Paper Trade Farming Strategy Targets $PAPER Through Losses and Profit Haircuts
A post by @degentradingLSD outlines a strategy for farming $PAPER on Paper Trade, where token emissions are created only when traders incur losses and are credited directly to their accounts. According to ChainCatcher, the current emission rate mints 16.6 PAPER for every $1 of loss.The article says positions themselves carry no trading or funding fees, while fees are charged on profitable positions. Profits below 2 bps are treated as zero to protect the protocol from manipulation of Hyperliquid mid-price, and larger gains face a graduated haircut based on the difference between entry and exit prices.It says the most efficient way to farm $PAPER is to keep the net cost basis as low as possible so profits face minimal haircut. The trade-off is time, since waiting for larger price swings can lengthen the interval between cycles.The post recommends a delta-neutral approach using simultaneous 100x or 200x long and short positions, then closing losing trades first and profitable trades afterward. It warns that even one liquidation can sharply raise farming costs because of liquidation fees and the need to immediately close profitable positions.Because liquidations take priority over normal closes, long and short positions may exit at very different prices if they are not included in the same block. The article also notes that congestion is more likely during sharp rallies, and advises against leverage above 100x. Traders can farm manually or use an automated farming bot, which the post says charges 10% of farming costs, below the slippage costs of manual trading.