Weekly Research Stack 5: Papertrade Nukes PAPER Perps as Macro Pressure Pushes BTC Below $81K

Papertrade Pulls the Exit Door on PAPER

Last week, Papertrade made a decision that sparked a lot of takes across CT as it backed out of its earlier plan to make PAPER transferable.

At launch, the team has said that transferability would come “after a significant period of time”, but those plans seems to have changed, leaving PAPER locked inside the protocol for the foreseeable future.

For holders, that changes the deal quite a bit. PAPER can still be staked for protocol distributions, but there is no spot market where holders can freely sell or transfer the token. This matters even more for early users who intentionally took losses on Papertrade to accumulate PAPER, hoping the token would eventually become tradable.

The decision also hits markets outside Papertrade. Paragon's PAPER pre-market perp, which launched on October 18 and recorded more than $12 million in volume within hours, had to be halted and eventually closed. Aster's PAPER market followed the same path, moving to reduce-only before being delisted.

Papertrade says the restriction is mainly about security.

Simply put, imagine someone shorts PAPER on Paragon, betting that its price will fall. The same trader could then open a highly leveraged BTC or ETH position on Papertrade and try to manipulate the external price Papertrade relies on in favour of that trade. If successful, Papertrade's liquidity pool pays out the profit.

Now, if that attack drains enough of the pool to shake confidence in Papertrade. PAPER could fall as a result, giving the attacker another profit from the short opened earlier.

Although, keeping PAPER non-transferable does not remove the possibility of someone trying to manipulate Papertrade's BTC or ETH markets, it removes that second way of making money and could make such an attack less attractive.

On the users' side, reactions have been mixed. Some agree that the security concern makes sense, but changing the rules after traders had already deposited money and taken losses with the expectation of future transferability has left a bad taste.

Delphi Research's Jason Pagoulatos described the change as a “bad look,” even while acknowledging the security argument behind it.

Following the announcement, PAPER staking revenue fell 93% in one day, from around $1.3 million on October 20 to roughly $88,000 on October 21. By the next day, however, it had recovered to about $1.07 million, making it too early to say traders are abandoning the protocol.

Bitcoin Slips Below $81K as Macro Pressure Builds

Bitcoin falls from around $84,800 on Wednesday to below $80,000 by Saturday, its first move below that level since October 15.

Part of the pressure comes from renewed tension in the Middle East.

US ordered some diplomats and family members to leave missions in Saudi Arabia as Houthi attacks hit airports and energy infrastructure, while reports of possible fresh US-Israeli strikes on Iran pushed oil prices higher.

By Friday, Trump was also openly saying the US could carry out another military operation against Iran.

With all this happening, the markets were already nervous. Nasdaq dropped 2.6% on Thursday as investors questioned whether the huge spending around AI will eventually translate into enough profit, with semiconductor stocks falling 6.7%.

Brent crude also climbed above $113 as tensions in the Middle East raised concerns around energy supply, adding another inflation headache for investors.

This flop was not limited to US markets either. Indonesia had already suffered a sharp sell-off earlier in the week after MSCI warned that the country could lose its emerging-market status. The Jakarta Composite fell 11.6% on Friday and another 3.6% on Monday, with roughly $65 billion wiped from the market in a single session.

In addition to these macro effects, Bitcoin ETFs turned from buyers to sellers at almost the same time. On October 22, US spot Bitcoin ETFs recorded about $636 million in net outflows, reversing the previous day's inflows. BlackRock's IBIT accounted for roughly $254 million of the withdrawals, while Fidelity's FBTC lost about $217 million.

Leverage trades made the move uglier. As Bitcoin slipped below $80,000 on Saturday, about $436 million in crypto positions were liquidated in just four hours, with $404 million coming from longs. Bitcoin longs accounted for roughly $149 million, while ETH longs lost about $127 million.

Binance alone saw $226 million in liquidations, with another $70 million wiped out on Hyperliquid.

Across the full 24 hours, more than 200,000 traders were liquidated and losses climbed above $800 million.

Going into the new week, $80,000 becomes one of the first levels to watch. ETF flows will also matter after Thursday's sharp reversal, while the Federal Reserve meets on October 27–28. Investors will be watching whether the Fed keeps rates unchanged and what it says about another possible hike, especially with oil prices already adding fresh inflation pressure.

Big Tech earnings could add another layer of volatility. Alphabet and Microsoft report on Wednesday, followed by Amazon on Thursday, giving investors another look at whether the huge spending on AI is translating into enough growth to justify current valuations.

Aero Takes Its Liquidity Model Beyond Base. What Comes Next?

Last week, Aerodrome and Velodrome merged to launch Aero, taking the liquidity model that helped them build strong positions on Base and OP Mainnet across seven chains including Ethereum, Arbitrum and Robinhood Chain.

Of course, Base still does most of the heavy lifting, accounting for roughly 79% of Aero’s TVL at launch and the majority of its trading volume.

However, the newer deployments are starting to show some life. Robinhood Chain stands out with less than $4 million in Aero TVL but roughly $35 million in 24-hour volume.

Part of what Aero is taking multichain is its incentive model. Liquidity providers can earn AERO emissions, while protocols can add their own incentives to attract liquidity into specific pools. For LPs, this creates an opportunity on newer chains where rewards and trading fees may be shared among much smaller pools of capital.

Already, these new markets are starting to add to Aero’s economics. Robinhood Chain has generated roughly $31k in fees and around $30k in revenue since launch, while Ethereum has contributed about $27k. The numbers are still small compared with Base, but they show that activity outside its home chain is already generating something.

There is also a direct benefit for AERO holders. Fees generated across the network can flow back through the staking system, so if trading activity keeps growing across the newer chains, more value could eventually flow back to stakers.

What comes next is whether liquidity follows. If Robinhood Chain keeps recording high volume with relatively little liquidity, LPs may have more reason to move capital there for the fees and incentives.

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