Delphi Digital analyst warns of challenges for Papertrade after 93% staking revenue drop

Papertrade had a launch most protocols would envy. Within days it briefly ranked second globally for daily revenue and racked up more than $1.3 trillion in cumulative notional volume.

Then the farmers started packing up. Staking revenue paid to PAPER holders dropped 93% in a single day, and a Delphi Digital analyst is now openly questioning whether the exchange can keep the lights on through organic activity alone.

Jason Pagoulatos, an analyst at Delphi Digital, summed up the mood on X.

“Many papertrade farmers are leaving, making future farming and revenue generation very difficult.”

From second place to outside the top 20

Papertrade is an onchain perpetuals decentralized exchange built on the HyperEVM. It opened for trading on October 10, 2026.

The pitch was straightforward: synthetic BTC and ETH perpetual contracts with high leverage.

The opening weekend was loud. The cumulative notional volume figure above $1.3 trillion put Papertrade briefly near the very top of revenue leaderboards.

The comedown was just as fast. Open interest fell from approximately $11 billion to $693 million within 24 hours of launch, a 93.7% decline.

Total value locked also slid early. By October 11, TVL had dropped by $48 million to $70 million.

Revenue followed the same path. By October 17, daily revenue had fallen 83% from the launch weekend to approximately $890,000.

The staking cliff and the PAPER token decision

The sharpest single move came in staking revenue. PAPER holders were collecting roughly $1.28 million the day before a 93% plunge took payouts down to approximately $84.5K.

The research ties that collapse to an October 20 decision to make the PAPER token non-transferable. Once holders could no longer move the token freely, much of the incentive for mercenary traders evaporated.

After that change, daily revenue fell to around $178K. That figure pushed Papertrade out of the top 20 protocols by revenue.

TVL kept bleeding too. It moved from $70 million down to about $40 million.

A business model built on trader losses

The deeper issue is how Papertrade earns money. The protocol relies heavily on traders losing, collecting revenue through a fee structure applied to realized profits and liquidations.

Early on, the setup looked generous to stakers. Nearly 98% of protocol revenue was directed to them, with tens of millions of USDC distributed.

That generosity is exactly what attracted farmers, traders who show up primarily to harvest token rewards and yield rather than to use the product long term. Pagoulatos’s concern is that those farmers made up a large share of the activity. If they leave, the volume that generates fees leaves with them.

What this means for Papertrade and its users

For PAPER stakers, the immediate math is stark. A position that was collecting a share of about $1.28 million in daily payouts is now splitting roughly $84.5K.

The non-transferable token decision adds a second layer of risk. Holders who cannot move their tokens have fewer options to manage exposure, which may explain why the research flags user trust as a central question alongside revenue.

For the protocol itself, the challenge is proving there is organic demand under the incentives. Revenue of around $178K a day is a real business. The question is whether that number stabilizes or keeps sliding as farming rewards shrink.

The open interest figures are worth watching closely. A drop from approximately $11 billion to $693 million suggests much of the early activity was transient.