HIP-4: The Next Stage of Hyperliquid

Source: Galaxy; Compiled by: Jinse Finance

Hyperliquid launched the HIP-4 proposal last week, which aims to add a new underlying primitive (outcome markets) to HyperCore (its ecosystem of high-speed decentralized exchanges). This feature is already live on the testnet, and its deployment to the mainnet will mark Hyperliquid's official entry into prediction markets.

Outcome markets are fully collateralized contracts that settle within a pre-defined range at expiration.Unlike perpetual contracts, outcome markets are non-linear, time-limited, and do not rely on leverage or liquidation.Instead, they provide a general way to express views on discrete events or bounded returns. This makes them well-suited for applications such as prediction markets, options-like instruments, and those that may influence the market. Following the widespread attention garnered by HIP-3, the HIP-4 proposal emerged. HIP-3 expanded Hyperliquid's product range to include perpetual contracts for stocks and commodities. These markets quickly became some of the most active derivatives trading venues on-chain, validating user demand for exposure to assets beyond pure digital assets and solidifying Hyperliquid's position as a leading perpetual contract platform. HIP-4 aims to continue this momentum. Unlike expanding the variety of tradable assets, HIP-4 will expand the ways traders express and hedge risk. HYPE is the native token of this ecosystem and is one of the few crypto assets currently performing well. As Bitcoin prices fell to new lows (around $67,000 as of Thursday afternoon New York time), HYPE has risen 56% in the past two weeks, from around $21 to around $38, and is currently trading at $32. Our Viewpoint: Hyperliquid's foray into the "outcomes market" is a significant step towards its established goal of becoming a "financial giant." Within the on-chain finance ecosystem, we primarily offer four products: 1) Perps, where Hyperliquid remains the leader. 2) AMMs and spot trading, which Hyperliquid already supports, with trading volumes on par with other leading on-chain exchanges. 3) Lending, which Hyperliquid supports as a pre-alpha product. 4) Prediction and "outcomes" markets, which HIP-4 will realize. The launch of HIP-4 completes Hyperliquid's presence in all major verticals where it has already achieved Product-Market Fit (PMF) on-chain. Hyperliquid's upcoming entry into the outcomes market marks its first challenge to existing market players as a mature protocol. When HIP-3 launched, Hyperliquid was already a leader in the efficient trading space. However, this time, Hyperliquid will compete with exchanges like Polymarket and Kalshi, which boast mature liquidity, easy user access, and integration with other front-ends. HIP-4, however, is significant beyond prediction markets. It introduces an open framework for building fully collateralized, limited-risk financial infrastructure products that settle based on discrete outcomes, supporting event-linked derivatives, digital options, and other structured yield instruments. These tools differentiate Hyperliquid from standalone prediction market platforms and naturally complement its equity, cryptocurrency, and commodity-linked products, creating adjacent use cases rather than an isolated new field. Crucially, Hyperliquid enters the outcomes market with the necessary distribution channels and product coverage to launch these markets. The protocol boasts a highly active, almost fanatical trading community that actively utilizes perpetual contracts for hedging and risk management. Results markets further expand this behavior, allowing traders to hedge event-driven, binary, and non-linear risks that cannot be effectively or expressed through traditional perpetual contracts, thus significantly alleviating the long-standing cold-start problem that has constrained results market platforms. The Galaxy Research team has been continuously monitoring this area, from prediction markets and their derivative financial products to decision markets, future technologies, and impact markets. We believe that the financialization of prediction market assets and related ancillary products has the potential to fundamentally change how global information is priced, disseminated, and how uncertainty is managed. The potential market size for these products is enormous, encompassing many of the risk transfer, hedging, and information discovery functions currently offered by traditional finance, but with significantly improved efficiency and transparency.