bought. i wonder when the rest lands on the chart.
seeing a lot of people run the maths on PaperStrategy usually is a signal that people are just catching up to how much of an edge they have holding pstr than trying to farm paper themselves (you can do both and play the game differently).
i’d be camping here if i were you. $PSTR still feels cheap here considering its performance on day 1.
treasury is still stacked. remember that.
will be calling it a night here, was nice experiencing the liquidation party today.
need to prep for a 10k run in the morning.
long degeneracy
noun | /lôŋ də-ˈje-nə-rə-sē/
he was right
long degeneracy
noun | /lôŋ də-ˈje-nə-rə-sē/
1. "a belief that the world will only get more degenerate, financialized, speculative, lonely, tribal and weird"
2. as real returns compress, risk increases to compensate
oldcoinbad.com/p/long-degene…
