Prediction markets are having a massive moment right now, growing from a side-show into a primary way for traders to hedge against real-world chaos and political drama. This hype is forcing protocols to build more accurate event-driven tools.

Hyperliquid is jumping on this trend by launching outcome contracts that run on the lightning-fast HyperCore engine, giving users institutional speed for betting on social catalysts. It is a direct answer to the demand for reliable, onchain settlement.

Continue reading to understand how this upgrade actually changes the game. 👇

What is Hyperliquid Improvement Proposal 4 (HIP-4)?

Hyperliquid Improvement Proposal 4 (HIP-4) is a governance-backed upgrade to the HyperCore trading engine that adds “outcome trading.” It introduces a new onchain contract primitive for event-based derivatives, aiming to expand the orderbook venue beyond perpetual futures into prediction-style markets.

The novelty of HIP-4 is “outcome contracts” that are fully collateralized and settle within a fixed payoff range, creating non-linear, dated exposure. By avoiding leveraged liquidations, Hyperliquid targets safer event trading while still using HyperCore’s order books and margin framework for execution and risks.

HIP-4 circulated publicly in late 2025, then Hyperliquid reiterated it on February 2, 2026, while rolling Outcome Trading onto testnet. The details were shared via an official X post and amplified by multiple crypto news desks as a prediction-markets push.

How Does Hyperliquid's HIP-4 Work?

HIP-4 functions by introducing prediction market contracts as native L1 primitives, utilizing the HyperCore engine to execute fully collateralized trades with fixed ranges.

The technical framework operates through these specific protocol components:

• Full Collateralization Requirement: Positions require upfront capital for the maximum possible loss, which entirely removes the risk of sudden liquidations or margin calls.  
• Fixed Settlement Boundaries: Every contract is engineered to settle within a predetermined range, allowing for predictable payoffs based on objective reference data points.  
• Dated Expiration Parameters: Markets feature specific termination dates rather than floating perpetually, facilitating the trading of event-specific outcomes and bounded volatility instruments.  
• Unified Margin Integration: Outcome positions share a collateral pool with perpetuals, enabling the system to recognize and offset negatively correlated risks automatically.  
• Native HyperCore Execution: Transactions are processed directly on the Layer 1 blockchain, ensuring institutional-grade speed and performance for high-frequency prediction market participants.  
• USDH Settlement Logic: All contracts resolve in the native stablecoin USDH, ensuring liquidity consistency and direct value accrual within the Hyperliquid ecosystem.  
• Opening Auction Mechanism: New markets utilize a 15-minute call auction to establish initial pricing, preventing chaotic volatility and potential manipulation during launch.

When Will HIP-4 Go Live On Hyperliquid Mainnet?

No official mainnet date has been provided for the mainnet rollout of HIP-4. The protocol is currently active on the Hyperliquid testnet, allowing developers and early users to refine the execution of outcome contracts.

Following successful testnet validation, the team plans to launch standardized canonical markets before eventually opening permissionless deployment. This phased approach ensures the stability of the unified margin system before large-scale capital entry.

Types of Hyperliquid HIP-4 Markets

The HIP-4 primitive supports a broad spectrum of instruments ranging from binary event bets to complex non-linear derivatives tailored for advanced risk management.

Common market formats are expected to include the following:

• Binary yes/no: Two-sided contracts pay out based on whether a single condition is met at the defined settlement time, similar to Polymarket.
• Range outcomes: Scalar markets settle within a defined interval, letting traders price “where” something lands rather than only yes/no.
• Bounded options-like: Capped payoffs can resemble calls or puts within preset bounds, delivering non-linear exposure without traditional leverage.
• Sports results: Matches, tournaments, or season outcomes can be encoded with objective resolution sources that match prediction-market demand.
• Political milestones: Elections or policy votes can be structured as outcomes, provided settlement criteria are clear and broadly verifiable.
• Financial events: Macro prints, protocol upgrades, or earnings-like catalysts can become dated outcomes that help hedge event-driven risk.
• Structured Hedging Products: Advanced traders can create positions that specifically offset the risks of their perpetual futures holdings within a single account

HIP-4 Pros and Cons

HIP-4 broadens Hyperliquid’s product surface, but it also introduces new market design, oracle, and settlement operational assumptions that traders should weigh carefully.

The main advantages and tradeoffs look like this:

Will HIP-4 Benefit Hyperliquid's HYPE Token?

Historically, Hyperliquid’s major HIPs have been framed as “step-function” product unlocks: HIP-2 deepened spot liquidity, and HIP-3 opened permissionless, builder-deployed perpetuals. Those upgrades strengthened the overall growth narrative that underpins demand for the HYPE governance/utility token.

HYPE has recently outperformed major assets like Bitcoin and Ethereum, rallying strongly despite broader market weakness. This strength is largely attributed to the protocol’s dominant market share and the removal of major sell-side overhangs.

Neutral scenarios suggest HYPE could test the $50 level if HIP-4 adoption accelerates. Conversely, persistent altcoin sector pressure or regulatory headwinds might lead to consolidation between the $30 and $33 support zones.

Hyperliquid HIP-4 vs HIP-3 vs HIP-2 vs HIP-1

Hyperliquid’s HIP series has expanded the protocol from basic DEX into a broader onchain perpetual exchange, adding new primitives incrementally over time.

Here’s what each HIP introduced at a glance:

• HIP-1 (Native Token Standard): This established the formal rules for asset creation on HyperCore, enabling the launch of tokens like HYPE and PURR.  
• HIP-2 (Hyperliquidity Engine): This introduced an onchain strategy to automatically provide buy and sell orders, ensuring deep liquidity for new spot assets.  
• HIP-3 (Builder-Deployed Perpetuals): This update allowed any builder to launch custom perpetual markets permissionlessly by staking a significant amount of HYPE tokens.  
• HIP-4 (Outcome Trading Primitives): This proposal introduces fully collateralized outcome contracts for prediction markets and options, expanding the platform's non-linear risk capabilities.

Risks of Hyperliquid HIP-4

Even with full collateralization, outcome trading adds new material failure modes around settlement, liquidity, and market integrity that differ from standard perps.

Consider these practical risks before trading or building:

• Oracle Failure Vulnerability: Erroneous data from settlement sources could lead to the incorrect resolution of contracts, causing irreversible financial losses for participants.  
• Systemic Margin Complexity: The integration of outcome contracts into a unified margin system increases the difficulty of calculating accurate cross-portfolio risk parameters.  
• Regulatory Legal Hurdles: Prediction markets are frequently targeted by financial authorities, potentially leading to jurisdictional restrictions or enforcement actions against the protocol.  
• Underlying Asset Manipulation: Malicious actors might attempt to influence real-world events or price data to profit from high-value event-based outcome contracts.  
• Liquidity Pool Fragmentation: The proliferation of multiple independent event markets may split existing liquidity, resulting in wider spreads and slippage for users.  
• Smart Contract Implementation: Vulnerabilities within the HyperCore Layer 1 smart contracts could be exploited, threatening the security of both perpetuals and outcome positions.
• Integration risk: New primitives stress APIs, risk engines, and liquidations logic, raising the chance of edge-case bugs on launch.

Final Thoughts

Hyperliquid’s introduction of fully collateralized outcome contracts connects the dots between high-frequency orderbook trading and the heavily trending prediction market sector.

By integrating these new event-driven elements into a unified margin system, the protocol allows for elegant cross-asset hedging and greater optimization of capital.

This strategic upgrade positions HyperCore as a premier infrastructure layer for decentralized finance, offering traders a straightforward environment for diverse risk management.