SPAPER minting
SPAPER is minted to traders on every losing close and liquidation; losses are the only source of supply.
Supply source#
SPAPER is minted to the trader's wallet on every losing close and liquidation. There is no premine, no team or investor allocation and no airdrop. Minted SPAPER is not staked automatically; staking is a separate action with a minimum of 1,000 SPAPER.
Mint amount#
The mint basis is the realised loss net of any LP-side fee; for liquidations, it is the margin net of the fee. The rate depends on the LP's net balance:
- Net LP below 2,000,000 USDT: 100 SPAPER per 1 USDT of mint basis.
- Net LP above 2,000,000 USDT: the rate decays with H, the cumulative mint basis minted in this upper segment. The marginal rate is 100 × (120M ÷ (120M + H))² SPAPER per USDT; at H = 120,000,000 USDT it is 25 SPAPER per USDT.
A single loss that crosses the 2,000,000 USDT line is split: the part below mints at 100 per USDT and the rest follows the decaying curve. H only increases. If the LP falls back below 2,000,000 USDT, minting returns to 100 per USDT, and decay resumes from the same H once the LP rises again. Full arithmetic: Mint curve.
Example: the same loss at two points on the curve#
Alice is liquidated on a 100 USDT margin while the payout queue is empty, giving a mint basis of 98 USDT.
| Protocol state | Rate | SPAPER minted |
|---|---|---|
| Net LP below 2,000,000 USDT | 100 per USDT | 9,800 |
| Net LP above 2,000,000 USDT, H = 120,000,000 USDT | ≈ 25 per USDT | ≈ 2,450 |
basis = 100 − 2% × 100 = 98
flat segment : 98 × 100 = 9,800 SPAPER
tail, H=120M : 98 × 100 × (120M ÷ 240M) × (120M ÷ (240M + 98)) ≈ 2,450 SPAPER
← Scroll sideways for long formulas
The same 98 USDT loss mints four times as many SPAPER early in the protocol's life as it does once 120,000,000 USDT of losses have been minted in the upper segment.
Implications#
Early losses acquire a larger share of supply. That share can be acquired at a finite cost, including by deliberately losing, for example with offsetting positions. This is a known property of the design.
Transfers#
SPAPER cannot be transferred; it can only be staked and unstaked. Governance can enable transfers once, through the 24-hour timelock. The change is permanent and cannot be reversed.