ChainCatcher report: Crypto trader Rune stated on X that the PaperTrade official documentation has disclosed a "vulnerability" in the protocol-level pricing mechanism. According to screenshots shared by Rune, attackers could manipulate prices by exploiting Hyperliquid’s order book BBO (Best Bid and Offer), with risks involving unresolved price manipulation pathways, contract economic mechanisms and risk exposure controls, as well as operational safeguards and permission management systems. Additionally, Rune shared a tweet from community user boblob, which revealed that two wallets appeared to be actively exploiting this vulnerability on the PaperTrade platform, causing a minor price fluctuation of approximately 10–20 basis points in ETH on Hyperliquid through trades totaling around $20 million. Boblob further noted that the clear issues currently present in the PaperTrade protocol require urgent fixes, or they may jeopardize the protocol’s long-term sustainability.
PaperTrade Protocol Exposed to BBO Price Manipulation Risk
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Summary
PaperTrade Protocol faces a risk-to-reward ratio concern after Rune identified a potential vulnerability in its pricing mechanism. Attackers could exploit Hyperliquid’s BBO to manipulate prices, revealing gaps in risk management, contract economics, and safeguards. A community user reported two wallets exploiting this flaw, causing a 10–20 bps swing in ETH prices through $20 million in trades. The issue requires urgent risk management fixes to secure the protocol’s future.
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