Exclusive Interview with PaperTrade Founder: The Man Who Built a 1000x Casino Hopes for a World Without Leverage

Source:Taiki Maeda

Compiled by Odaily (@OdailyChina); Translator: Azuma (@azuma_eth)



Editor's Note: This past weekend, PaperTrade was undoubtedly the most talked-about project in the entire crypto market (recommended reading: "Even Losses Require a Queue — How Far Can PaperTrade's 1000x Leverage Experiment Go?").

As a next-generation "degen play" combining perpetual contract mechanics, PaperTrade reached $14.4 billion in notional trading volume within less than 10 minutes of launch; within 24 hours, cumulative notional trading volume exceeded $678 billion.

Just days before PaperTrade went viral, during Token2049 Singapore, the project's founder Jez had just given an exclusive interview to Steady Lads podcast host Taiki Maeda. In the interview, Jez shared his thoughts on PaperTrade's design, market cycles, personal trading strategies, and more.

The following is a transcript of Jez's interview video, translated by Odaily (content has been abridged).

Opening Remarks

Jez: Should people actually trade derivatives? Probably not. If everyone could just stick to spot, the world would likely be a much better place. Even if you get the direction right — say you go long, and an hour later the coin does go up — once you exceed 8x leverage, the expected value (EV) of that trade turns negative. I've seen too many traders blow up and leave. More people die from... rather than from making one or two bad trades.

Q1: Is This a Bull or Bear Market?

Taiki: I want to start with a question: is this a bull market or a bear market?

Jez: To me, that question isn't that important. If you look at how some perpetual contract exchanges have performed over the past few years, you'll find that whether the overall market is in a bull or bear phase really isn't that critical.

I think there are now some protocols with solid fundamentals that can generate revenue and return value to token holders. These types of projects are no longer as cyclical as they used to be. They no longer depend as much on retail capital flooding in and continuously buying tokens. After all, some protocols already have astonishing trading volumes, or institutional buying pressure. Take HYPE holders, for example — they don't seem to feel much of a difference between bull and bear cycles.

Taiki: It just keeps going up, and up.

Jez: So for me, whether the overall market is in a bull or bear phase isn't the most important thing. What I focus on more is whether the investment thesis I believe in will ultimately play out. And I think that thesis hasn't fully played out yet, though it's getting closer.

By the way, we can now already see TradeXYZ's ticker on Bloomberg terminals. That's a big deal.

I used to be one of those 23-year-old analysts sitting in front of a Bloomberg terminal with nothing to do. Because there was nothing to do, I'd just stare at the geographical maps on it.

Taiki: Now they're finally starting to pay attention to perpetual contracts.

Jez: Yeah.

Taiki: I think the market vibe has really changed. Although this may not yet be a clear bull market — Bitcoin is still hovering in the mid-$80,000s — the overall sentiment is different.

Bitcoin holders might be happy that their positions are up a bit, and ETH holders too, but holders of HYPE, Zcash, and PUMP are far more excited.

And I think there's actually logic to how this rally has unfolded: the things that are going up do have reasons for going up.

Jez: Exactly. I think this is practically the cycle that fundamental researchers have been dreaming of.

Taiki: Yes, mid-cap projects are winning.

Jez: Precisely. I think a big change compared to the past is that we finally have a batch of truly excellent businesses. In the past, if you tried to do fundamental analysis on a project, it was often easy to over-extrapolate short-term trends, mistakenly assuming that the trend could continue indefinitely.

There used to be a joke in crypto — as soon as someone starts calculating a project's annual percentage rate (APR) on Twitter, you should sell. But things are different now. We actually have some truly excellent business models.

Taiki: Still, I think it's hard for the general public to distinguish between a meme token and a project like Hyperliquid. Of course, things are slowly improving. Especially projects positioned slightly below Hyperliquid — their value hasn't been widely recognized enough.

If you're in this industry and can tell what's just a castle in the air versus what's genuinely excellent, you might feel like it's all obvious, or even that these judgments are already market consensus. But for people outside our circle, they might still think the entire crypto industry is a scam.

Taiki: Right. On social media, people might feel like everyone holds HYPE, but they may not truly understand the project's vision. In my view, your core argument is that speculative demand will persist long-term and will continue to evolve. This is also the core of your so-called "Long Degeneracy" thesis, right?

Jez: Exactly. I gave a talk before. I originally came from traditional finance, mainly focused on high-frequency trading and options-related business.

