Hyperliquid will launch HIP-4: Will the prediction market become the next growth engine?

Author: Flora, CryptoPulse Labs

On July 20, Hyperliquid released the latest proposal for HIP-4 (Outcome Markets), planning to support permissionless deployment of outcome markets in upcoming network upgrades, first launching them on the testnet and then rolling them out to the mainnet.

Under the proposal, validators will decide which outcome market templates can be used through voting. Deployers can create specific markets based on the templates and are responsible for completing market definitions and final settlement. At the same time, deployers need to stake 500k HYPE tokens, and can additionally earn up to 50% of the fee revenue in the future.

This means Hyperliquid is gradually shifting outcome markets from an official-led product to an open ecosystem co-created by the community. For a platform that started with perpetual contract trading, HIP-4 is not only adding a new category of trading products—it could also be an important step in its transition from a trading platform to on-chain financial infrastructure.

1. From official launch to permissionless deployment: outcome markets open new growth space

In the past few years, Hyperliquid’s core competitiveness has mainly come from perpetual contracts. With high trading performance, an on-chain order book model, and its self-developed Layer1, Hyperliquid has steadily become an important platform in the on-chain derivatives market.

However, the assets traded in spot and perpetual contracts are mostly existing crypto assets. While the market is large, it still has certain boundaries. Outcome markets are different: they don’t trade an asset itself, but the result of a future event.

For example, whether a certain country cuts interest rates, whether a policy is implemented, whether a company completes fundraising, whether a particular ETF is approved, and even the final result of a sports match—all of these can become trading objects in outcome markets.

As long as an event can be clearly defined and ultimately verified, it may form a new on-chain market.

This means outcome markets have far more potential trading scenarios than traditional spot and perpetual contracts. In the real world, the number of events that can be defined and verified has almost no clear upper limit. If all markets relied on the official team to create them one by one, it would obviously not be able to meet future demand.

Therefore, the core change in HIP-4 is to open up market creation rights.

In the future, developers, research institutions, community organizations, and even individual teams—so long as they meet the requirements of the protocol—can deploy outcome markets based on standard templates. The platform no longer needs to decide all trading objects officially; instead, it provides underlying infrastructure and a rules framework, allowing the community to continuously create new markets.

This is somewhat similar to how Uniswap allows users to create their own liquidity pools. In the past, platform growth mainly relied on official teams launching new products. In the future, Hyperliquid can expand its ecosystem through open deployment, driven jointly by developers and the community.

If spot and perpetual contracts solve the problem of asset trading, then outcome markets are trying to solve the problem of pricing future events. Accordingly, Hyperliquid’s competitive boundary may gradually extend from trading crypto assets to information, events, and expectations in the real world.

2. Templates, staking, and governance: HIP-4 aims to solve the trust problem in outcome markets

Outcome markets have huge room for imagination, but they also face some more complex issues than ordinary trading markets.

For instance, how to define the outcome—does a match count as over if it gets postponed? If a policy is published and later canceled, how is the final outcome recognized? If a company announces fundraising but the funds have not arrived yet, does that count as completed fundraising?

If market definitions are not clear, final settlement is likely to become controversial.

Therefore, HIP-4 does not simply adopt a model where “anyone can create markets freely.” Instead, it designs a set of rule framework.

First is the template mechanism. In the future, Hyperliquid validators will decide which outcome market templates are usable through voting. Templates will specify how markets are defined, the settlement conditions, and the execution logic, and they will be stored on-chain. Deployers can create specific markets based on templates, but must comply with the template rules.

For example, sports events, macroeconomic data, political events, or crypto asset prices could all become different standardized templates in the future. Templating not only lowers the barrier to market creation, but also reduces settlement disputes caused by inconsistent rules.

Second is the staking requirement of 500k HYPE tokens. If a deployer’s market definition is unclear, or it fails to settle correctly according to the template, or if—after the market result is reached—proper settlement is still not completed within one week, validators can vote to slash the stake.

This establishes an economic guarantee mechanism. Deployers gain the freedom to create markets, but they must also be responsible for market quality and final settlement. If someone intentionally creates ambiguous markets, or abandons settlement after the market ends, they could suffer significant economic losses.

In addition, deployers’ staking lockup period is 6 months, and they must complete settlement for all markets before they can unstake. This rule further prevents creators from “creating a market and then exiting.”

In terms of the number of markets, in the initial phase HIP-4 stipulates that each deployer can create up to 100 outcome markets, corresponding to 200 Outcome Tokens. In the future, the protocol also plans to expand deployer quotas through an auction mechanism.

Overall, HIP-4 sets up a model of “permissionless creation, but with mandatory responsibility.” The community can freely innovate, but market rules are constrained by templates; deployers can earn revenue, but must stake; validators participate in governance through voting.

The core of this design is to seek a balance between openness and market quality. If outcome markets are too closed, there won’t be enough richly varied trading scenarios.

If everything is fully open, it’s easy to end up with low-quality markets and settlement disputes. HIP-4 hopes to resolve this contradiction through templates, staking, and governance mechanisms.

3. Up to 50% of fees shared: market creation could become a new business model

Another important design in HIP-4 is that deployers will be allowed to receive up to 50% of the fee revenue in the future. This mechanism suggests that market creation itself may become a sustainable business model.

Previously, fees in trading protocols typically went mainly to the protocol or liquidity providers, while HIP-4 brings market creators into the revenue system.

In the future, sports media can create sports prediction markets, financial institutions can build markets around interest rates, inflation, and economic data, research institutions can create specialized markets targeting industry events, and Web3 communities can also build dedicated markets around events such as project upgrades and token listings.

These deployers can not only design markets, but also attract users through content distribution and community operations, earning revenue from trading fees.

As a result, a new on-chain role may emerge: market operators.

They don’t need to develop the underlying blockchain, nor build a full trading platform. Instead, they can rely on Hyperliquid’s infrastructure and focus on market creation and user operations in a specific vertical.

This model is somewhat similar to creator economics on content platforms. The platform provides infrastructure, while creators produce content and attract users; in the HIP-4 ecosystem, the platform provides market infrastructure, while deployers are responsible for creating markets, operating communities, and earning profits through fee sharing.

At the same time, Hyperliquid will still retain official standard markets. Under the current proposal, official markets are expected to be controlled to under 10 per year. In the future, an ecosystem structure could form where “the official sets standards and the community drives innovation”: the official builds foundational templates and governance frameworks, while the community discovers more niche needs.

Of course, HIP-4 is still only a preliminary proposal for now. Permissionless deployment will first be validated on the testnet, and related rules may also be adjusted based on community feedback. The real challenge is for Hyperliquid to address how to prevent an influx of low-quality markets, how to reduce settlement disputes, and how to prevent markets from being maliciously manipulated.

If templates, staking, governance, and fee sharing can form an effective closed loop, HIP-4 could potentially push outcome markets into a new stage of development.

From a broader perspective, Hyperliquid is changing the growth logic of on-chain trading platforms. In the future, competition may no longer be only about trading speed and fee rates, but also about how many types of markets a platform can support, how many developers it can attract, and whether it can establish effective community incentive mechanisms.

Conclusion

If HIP-4 rolls out successfully, Hyperliquid’s positioning could further shift from a high-performance derivatives trading platform to an open financial market infrastructure.

Spot and perpetual contracts are only the foundation, while outcome markets will turn a wide range of real-world events into on-chain markets that can be traded, priced, and settled. What Hyperliquid truly wants to open up might not be a new trading category, but rather a financial ecosystem where the community continuously creates markets.