is it alright to keep paper towel on the bottom of a cage?

yup its all i use its cheep and you just toss it out

x2 makes cleaning poo easy too.

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how often do you guys change it out?

I use papertowels too. I change it weekly.

its probably the safest and easiest substrate to deal with.

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1.1 BB Ambilobes / 1.0 BB Ambanja / 0.0.1 Melleri / 1.1 Hypo Red Beardies

i have to agree with everyone.... very easy to clean and i cleaned mine out everytime my veiled pooped on it ... Cheap and easy!

If you're using paper towels, I would change them daily. Weekly, you're going to get a LOT of bacteria, mold and fungus growing on and underneath those paper towels. You don't want feeders running around in bacteria.
I've forgotten for two or three days and seen mold. I would change them out daily for sure.

How often you change the papertowel will depend on the environment they are exposed too. Mold and Bacteria and fungus might grow on papertowles for those people misting all over the place. Mold needs damp to grow. My paper towels are never wet. So my paper towels NEVER grow mold. And I dont let feeders go all over the show either, so there are no feeders near the paper towels.
I choose to change my paper towels after each poop, but Ive left them a week before and certainly there would be no issue with that.

How often you change your towels will depend on the conditions the towels are in.

I don't see how you can mist your enclosure thoroughly and not have any water or mositure touch the cage floor. The "conditions" you speak of are what most people have drainage systems for. Moisture on the enclosure floor is unavoidable, and I'm interested in how you keep your floor bone dry.