Hyperliquid plans permissionless prediction markets in HIP-4 update

Hyperliquid is preparing to open prediction-market creation beyond its validators, a shift that could make the exchange a more direct rival to platforms such as Kalshi and Polymarket. For everyday crypto investors, the key detail is the price of entry: anyone launching a market would need to stake 500,000 HYPE, worth about $30 million, according to Decrypt.

Prediction markets let users trade contracts tied to real-world outcomes, such as whether an event will happen by a certain date. The market price is often treated as a rough signal of how likely traders think that outcome is, though it is not a guarantee.

Decrypt reported that the planned change is an enhancement to Hyperliquid’s HIP-4 upgrade, which added outcome trading in May. The update is expected to go live on testnet first, then move to mainnet, according to the report. A testnet is a trial version of a blockchain system, while mainnet is the live network where real assets are used.

How the new model would work

Today, Decrypt reported, Hyperliquid’s prediction markets are run by validators. Validators are network participants that help process transactions and enforce protocol rules. Under the planned change, Hyperliquid expects validator-run markets to become rare, with the exchange saying there would ideally be fewer than 10 such markets per year, according to Decrypt.

The rest could be created by outside deployers, provided they meet the staking requirement. Staking means locking up tokens as collateral. In Hyperliquid’s proposed setup, that collateral could be cut, a process known as slashing, if validators decide a market was badly written or resolved the wrong way, Decrypt reported.

The incentive runs both ways. A deployer that creates a market can earn as much as 50% of that market’s trading fees, according to Decrypt. That fee share gives market creators a reason to design contracts that attract trading activity, while the large stake is meant to discourage sloppy or misleading markets.

Decrypt contrasted that model with Kalshi and Polymarket, where markets are defined by the platform rather than opened to outside creators in the same way.

Why Hyperliquid is pushing into prediction markets

The move comes after a busy period for prediction markets. Decrypt reported that the sector handled $50 billion in wagers in June, helped by World Cup activity, and that July had reached $37 billion so far.

Kalshi led the category in June with $33 billion, equal to 66% market share, according to Decrypt. Hyperliquid’s volume was much smaller at $176 million, the report said.

Hyperliquid is already known in crypto for decentralized derivatives trading. Decrypt’s newsletter also noted that HYPE traded around $60.80 after falling 7% for the week, while Bitcoin was around $64,600 and Ether around $1,885.

The planned HIP-4 enhancement would not by itself guarantee that Hyperliquid gains share in prediction markets. It would, however, test whether a permissionless model, where outside participants can launch markets if they post enough collateral, can compete with more curated platforms.

This story draws on original reporting from Decrypt.