Why PaperTrade Says a Transferable PAPER Token Would Invite a Lucrative Attack

Jason Pagoulatos argues that PaperTrade was right about the core risk: if the PAPER token became transferable, an attacker could create a perp market, take large PAPER exposure, and profit by manipulating the oracle-linked price of Bitcoin or Ether. He says the team’s own example is correct in substance, because once the token is liquid and the bankroll is large enough, the attack becomes economically viable. But he also says that conclusion makes the earlier roadmap look misleading, because the team appears to have known the attack surface while still implying transferability could come later.

Pagoulatos says the protocol is not fully decentralized because it is still controlled by a multisig, and that the team manually blocked the trader’s positions during the incident. He adds that any serious fix would require limits on pool size or leverage, but those restrictions would undercut the 1,000x degen-style product PaperTrade was trying to build. In his view, the result is not a classic rug pull, but it is still a bait-and-switch for users who deposited under one rule set and now face a different one.

He also highlights the moral discomfort of the launch design: users were effectively incentivized to lose money to earn PAPER, then expected to monetize that token later.