What Is Hyperliquid Outcome Trading? HIP 4 Prediction Markets Explained

Many Hyperliquid traders, builders, and community members see this new update as a transformative upgrade for the platform, growing Hyperliquid from a specialized perpetual crypto DEX into a comprehensive on-chain derivatives trading platform. This HIP-4 update, in conjunction with the HIP-3 update that supports permissionless builder-deployed perps, has spawned a new equities market on Hyperliquid and augmented Hyperliquid’s capabilities to become a complete, exhaustive trading platform. In the near future, Hyperliquid will be able to support all assets in crypto, equities, commodities, and others, supporting spot and perps trading for both, as well as prediction markets for real-world events.

With the publication of the outcome trading update on February 2, 2026, outcome trading was made live on the Hyperliquid testnet so that the usage and functionality can be tested via mock trading accounts. Once technical development and testing are complete, Hyperliquid will implement canonical markets denominated in USDH, the native Hyperliquid stablecoin launched and run by Native Markets. Native Markets is a specialized team formed by Hyperliquid ecosystem participants consisting of Max Fiege (early Hyperliquid investor), Mary-Catherine Lader (former COO of Uniswap Labs), and Anish Anhihotri (blockchain researcher) that won a (slightly controversial) community vote to design, issue, and manage Hyperliquid’s native stablecoin, USDH. USDH is a dollar-pegged stablecoin fully backed 1:1 by cash, cash equivalents, and U.S. treasuries managed through partnerships with Stripe, Fireblocks, J.P. Morgan, Blackrock, and Superstate.

As of writing, there is no definitive date set for the mainnet launch yet.

Hyperliquid’s Outcome Trading Mechanism

Before implementing this outcome trading update, Hyperliquid did not operate any prediction-style markets, akin to those on popular betting sites like Polymarket or Kalshi. However, HIP-4 will enable prediction-style markets for users to trade the probabilities of discrete and verifiable events via the creation and trading of fully collateralized contracts that settle within a fixed binary range (typically 0 or 1, or no or yes).

Outcome trading will be based on binary contracts that will ultimately settle to 0 or 1 based on the resolution of a predefined event. However, until the conclusion of the predefined event is reached, the contract price will fluctuate in continuous trading within a bounded range between 0% and 100% that will represent the market-implied probability of a "YES" outcome (e.g., p=0.75 means the market assigns a 75% chance to the event happening). At resolution, the contract will settle to either 0 (NO) or 1 (YES), with no intermediate values. The prediction market will utilize contracts that are fully collateralized in nature, have a non-linear payoff structure, and have a predetermined explicit end date.

• Fully Collateralized Nature: Unlike typical leveraged perps on Hyperliquid that allow users to margin their account and lever up their positions, outcome trading requires 1x isolated margin only. That means there will be no use of leverage, resulting in only fully collateralized positions. When users want to long a contract or position meaning that they are buying YES, the price will be the quantity (q) times the price (p), requiring all USDH collateral up front. When users want to short a contract or position meaning that they are buying NO, the price will be the quantity (q) times the price (1-p), requiring all USDH collateral up front. There is no opportunity for users to enter positions on margin in outcome trading, so positions are fully collateralized up front, which materially reduces liquidation risk relative to leveraged perps, including around resolution.

• Non-Linear Payout: Traditional perps have linear payoffs where a user's profit scales directly with price delta as the underlying asset moves. However, outcome trading will introduce non-linear payoffs, where the return is bounded but asymmetric. For example, if a user buys into a 10% contract at p=0.10 and settles to a YES, they will yield a 9x return with a profit of 0.90 on the 0.10 initial investment. However, if they are wrong, they will only lose their initial 0.10 investment. This gamifies trading for events with skewed probabilities such as big underdog bets as it introduces asymmetric upside in certain positions.

• Fixed Date Contract: Outcome trading contracts have an explicit, predetermined resolution time tied to an event, such as election day or the conclusion of a sports match. This specifically contrasts with how perpetual futures have an indefinite duration until closed, hence the name “perpetual”. As a result, outcome trading introduces a mechanism of time decay implicitly through market pricing, as uncertainty decreases as the final resolution date approaches. This mechanism can be leveraged by traders using both perpetual and time-defined trading mechanisms to open more sophisticated trades under a single platform.

