HIP-4

Hyperliquid Improvement Proposal 4 (HIP-4) is the designation used for two distinct proposals aimed at expanding the trading capabilities of the Hyperliquid decentralized exchange. The most recent proposal, announced by the Hyperliquid team on February 2, 2026, introduced "Outcome Trading" through a new primitive called "Outcome Contracts" (also referred to as outcome markets) to enable prediction markets and options-like instruments, and has since been implemented on mainnet as live binary outcome markets on HyperCore.^[1]​^[2]​^[7]​^[6] HIP-4 Outcome Trading now functions both as an improvement proposal and as an on-chain primitive in production. An earlier proposal from September 2025, also named HIP-4, was submitted by third-party contributors and focused on a product called "Event Perpetuals" to solve challenges related to deploying prediction markets on the platform.^[3]​^[4]​

HIP-4: Outcome Trading (February 2026 Proposal)

On February 2, 2026, the Hyperliquid team announced its own version of HIP-4, introducing a new primitive called "Outcome Trading" (or outcome markets) to the protocol.^[2] This improvement proposal aims to support a wider range of financial products beyond the platform's core offering of perpetual futures. The development was initiated in response to what the team described as "extensive user demand" for both prediction markets and options-style derivatives.^[1] Following testing and staged deployment, HIP-4 outcome markets went live on HyperCore with curated canonical markets, including recurring BTC binary contracts and other short-term crypto price binaries.^[7]​^[6]​

Key Features and Technology

The core of this proposal is the "Outcome Contract," a new general-purpose primitive designed to be built on Hyperliquid's core infrastructure, HyperCore.^[2]​^[7]​

Key characteristics of Outcome Contracts include:

• Full Collateralization: Unlike leveraged perpetuals, these contracts are fully collateralized, meaning the maximum potential loss is the capital committed upfront. This design completely removes the risk of liquidations for traders of these instruments.^[1][7]
• Fixed Settlement Range: Each contract settles at a fixed price within a predetermined range, making them suitable for binary or bounded outcomes.^[2][7]
• Dated Markets: The proposal introduces contracts with specific expiration dates, a feature distinct from the platform's existing perpetual offerings.^[1]
• Non-Linear Payoffs: Outcome Contracts allow for more complex profit-and-loss structures compared to the linear payoffs of perpetual futures.^[1]
• Compositionality: The primitive is designed to be compatible with other Hyperliquid features, such as portfolio margin and the HyperEVM, allowing developers to build novel applications.^[2][7]
• Merged Yes/No Liquidity: Each outcome market has two token sides, often labeled Yes and No, whose order books are merged so that liquidity is shared, even though users interact with separate Yes and No tokens.^[7]

The primary initial applications for Outcome Contracts are prediction markets and bounded, options-like derivatives. The canonical markets are planned to be denominated in USDH.^[2] The first live market under HIP-4 is a recurring BTC binary that settles daily at 06:00 UTC to the BTC mark price on HyperCore, while multi-outcome markets and additional features are planned for staged rollouts.^[7]​

Proposed Implementation Roadmap

The rollout of Outcome Trading was planned in multiple phases to ensure stability and incorporate community feedback.^[1] As of the announcement on February 2, 2026, the feature was actively being developed and tested on the Hyperliquid testnet.^[2] After testing, HIP-4 was approved and activated through Hyperliquid’s validator-governed network upgrade process rather than a separate token-holder vote, in line with how other HIPs are rolled out.^[10]​

The originally planned phases were:

1. Phase 1: Testnet Launch: Initial deployment on a testnet for final technical development and testing.
2. Phase 2: Mainnet Launch with Curated Markets: Following a successful testnet phase, the feature would launch on the mainnet with a limited set of markets curated by the Hyperliquid team and settled using objective data sources.^[1][2]
3. Phase 3: Potential Permissionless Listing: Depending on the success of the initial phases, the infrastructure might be opened up for permissionless deployment, allowing users to create their own outcome-based markets under a model similar to Hyperliquid's permissionless perpetual markets, which require staking 500,000 HYPE tokens.^[1]

By May 2, 2026, HIP-4 binary outcome markets had progressed beyond testing, with Phase 1 and Phase 2 completed and curated canonical markets live on mainnet, including a daily BTC binary that settles to the BTC mark price on HyperCore and additional short-term crypto price binaries.^[7]​^[6] Permissionless listing of outcome markets remains a possible future phase, contingent on user feedback and governance decisions.^[1]​

Launch and Exchange Support

​Bitget reported on May 2, 2026, that Hyperliquid had launched live binary outcome markets under HIP-4 on mainnet, positioning them as rivals to existing prediction platforms such as Polymarket and Kalshi. The report characterized the new markets as binary/outcome-based instruments designed to broaden Hyperliquid’s product set, with trades executed on an on-chain CLOB, fully collateralized payoffs that settle to 0 in USDH, and a zero-fee-to-open model.^[6] Bitget also noted a ~15-minute opening auction for new markets and that builders must stake 1,000,000 HYPE to deploy markets. Bitget did not state that it was listing or offering direct trading access on Bitget Exchange; the article served as news coverage and pointed users to Hyperliquid’s app for access.^[6]​

