Hyperliquid enters the prediction race; what are the selling points of the HIP-4 protocol?

Hyperliquid, a major player in crypto derivatives, has entered the prediction market arena with its new "Outcomes" feature (HIP-4 protocol), causing its native token HYPE to surge over 10%.

Core Innovation: Outcomes is not a simple betting platform. It redefines prediction markets through three key mechanisms:
- Full Collateral & No Liquidation: Trades are fully collateralized and settled within a fixed range, eliminating liquidation risk before settlement.
- Non-Linear Settlement: Offers flexibility similar to options, enabling complex hedging strategies beyond simple yes/no binaries.
- Native Integration & Shared Margin: Deeply integrated into Hyperliquid's chain (HyperCore) and uses USDH. It shares margin with existing spot and perpetual contracts, allowing seamless strategy combination and liquidity reuse.
Market Context: The prediction market is highly competitive. Hyperliquid's approach differs from competitors:
- Polymarket focuses on social sentiment.
- Kalshi and Coinbase target compliant, mainstream users.
- Hyperliquid aims for financialization, allowing users to hedge macro risks (e.g., short BTC while buying an Outcomes contract on economic data).
Strategic Synergy & Team: Outcomes synergizes with HIP-3 (permissionless listings). Hyperliquid's lean, elite team of ~11 people achieves exceptional efficiency, supporting rapid iteration.
Valuation Perspective: Analysis suggests Hyperliquid's ~$7B valuation is undervalued compared to Polymarket's $10B. Even capturing 100% of Polymarket's volume would only add ~5% to Hyperliquid's revenue, highlighting the vast scale of its core perpetual contracts market. Outcomes is viewed as a crucial piece in building a comprehensive "on-chain Wall Street."

Note: Outcomes is currently on testnet, with no mainnet launch date announced.

Author: Seed.eth, Bitpush

Hyperliquid, which holds a dominant position in the crypto derivatives market, is now trying to extend its reach into another trillion-dollar market that is experiencing explosive growth: the prediction market.

Today, Hyperliquid officially announced the testing of a new feature called "Outcomes." This news immediately ignited the secondary market, with its native token HYPE recording a gain of over 10% within 24 hours, pushing its price above the $30 mark.

At a time when Polymarket dominates on-chain traffic and Kalshi and Coinbase are jointly reaping the benefits of the compliance market, Hyperliquid's entry is by no means a simple "following the trend," but rather a redefinition of the rules of the game by leveraging the absolute advantage of its native underlying performance.

What are Outcomes?

According to the official HIP-4 proposal, Outcomes is not a simple betting interface; its design is based on the following three core logics:

1. Full collateralization, risk of liquidation.

Unlike leveraged perpetual contracts, Outcomes follows the principle of "do what you can afford." It uses full collateral and settles within a fixed range. This means that regardless of market fluctuations, as long as the settlement date has not arrived, traders' positions will not face forced liquidation, fundamentally eliminating the risk of margin calls.

2. Nonlinear settlement, larger strategy space

Outcomes introduces a non-linear settlement mechanism. For traders, this is equivalent to gaining flexibility close to that of options, allowing them to build more complex hedging tools, no longer limited to simple "yes" or "no" binary games, thus opening up greater space in risk management and strategy combination.

3. Native integration, enabling seamless liquidity.

Outcomes will be deeply integrated into HyperLiquid's underlying chain, HyperCore, and priced in the native stablecoin USDH. More importantly, it can share total margin with the platform's existing spot and perpetual contracts. This means that users can seamlessly integrate multiple trading strategies within the same margin account, truly achieving interoperability and reuse of liquidity.

Multiple factions vying for dominance: Who will ultimately predict the market's outcome?

The current prediction market is experiencing a "1995 browser war" moment, resulting in four distinct business paths:

Polymarket sells "opinions"; it's a barometer of social trends.

Kalshi sells "compliance," attracting US domestic funds seeking to avoid legal risks.

Coinbase, on the other hand, took a "lower-dimensional approach," turning the prediction market into a mass-market consumer product through built-in features in its app.

Hyperliquid's logic is the most hardcore: it doesn't require you to click Yes or No on a webpage; it allows you to short BTC while simultaneously buying an Outcomes contract based on "better-than-expected non-farm payroll data" to hedge against macroeconomic risks.

The community is currently most concerned about the synergistic effect between HIP-3 (permissionless listing) and HIP-4 (Outcomes).

Under this architecture, Hyperliquid's evolution path is clear: first, it will be officially deployed to "canonical markets" based on objective data sources, such as interest rates and macroeconomic indicators; then, permissionless deployment will begin.

Behind this strategy lies Hyperliquid's legendary team advantage. It's hard to imagine that supporting this behemoth with annualized revenue exceeding $1.1 billion and trading volume comparable to top-tier CEXs is a core team of only about 11 people. This "special forces" team, composed of Harvard and MIT graduates and elites from top quantitative hedge funds, has achieved an astonishing efficiency of over $100 million in annualized revenue per person. It is precisely because of this extremely lean team and short decision-making paths that Hyperliquid can iterate rapidly.

A veteran DeFi observer stated, "Coinbase's entry validates the business model, but it remains centralized. Hyperliquid's Outcomes challenges the premise that the endgame of prediction markets lies not in social media, but in financialization. The true potential of on-chain finance will only open up when prediction results become as smooth as buying and selling stocks, and when margin sharing is possible with futures."

Is HYPE significantly undervalued?

As the crypto options market matures, Hyperliquid HIP-3 open interest (OI) has surged to $1 billion, and the platform’s 24-hour trading volume has soared to $4.8 billion, setting a new record.

Regarding this move, Blockworks researcher Shawda Devens believes it further supports the upside potential of Hyperliquid's valuation.

Devens points out that even though HIP-4 consumes 100% of Polymarket's trading volume, its contribution to Hyperliquid's revenue is only about 5%.

This data may seem surprising at first glance, but the underlying logic lies in the sheer size of the perpetual contract market (including the long-tail assets brought by HIP-3). Devens believes that Hyperliquid's current valuation of approximately $7 billion is significantly undervalued compared to Polymarket's latest valuation of $10 billion (based on 2025 funding data). The launch of Outcomes primarily serves as a crucial supplement to its comprehensive financial product matrix.

Despite the high market sentiment, it's important to note that Outcomes is currently in the testnet phase, and the exact timeline for its mainnet launch has not yet been announced. However, with the explosive growth of the HyperEVM ecosystem, mainstream service providers such as Kalshi or Crypto.com could theoretically migrate to the Hyperliquid chain using the HIP-4 protocol in the future.

In summary, prediction markets are entering their golden age. In the US, thanks to increased regulatory transparency, Kalshi's partnership with Coinbase has expanded prediction markets to cover all 50 states; similar growth momentum is also strong in the EU and Asia. For Hyperliquid, Outcomes is not simply a "gamble," but an indispensable piece of its puzzle in building an "on-chain Wall Street."