Papertrade responds to questions about price manipulation and agreement loopholes: Due to loose position caps at the beginning of launch, it has begun to tighten parameters

On October 11, Papertrade officials responded to questions about price manipulation and agreement loopholes. It made it clear that small orders and large orders should not have the same priority, otherwise the front end will face serious congestion in junk transactions, resulting in a worse user experience than the current queuing mechanism. Under the existing constraint framework, the platform has strived to improve the inclusiveness of the fair start mechanism. Regarding the price manipulation behavior of BTC/ETH on the Hyperliquid BBO platform yesterday, the official emphasized that it was not due to loopholes in the mechanism designed six months ago, but due to the loose position cap initially set to deal with congestion. If the position cap is implemented during the peak period of queuing start-up, it may aggravate the problem of user experience lag. At the same time, the queuing mechanism objectively provides a natural barrier to manipulation behavior due to the uncertainty of the confirmation time of opening/closing positions. At present, as network congestion has gradually eased, Papertrade has adjusted its position limit parameters at the chain and relay levels. Officials pointed out that under this system architecture, there is always potential for price manipulation, but the core issue is whether it is economically feasible. The current parameter setting is close to the critical point where it cannot be profitable. Even if the manipulation is successful, the tail risk will be extremely high and the expected return will be negative. Previous reports showed that some trading addresses traded on the Hyperliquid platform with a single transaction of approximately US$20 million, resulting in ETH price fluctuations of 10 to 20 basis points, and built long positions with a nominal value of hundreds of millions of dollars on Papertrade.