Hyperliquid wants to create a prediction market? Interpreting the HIP-4 proposal: The new business strategy of DEX giants.

For Hyperliquid, prediction markets can be a "handy" business, and the technical architecture is highly similar to perpetual contracts. (Summary: Circle announces that it has invested $HYPE and is considering serving as a validator node, and USDC has been deployed in Hyperliquid) (Background supplement: IOSG in-depth analysis Hyperliquid: disruptive infrastructure or a high-valuation bubble? Yesterday, Hyperliquid released a new proposal, HIP-4. In the bombardment of various live coin and buyback narratives, this proposal does not seem to have stimulated much discussion in the crypto community; But a closer look at the content of the proposal reveals that it points to another hot narrative in the crypto market in the near future – the prediction market. At the heart of the proposal is the launch of a new trading product called Event Perpetuals. Simply put, Hyperliquid wants to add binary prediction market functionality to its perpetual contract exchange. Users can bet on events such as "whether the Fed will raise interest rates" and "whether a token will be listed on Binance this month". It's worth noting that Hyperliquid's proposal was written by an interesting lineup: investors from Framework Ventures, team members from prediction market platform Kalshi, and developers from Felix Protocol and Asula Labs. "Competitor involvement in the development of the plan" is rare, and Kalshi itself is one of the major players in the US compliance prediction market. This may imply that Hyperliquid's prediction market business may not be about disrupting existing players, but rather seeking some form of collaboration or differentiation. As the absolute leader of the perpetual contract track, Hyperliquid launched HIP-4 at this time, is it looking at the huge potential of the prediction market and wants to get a piece of the pie, or is it looking for new narrative support for the HYPE ecosystem? It's time to do business The 2024 U.S. election catapulted Polymarket to fame, with trading volume exceeding $3.6 billion. Entering 2025, the prediction market is even more of a capital darling: Polymarket has just returned to the US market with a $1.12 billion acquisition of QCEX, Kalshi and Robinhood launched a prediction market function, and the monthly trading volume has stabilized at more than $800 million. Even the traditional financial giants are on the move. Time magazine previously named Polymarket one of the "100 Most Influential Companies of 2025." The reason is simple: prediction markets are redefining the value discovery mechanism of information. In the face of such market heat, will Hyperliquid be unmoved? While HIP-4 is currently just a proposal that requires community voting and technical validation, it is clear that this is not a whim given the level of detail of the proposal and the lineup of participants. More importantly, for Hyperliquid, this may be a "handy" business. First of all, the technology is highly reusable. Prediction markets and perpetual contracts are highly similar in terms of technical architecture: both need order books, both need matching engines, and both need margin systems. For Hyperliquid, the development cost of adding Event Perpetuals is relatively low, and the trial and error cost is controllable. Even if the final effect is not as expected, it will not have much impact on the main business. Second, there is a natural overlap in user groups. Traders who play perpetual contracts and bettors who play prediction markets are essentially speculators. They chase volatility, enjoy uncertainty, and are willing to bet on their own judgment. Hyperliquid has gathered a large number of such users, why not give them more games to play? Finally, the HYPE ecosystem needs a new story. As one of the most successful DEXs of 2024, Hyperliquid's perpetual contract business is already quite mature. But capital markets are always looking forward to growth, and HYPE tokens also need more use cases to support valuations. Prediction markets aren't just a potentially good business, they're a good story—sexy enough, imaginative enough, and hot enough. This is not so much a strategic transformation as a low-cost product line trial. It's done, opening up new tracks; No, the original basic disk is still there. HIP-4: A Clever Product Extension Let's first understand a core question: Why can't Hyperliquid add prediction markets directly to existing systems? A vivid example is given in the proposal: NFL game predictions. Suppose the prediction question is "Will the Chiefs win the Super Cup?" If you use the traditional perpetual contract method, you need to feed the oracle continuously, and the odds are updated every 3 seconds. But here's the problem, the odds for sports games don't change continuously. After one offensive and defensive round, the odds can change instantly. HIP-3 (Hyperliquid's existing market deployment specification) limits price changes by up to 1% per tick. This means that if the result of the match is determined, it will take a full 50 minutes for the price to jump from 0.5 to 1.0. During this period, traders who know the results can easily arbitrage. That's why Event Perpetuals in the new HIP-4 proposal are needed. Event Perpetuals removes the two core mechanics of perpetual contracts: continuous oracles and funding rates. The price is determined entirely by the market trade, and the final result (0 or 1) is determined only by the oracle at the end of the event. Interesting designs include: Opening auction mechanism: 15-minute collective bidding to avoid initial price confusion 1 times segregated margin: no leverage, reduce the risk of liquidation Slot reuse: new markets can be deployed immediately after market settlement, improving capital efficiency On the surface, this is a technological innovation; In essence, this may be a business test that Hyperliquid wants to do. The attempt to move from a single product to a product matrix is obvious. No matter how successful a perpetual contract is, it is only a product. Event Perpetuals, if successful, means that Hyperliquid's infrastructure can support more financial products: today it is a prediction market, tomorrow it may be an option, and the day after tomorrow it may be a structured product. What's more, Hyperliquid has chosen a clever way to scale: let someone else create the market. According to the proposal, any team that wants to create a prediction market on Hyperliquid (called "Builder" in the proposal) will need to stake 1 million HYPE tokens. These Builders are responsible for: Deciding what markets to create (e.g. "whether Trump will buy Bitcoin") Set market parameters (settlement time, oracle source, etc.) Maintain market operations (provide initial liquidity, promotion, etc.) In return, Builders receive up to 50% of the trading fee share for that market. This design is ingenious. Hyperliquid doesn't need to judge "what prediction market will fire" by itself, but let the market decide. A team willing to stake 1 million HYPE will naturally carefully choose the market with liquidity potential. If...