In comparing HIP-4 to Polymarket and Kalshi, Bitget highlighted that Hyperliquid’s outcome markets use a fully on-chain central limit order book, share margin with other products in a unified account, and charge zero fees to open positions, whereas Polymarket relies on automated market makers and Kalshi operates as a regulated prediction exchange with a different fee and account structure.^[6]​^[8]​

Native Oracles and Canonical Markets

HIP-4 outcome markets form part of a broader shift by Hyperliquid toward native validator-run oracles and curated canonical markets. Early mainnet deployments focused on crypto price binaries, such as daily BTC outcome contracts that settle to on-chain mark prices, and subsequently expanded to macro outcomes including markets on Federal Reserve rate decisions and inflation-related indicators.^[7]​^[9]​^[8] These canonical markets are curated by the core team and validators, who select questions and maintain native oracle feeds, with a stated roadmap toward enabling third-party builders and validators to introduce additional outcome pairs under this oracle framework.^[9]​^[8]​

Previous HIP-4 Proposal: Event Perpetuals (September 2025)

Prior to the team's official 2026 announcement, another proposal also designated HIP-4 was introduced on September 16, 2025.^[4] Titled "HIP-4: Event Perpetuals," this proposal was authored by four contributors, including John Wang, the Head of Crypto at the CFTC-regulated prediction market Kalshi, and the research entity Bedlam Research.^[3]​^[4] The Event Perpetuals design was debated but not adopted on mainnet, and the concept was effectively superseded by the core team’s later 2026 HIP-4 Outcome Trading implementation.^[10]​

Rationale and Problem Addressed

This version of HIP-4 was created as an extension of HIP-3, which had enabled builders to deploy their own perpetuals markets. The authors identified that HIP-3's mechanics were unsuitable for binary outcome prediction markets. The key limitations were:^[4]​

• Slow Price Adjustment: The existing infrastructure restricted price changes to 1% per tick, making it too slow to settle a market to a definitive 0 or 1 outcome. This "asymmetric resolution problem" could take nearly an hour for a market to decay to zero.
• Arbitrage Vulnerabilities: The slow settlement time created significant arbitrage opportunities for traders who had information about a resolved event before the market price could catch up.
• Oracle Dependency: The system's reliance on a continuous oracle price feed was not practical for events that resolve instantaneously, such as the outcome of a sports game or an election.^[3]

Technical Design of Event Perpetuals

To solve these issues, the proposal introduced "Event Perpetuals," a specialized derivative designed for binary prediction markets.^[4]​

Market Launch

A key innovation was a 15-minute opening auction to establish an initial market price. The system would algorithmically determine a single clearing price that maximized trading volume, minimized the buy/sell imbalance, and, as a final tie-breaker, was closest to 0.50. All initial orders would execute at this single price before the market transitioned to continuous trading.^[4]​

Trading and Settlement

• Oracle-Free Trading: After the opening auction, trading would occur freely on the order book without a continuous oracle feed, with prices representing the market-implied probability of the event.^[3]
• No Funding Rate: Unlike standard perpetuals, these markets would not have a funding mechanism.^[4]
• Binary Settlement: Upon the event's conclusion, a resolution oracle would post the final outcome (0 or 1), trading would be halted, and all positions would be settled instantly. The proposal included an optional dispute window before final settlement.^[3]
• Margin: The proposal specified 1x isolated margin, requiring traders to fully collateralize their positions based on their maximum potential loss.^[4]

Deployment and Governance Requirements

Under this proposal, builders could deploy their own Event Perpetual markets by staking 1,000,000 HYPE tokens.^[3] Builders would be responsible for defining the event terms and resolution criteria and would be granted the ability to set and collect additional trading fees of up to 50% on their deployed markets.^[3]​^[4]​

Underlying Technology: HyperCore

Both HIP-4 proposals are designed to be implemented on HyperCore, the specialized Layer 1 blockchain that powers the Hyperliquid exchange.^[5] HyperCore is designed for high-performance decentralized finance, with its state split between the core matching engine and a general-purpose, EVM-compatible environment known as the HyperEVM. Unlike many exchanges, it does not use an off-chain order book, instead processing all transactions through its on-chain consensus mechanism.^[5]

Architecture and Consensus

Hyperliquid's L1 uses a Proof of Stake (PoS) consensus algorithm named HyperBFT, which is a variant of HotStuff consensus. Validators produce blocks in proportion to their staked native tokens, and the mechanism is optimized for low end-to-end latency.^[5]

Performance and Scalability

According to documentation updated in early 2025, the Hyperliquid mainnet was reported to achieve the following performance metrics:

• Latency: For a geographically co-located client, the median end-to-end latency (from request sent to response received) was 0.2 seconds, with the 99th percentile at 0.9 seconds.
• Throughput: The chain could process approximately 200,000 orders per second. The documentation noted that the primary performance bottleneck was the execution logic, while the underlying consensus and networking layers were capable of scaling to "millions of orders per second" with future optimizations.

These technical specifications form the foundation upon which features like Outcome Trading and Event Perpetuals are built.^[5]