Hyperliquid, a fast-growing decentralized exchange, is moving beyond perpetual futures and spot trading into a new frontier: prediction markets. The team has unveiled a proposal for a feature it calls “outcome trading,” laid out in Hyperliquid Improvement Proposal 4 (HIP-4), positioning the protocol to support a broad class of event-based financial products.
At the core of HIP-4 is an upgrade to HyperCore, the protocol’s main infrastructure layer, enabling fully collateralized contracts that settle within a predefined numerical range. Instead of trading a token or a perpetual future, users would trade contracts whose payoff depends on whether a certain outcome occurs—or where a measurable value lands—within that range.
The Hyperliquid team describes these contracts as a “general-purpose primitive” that can serve as the backbone for several types of applications. The most obvious one is prediction markets: on-chain venues where traders can buy and sell exposure to real-world events, such as election results, macroeconomic indicators, sports outcomes, or protocol governance decisions. But the same structure can also mirror options-like instruments whose payoff is capped or bounded, simplifying risk management for more conservative traders.
Unlike undercollateralized derivatives, the contracts envisioned in HIP-4 would be fully collateralized, meaning the maximum loss is covered from the start. That design is crucial for products tied to binary or range-based outcomes, where the entire contract can swing from zero to full value depending on how an event resolves. Full collateralization can reduce counterparty risk and make the payoff mechanics easier for users to understand.
Structurally, outcome trading transforms markets into expressions of probability. A contract that settles between 0 and 1, for example, can be interpreted as the market’s implied probability of an event taking place. If a “Yes” outcome is trading at 0.70, traders are effectively pricing a 70% likelihood that the event will occur. This framing is what makes prediction markets attractive not only to speculators, but also to researchers, analysts, and institutions interested in crowd-sourced forecasting.
Hyperliquid notes that there has already been “extensive user demand” for both prediction markets and bounded options-style products. The expectation is that external builders will layer custom interfaces and applications on top of HIP-4, experimenting with novel use cases beyond the canonical “yes/no” bets. In practice, that could include range markets on protocol metrics, volatility-linked contracts, or outcome-based hedging tools for DeFi positions.
The timing of Hyperliquid’s move is notable. Prediction markets have recently surged in prominence and trading activity, with monthly volumes climbing into the tens of billions of dollars across the sector. High-profile political cycles, macroeconomic uncertainty, and the search for new decentralized primitives have all contributed to a renewed interest in markets that turn information and belief into tradable assets.
For Hyperliquid, adding outcome trading is also a strategic expansion of its product suite. Traditional crypto derivatives platforms tend to focus on perpetual futures tied to major tokens, occasionally branching into options. By contrast, outcome-based contracts can reference almost anything that can be measured or clearly verified—on-chain metrics, asset prices at a specific time, non-crypto events, or even composite indicators created by oracles. That flexibility can significantly broaden the protocol’s addressable market.
From a technical perspective, supporting range-settled contracts on HyperCore implies changes not just to the matching engine, but also to risk management and margin logic. Because each outcome contract has a bounded payoff, margin requirements can be precisely computed, and liquidations can be made more predictable. This stands in contrast to some leveraged perpetual products, where extreme volatility can create gaps between risk models and real-world price action.
For users, outcome trading could reshape how they interact with markets. Instead of taking a directional bet on a token’s long-term trend, a trader might express a specific view such as “the Federal Reserve will not cut rates at its next meeting,” or “a given governance proposal will pass with more than 60% support.” Each such thesis becomes a tradable asset, with liquidity pools and order books forming around competing expectations.
Regulation is an unavoidable consideration in this space. Many jurisdictions scrutinize prediction markets closely, especially when contracts reference elections, regulatory outcomes, or other politically sensitive events. Hyperliquid’s design as a decentralized protocol does not eliminate these pressures, but outcome trading as a general primitive can be tailored toward less controversial markets—for example, on-chain performance metrics, asset volatility bands, or protocol-specific milestones.
The “options-like” dimension of HIP-4 also opens the door to more sophisticated portfolio construction. Traders could use bounded outcome contracts to cap downside while maintaining targeted exposure to certain events. For instance, instead of holding a volatile token outright, a user could gain exposure to whether that token ends a given month above or below a set price, with the maximum loss clearly defined at the outset.
For builders, HIP-4 effectively offers a toolkit rather than a single product. Frontends could specialize in politics, sports, macro data, or DeFi-native metrics, all while relying on the same underlying outcome contract infrastructure. Liquidity providers could route capital to whichever categories are seeing the strongest flow, and market makers could design strategies around mispriced probabilities or time decay as events approach resolution.
There are also data and analytics implications. As outcome markets mature on Hyperliquid, the trading prices of these contracts can serve as real-time signals of collective expectation. Researchers and traders might track how probabilities shift in response to news, on-chain events, or broader market moves, using outcome trading markets as a kind of sentiment and information barometer.
Risk remains an important factor. Outcome markets are still speculative activities, and traders can lose their entire stake on a given contract if the event goes against them. Moreover, low-liquidity markets may produce noisy or misleading probability signals. Hyperliquid and external builders will likely need to focus on incentives for liquidity, clear UI/UX for payoff diagrams, and robust resolution mechanisms, especially where off-chain data and oracles are involved.
If successfully implemented, HIP-4 could mark a significant evolution for Hyperliquid: from a derivatives-focused DEX into a broader marketplace for beliefs, forecasts, and custom payoff structures. The combination of fully collateralized range-settled contracts, user demand for prediction markets, and a permissionless building environment positions outcome trading as more than a niche feature—it could become a foundational layer for the next generation of on-chain financial experimentation.