Proposed Outcome Trading Market Mechanism

Although not officially confirmed by Hyperliquid, according to Bedlam Research’s initial proposal for prediction markets, now HIP-4, which Hyperliquid seems to have adopted, they proposed that builders on Hyperliquid will have to initially stake 1M HYPE ($36M at the time of writing) to deploy an event market (which may have decreased to 0.5M HYPE or $18M at the time of writing), ensuring the high staking threshold to entry deters spam. It aligns with economic goals while slashing malicious behavior. Once all the HYPE tokens are staked, the builder will define the market via a schema that includes title, resolution time/end date, resolution source/oracle details, authorized updates, and an optional challenge window. Each prediction market will then be initiated with an open auction process:

• Order Collection: For approximately 15 minutes, people will post “I’ll buy YES up to price P” or “I’ll sell YES down to price P.” However, zero trades will execute during this window. As a result, the order book can look “crossed” (buys above sells) but the market will only use these orders to compute a fair opening price.

• Establishing Single Opening Price: At the end of order collection, the order book engine will try all of the candidate prices and choose the price where the most contracts can trade at (max matched volume). If there is a tie between optimal prices, the engine will pick the one with the smallest leftover imbalance. However, in the rare occasion that it is still tied, the engine will pick the price closest to 50%.

• Fill Everyone at a Uniform Price:

  • Orders priced higher than the p* (e.g., buy at 0.70 when p*=0.65) will get filled first.

  • Orders exactly at p* share will receive whatever allocation is left pro‑rata (each gets a slice proportional to its size).

  • All orders and trades will execute at p* (one opening price).

• Initialize Markets: The clearing price maximizes matched volume given supply and demand. Unfilled orders rest in the book at their original prices. The orderbook may be crossed during the opening auction but will be uncrossed while determining the opening price.

• Trading: Trading will begin with continuous order book trading at zero funding rate and between the price bands [0.001, 0.999]. No leverage will be allowed in our construction due to the complexities around liquidations during resolution.

• Resolution: At or before resolutionTime, the updating oracle will post r ∈ {0, 1}. Early resolution can happen if an event occurs before resolution time for the market. A challenge window can be specified, making resolution optimistic and disputable during that period.

• Settlement: Upon resolution, trading will halt, resting orders will be canceled, and positions will resolve to their final outcome based on the ending result of the market.

Hyperliquid’s Future Outcome Trading Platform

With the development of an outcome trading platform, Hyperliquid will allow traders to make bets on a much wider variety of markets than is currently available now. Not only will traders be able to make bets on typical prediction market outcomes that are frequently seen on platforms like Polymarket and Kalshi but users will also be able to hedge their traditional spot or perps directional positions. For example, if a user is long BTC via Hyperliquid perps but wants to hedge the price of BTC in the next 15 minutes due to a belief that it will falter in the short term, they can open a position in the new Hyperliquid prediction market that says exactly that, successfully hedging their perps position. This can even be done now with equity markets on Hyperliquid via HIP-3 and now HIP-4, where users can long a specific equity going into earnings while hedging their position due to the volatility and risk typically associated with the announcements that are frequently made during an earnings call. This is extremely advantageous for new and existing Hyperliquid users as they will be able to execute all sorts of trades on a singular Hyperliquid platform using a single source of liquidity (with portfolio margin) rather than the current scenario where they are forced to open up multiple trades on multiple different platforms to execute a similar trade.

Looking forward into outcome trading on Hyperliquid will rely heavily on the builders that build and operate the applications and ecosystem that will run atop the outcome trading capability. Similar to how builders have taken the HIP-3 permissionless perps functionality and expanded its capability to many tradable assets on traditional equity markets, builders will have to take the HIP-4 permissionless outcome trading functionality and do the same.

However, not to be worried, builders like @‌Outcomexyz are already prepared by aligning themselves as early developers (with open investments of 500,000 HYPE tokens) that will open Hyperliquid up to various new potential use cases via prediction markets like insurance products, governance bets, and gamified social trading.

Users can view the Hyperliquid Testnet Explorer and request one thousand mock USDC on testnet using the faucet here to begin testing the application of the new outcome trading update prior to using real money on mainnet.

If users run into any issues or have any questions about the update or the Hyperliquid ecosystem in general, join the Hyperliquid Discord server here to be able to pose questions to Hyperliquid team members and speak to other Hyperliquid community members.