We were once market makers for the early WallStreetBets community. Later, WallStreetBets gradually evolved into a speculative frenzy around meme stocks like GME and AMC. But between 2015 and 2019, many people in tech and finance were already trading short-dated options like crazy. They wanted high Delta exposure through options — using relatively little capital to capture larger price movements.

And my job at the time was to provide liquidity to these people, to be their counterparty. So I understand this speculative psychology very well. Later, when I encountered the market structure of perpetual contracts, I felt it was an obvious market gap.

Q2: How Did You Get Into Crypto?

Taiki: I'd like to learn about your personal background. Many people on X might think you're just a trader who got lucky, or even a lucky gambler.

Jez: That's actually true (laughs).

Taiki: But if you look more carefully at your journey, you'll see you've been through a lot along the way. I want to start from high school — I know you placed fourth in a state-level track and field competition. Have you always been a very competitive person?

Jez: Yes, you could even say excessively so. I'm actually not great at free-for-all competitive games where everyone is out for themselves, because trying to beat too many people at once makes me feel overwhelmed. As a kid, I preferred team competitive games. Because you only face one opponent, and you can focus on figuring out how to beat them. I've been playing sports since I was young, competed in competitive athletics, and sometimes in esports.

When it comes to competition, and trading, one thing I've gradually realized about myself is — I really enjoy the feeling of being right, especially being more right than everyone else.

I love that feeling, when my judgment is indisputable, when no one can see it more accurately than I can.

I think most successful traders must have a strong competitive drive. And from my observations, successful traders typically share a few traits: first, curiosity; second, strong conviction; but one thing is especially important — after making a mistake, they are very hard on themselves, to the point of being almost harsh. They take personal responsibility and never easily blame others for their mistakes. They repeatedly ask themselves: where exactly did I go wrong? How can I do better next time? I think this trait largely stems from competitive drive.

Taiki: Same here. Every time the market teaches me a harsh lesson, I'm very hard on myself.

But I think I've improved somewhat now. After all, you have to keep moving forward, right? The market won't go easy on you just because you're comforting yourself, trying to accept a loss.

Jez: Actually, that's one of the most interesting things about trading.

We learn to recognize emotional signals in others, and even in ourselves, and treat them as trading signals. The most typical signal is cope — for example, when you see someone who missed the move making excuses on Twitter to comfort themselves, you actually add to your position, because that emotional reaction itself is an extremely strong bullish signal.

The hardest moments are when we ourselves have lost money and, out of normal psychological self-protection, start making excuses to comfort ourselves — and you instantly realize you're coping.

Then you start to hate that state, thinking: "Damn it, I'm making excuses to avoid reality again, I really hate this version of myself."

I've been fighting this psychology all along.

Taiki: You went to MIT after high school, then entered traditional finance, working at Morgan Stanley and Millennium. Can you talk about your experience at these institutions? How much did they help you later when you entered crypto? And when did you actually start getting into cryptocurrency?

Jez: I want to say that I entered traditional finance because I was already doing speculative trading first; it's not that I entered traditional finance and then started speculating. I remember telling my trading origin story here two years ago, but I can give a brief recap.

In high school, I competed in an esports game called Team Fortress 2. Later, the game introduced "virtual hats" as items, and I went from scrimming with my team to buying and selling those hats all day. I became a hat day-trader — because I didn't want to hold overnight, I was constantly flipping hats at high frequency every day. At that moment I realized, I love trading too much, and I also love math — I should make trading my career. That guided me onto the path of quantitative high-frequency trading.

Even after I became a professional quant trader, my personal account was still full of extremely high-risk zero-day options; then came DeFi Summer; then heavy NFT positions. My personal portfolio has always been extremely aggressive, leaning toward high-risk speculation.

I think this largely stems from my constant attempt to push risk to higher levels. I have strong confidence in myself and my ideas, so I'm willing to take on greater risk.

Taiki: Many people are naturally risk-averse. Do you think you were born this way, or did you develop this personality later?

Jez: Yes, I think I do have this tendency.

I'm half Korean. In Korean tradition, when a baby turns one — which might be about two in Korean traditional age — the family dresses the child in traditional clothing, looking like a little emperor.

Then they place various snacks, toys, and other things attractive to young children on a table. Then they hold the child about ten feet away from the table, put them down, and let them walk over on their own.

