High revenue growth, 99% staking: PaperTrade off to a strong start—how should PAPER be priced?

1.15 trillion in cumulative notional trading volume, $67.55 million in TVL, $46.71 million in cumulative USDC staking rewards.

In less than a week since launch, PaperTrade has already delivered this kind of scorecard. "Cumulative staking rewards" refers to the yield distributed to PAPER stakers.

The discussion around PAPER has shifted accordingly. At first, traders cared about how many tokens they could get for how much they lost; now, the increasingly worthwhile question is how much revenue the PAPER they receive can actually lay claim to, and what it should be worth.

Revenue Keeps Growing

Just how strong PaperTrade's start has been can be seen from a single comparison.

According to DefiLlama data, PaperTrade generated $23.97 million in Holder Revenue on October 10, with a cumulative total of $33.94 million from October 10 to 13. By contrast, Hyperliquid's single-day revenue peak stands at $8.81 million, and its peak four-day cumulative revenue is just $22.3 million — less than what PaperTrade earned in a single day.

Single-day records are easily inflated by launch hype, so subsequent performance is more telling. In the days after launch, PaperTrade's daily staking rewards have climbed steadily.

Protocol users are also growing steadily. PaperTrade's cumulative first-deposit addresses have reached approximately 14,900, with cumulative deposits of about $241 million in USDC. Placed alongside steadily rising daily rewards, these metrics are enough to show that PaperTrade has already formed an active base of participants.

Revenue Distribution

What makes PaperTrade compelling is that it links the trading experience, token issuance, and revenue distribution together.

Traders take the liquidity pool as their counterparty and don't need to wait for another user to fill their order; positions carry no funding rate, opening positions and losses incur no fees, and leverage of up to 1000x is supported. After a trading loss, qualifying losses can in turn generate PAPER. Holding and staking PAPER allows holders to participate in the protocol's USDC revenue distribution.

For high-frequency traders, this combination offers a different cost structure; for early participants willing to take on risk, losses come with the chance to earn a claim on future revenue. Traders and participants in the platform's revenue can be the same group of people.

This is precisely what Ansem is bullish on. In his view, the revenue opportunity created by trader losses is far greater than the small fees collected on a per-trade basis.

PAPER's issuance mechanism is also changing participants' costs. Initially, every qualifying $1 of losses could mint up to 100 PAPER; once the LP tracked by the protocol exceeds the $2 million threshold, the minting rate begins to decline. PAPER's new supply has shrunk markedly after the concentrated release on day one.

At the same time, PAPER's yield comes from a share of LP revenue, and once LPs exceed $5 million, excess funds are also used for distribution to PAPER stakers. With revenue continuously generated and early emission slowing, holders who have already accumulated PAPER have all the more reason to keep staking.

Currently, PAPER's total supply is approximately 8.16 billion tokens, with about 8.1 billion in staking — a staking ratio of 99.23%. With nearly the entire token supply staked, PAPER's value is therefore directly tied to revenue performance.

Valuation

As of October 16, PaperTrade's historical average daily staking revenue is shown at approximately $5.06 million, corresponding to roughly $1.85 billion in annualized revenue.

But even after heavily discounting this figure, PAPER still has a valuation worth discussing.

With nearly all tokens staked, a simple model can be used to estimate the value of each PAPER:

PAPER reference price = daily holder revenue × 365 × holder revenue multiple (annualized) ÷ token supply.

This uses the revenue flowing to holders; the $46.71 million in USDC already distributed historically is not added again as an additional asset.

The ratio of current circulating market cap to holder earnings for PUMP, HYPE, and LIT is 6.53x, 21.46x, and 27.33x respectively. Here we adopt the lowest of these, 6.53x.

On the token supply side, 8.16 billion PAPER tokens have already been generated, and continued future issuance will dilute the revenue each token receives. Below, we use both 14 billion and 18 billion tokens as future supply scenarios.

Paper Strategy

PAPER tokens are not yet open for trading. PaperStrategy is the "PAPER" treasury on HyperEVM, and is currently one of the few ways beyond OTC to gain PAPER exposure.

Around PAPER's yield, PaperStrategy has built an accumulation mechanism. PaperStrategy's token, PSTR, charges a 10% tax on both buys and sells, with 90% of the tax proceeds going to the treasury and 10% to the team; the treasury accumulates and stakes PAPER through trading strategies, then uses 90% of the staking yield for buyback-and-burn of PSTR, with the remaining 10% going to the team.

Currently, PaperStrategy has staked approximately 154 million PAPER. Over the same period, PSTR's market cap is about $8.5 million; after deducting roughly $600,000 in account and treasury balances not yet converted into PAPER, and adding the 10% tax on both buys and sells, this roughly implies an implied price of about $0.064 per PAPER. This provides a window into observing PAPER's market pricing.

PaperTrade has already produced a sufficiently strong start, and PAPER's value is beginning to have revenue as its backing. Next, what's worth watching is whether the sustainability of revenue can provide PAPER with a sufficiently strong valuation foundation.