Apparently, I picked up a US dollar bill. So I guess this tendency may have existed since childhood.

Taiki: That's hilarious. You went straight for the money as a kid.

Q3: On "Long Degeneracy"

Taiki: You have an interesting theory called "Long Degeneracy."

Simply put, you believe people will continue to gamble, trade, and speculate because they feel that if they don't, they'll have no chance at upward social mobility. Did you realize this from your own experience, and later discover that it might be becoming a more widespread social phenomenon?

Jez: Yes, because I've personally experienced all of it. Of course, I also have to credit DJ, Spartan, GCR, and others for this view. They kept repeating this logic until I fully understood it.

I remember when I was 22, just out of college, I once explained a problem to my girlfriend at the time. I told her that my entire savings in my bank account was far short of the down payment needed to buy a house in New York, but if I could turn that money into ten times what it was, maybe it would be enough.

I also told her that the purchasing power of the dollar was continuously declining, asset prices might eventually rise across the board, so we should hold risk assets as much as possible. Actually, at 22, I already felt this pressure very intuitively, and could even explain it clearly to others. But at the time, it wasn't yet a complete investment philosophy.

It wasn't until later, when I discovered a suitable tool — perpetual contracts (Perps) — that this idea truly became an executable investment strategy. When I saw perpetual contracts, I realized this was a great tool. It aligned with my view of the future — that speculative demand would continue to grow.

To further explain "Long Degeneracy," the core logic is actually very simple — when the real returns available in the real world continue to compress, people's willingness to take on risk increases.

The most typical example is the traditional life path — go to college, find a good job, get married, buy a house — this path no longer works the way it used to. Of course, if you're willing to live in Alabama, you might still be able to achieve that life, but for most cities where young people want to live, relying solely on a stable job and gradually accumulating wealth to eventually buy a home has become increasingly difficult.

When this traditional path fails, people start taking on greater risk. Like I told my girlfriend when I was 22 — with the money I have now, I can't afford a house at all, but if I could turn it into ten times what it is, maybe I'd have a chance. Of course, if I end up losing every last penny, then there's nothing left.

Long-term, this has a big impact. If you keep losing your principal over and over, by the time you're 30, you might suddenly find yourself with nothing left, while friends who chose the more stable path have accumulated more and more wealth through consistent saving.

But when you're young, you typically don't truly feel the consequences of this risk. You just think: "So what if I lose it all this time? Next month I'll make some more money and start over."

Taiki: I think crypto really easily attracts this type of person.

Because you might lose all your money in two days, but conversely, if you buy the right token, or a project like Hyperliquid ultimately succeeds, you could also accumulate astonishing wealth in your twenties. That's exactly what makes crypto attractive.

Maybe you've had a similar mindset in the past — if I can't turn this money into ten times what it is, I'll never make it. But do you think this way of thinking has also led to some of your major losses in the past?

Jez: Of course. But I want to add one thing first — speculation is actually crypto's product-market fit (PMF). What crypto sells to users is a dream of changing your fate through speculation.

Of course, from a technical and infrastructure perspective, crypto's real product-market fit might be that it's a programmable monetary system with a built-in financial database.

But for most people, their entry point into this industry is almost always speculation.

Q4: Diversified Allocation or Concentrated Bets?

Taiki: Do you think this "Long Degeneracy" idea was the trigger for your many blowups and losses in the past?

Jez: Oh, actually there's no direct connection. To be precise, most of my past blowups and losses were more attributable to greed, poor risk management, and tilt, rather than rationally adding leverage.

I see "Long Degeneracy" as a core macro thesis about the direction the world is heading, which you can use to position yourself. But when I went all-in with 10x leverage on ETH with my entire main account back then, there was no sound logic behind it — it was pure gambler's mentality: "I'm going to win back everything I lost in one shot!"

Taiki: Exactly. We talked about this when we recorded a podcast two years ago. One of the most viral clips and biggest takeaways from that episode was this line from you: "If you have the best idea, why would you put your money on the second-best idea?"

Many people lose big money because they scatter the same capital across irrelevant marginal ideas. Do you still stand by that view?

Jez: Yes, as a general rule, I still completely agree with it, though there are many specific details and nuances involved. But as a guiding principle, it can really benefit people a lot.

I've always been very open and public about my blowups and comebacks. People like me who have repeatedly rolled tiny spot principal into 7-figure and 8-figure sums are probably among the most numerous in the space.

Taiki: