Can Hyperliquid win in the prediction market?

Author: Zhou, ChainCatcher

In May 2026, Hyperliquid officially launched the HIP-4 event contracts on the mainnet, introducing the prediction market feature Outcomes. On the first day of launch, the nominal trading volume reached 6.05 million contracts, accounting for about 0.7% of the total prediction market volume that day. In comparison, Kalshi had about 546 million contracts, and Polymarket had about 190 million contracts, showing a significant disparity in scale.

However, according to DL News, the daily trading volume of its first BTC price direction binary contract was about three times that of the combined markets of Polymarket and Kalshi.

Coinglass data shows that the HYPE token has increased nearly 60% since the beginning of the year, with a rise of about 42% over the past 90 days.

A platform that has already captured over 70% of the perpetual contract market is now officially venturing into the prediction market, which operates on a completely different logic. Hyperliquid previously opened the commodity tokenization battlefield with HIP-3; can it replicate that success once again?

1. From perp DEX to HIP-3: The Expansion Confidence of Hyperliquid

Hyperliquid's expansion is built on the practical accumulation of the past few years. It has gradually attracted professional traders and market makers since 2023, relying on a high-performance order book, extremely low fees, and a decentralized, no-KYC attribute, forming a strong liquidity foundation.

The success of HIP-3 serves as an important precedent. After its launch in October 2025, Hyperliquid opened permissionless commodity and stock perpetual contracts. At a time when commodities and U.S. stocks were experiencing significant market movements, the platform quickly capitalized on this wave of traditional asset dividends.

Data shows that its open interest contracts exceeded $1 billion at their peak, with 24-hour trading volume repeatedly surpassing $4.8 billion, including approximately $3 billion in silver perpetual weekly trading volume, about $700 million in gold, and over $1.2 billion in cumulative trading volume for stocks like Nvidia.

Under the influence of geopolitical situations, this advantage has become even more pronounced. During the escalation of the situation in Iran, crude oil prices fluctuated sharply, and Hyperliquid's crude oil perpetual contracts saw daily trading volume exceed $2.2 billion, second only to Bitcoin, becoming the platform's second-largest trading variety.

This fully demonstrates that Hyperliquid's liquidity flywheel can operate not only within the crypto category but also successfully absorb the overflow demand from traditional financial markets, attracting a large number of centralized exchange users and traditional traders.

The HIP-4 prediction market is yet another expansion attempt along the same logic. However, this time, the nature of the moat it faces is completely different from before.

2. Differentiation of HIP-4 in Trading Infrastructure

On the surface, HIP-4 is a prediction market, but essentially it is a binary option and boundary option embedded in Hyperliquid's complete derivatives system. It adopts a fully collateralized mechanism, with no leverage and no liquidation risk, and the contract price reflects the implied probability of the event occurring in real-time between 0.001 and 0.999, while also supporting non-linear settlement methods, granting users greater strategic flexibility closer to traditional options.

Hyperliquid did not simply replicate Polymarket's approach but instead natively integrated this tool into the platform's existing high-performance CLOB order book and matching engine.

This means that HIP-4 shares the same account, margin pool, and liquidity environment as spot and perpetual contracts, allowing users to achieve true cross-product hedging and capital reuse.

Among these, the cost advantage is the most direct. According to official documentation, opening a HIP-4 contract is free, with only a small fee charged upon closing or settlement, and there are no fees for minting. Compared to Polymarket's maximum 2% winner's fee, this design offers significant cost advantages for high-frequency traders and large players.

Bernstein analysts pointed out in a report that binary contracts provide funds focused on macroeconomics with a clearer way to hedge event risks than traditional tools, where premiums, maximum losses, and gains are all known in advance, which is precisely the value reinforced by the zero opening fee structure.

Account integration is another structural highlight. Traders can hold both BTC perpetual positions and prediction outcome contracts within the same USDC margin account, for example, hedging against macro events like non-farm payroll data or Federal Reserve decisions while being bearish on BTC through HIP-4 contracts. This zero-friction combination strategy is currently difficult to achieve in the independent account systems of Polymarket and Kalshi.

In terms of institutional support, the three platforms are taking different paths.

It is reported that Hyperliquid, relying on existing derivatives infrastructure, has had FalconX launch prime brokerage margin financing services for it, Ripple Prime has listed it as the first cooperative DeFi platform, and Anchorage Digital also supports HYPE custody and staking.

Kalshi has taken the lead in institutional trading, completing its first customized bulk trade facilitated by Greenlight Commodities, with Jump Trading participating, and institutional broker Clear Street becoming the first futures commission merchant to provide regulated prediction market clearing services for hedge funds.

Polymarket has received over $1.6 billion in investment from ICE, with shareholders including General Catalyst, Point72, and Founders Fund, and has introduced professional market-making services through equity-for-liquidity partnerships with Jump Trading, with its valuation now approaching $15 billion.

3. True Barriers Beyond Technology

The core competitiveness of prediction markets goes far beyond technology; it is also a content and operations business that needs to continuously provide attractive hot topics to maintain order book depth and user activity.

Galaxy Research pointed out in a report that the biggest constraint on prediction markets currently is liquidity, and the source of liquidity lies in topic supply. Most markets have limited order book depth, and a few thousand dollars in trading can cause significant fluctuations in odds. Only by continuously attracting participants to hot markets can reliable probability signals be formed.

Real data also confirms this challenge. According to Dune Analytics data, after the launch of HIP-4, Hyperliquid's overall nominal trading volume in the prediction market was only about $3.95 million, accounting for less than 0.02%. The cumulative nominal trading volume of Polymarket and Kalshi has exceeded $80 billion. Although Hyperliquid has achieved early highlights in BTC price contracts, its overall scale is still in the initial stage.

Currently, the HIP-4 market is still primarily focused on BTC price direction contracts, with insufficient coverage of long-tail topics such as politics, sports, and entertainment. According to the Chainstack technical report, deploying new markets requires staking 1 million HYPE, which is double the threshold of HIP-3, leading to early content being primarily provided by a few financially strong large developers, potentially limiting the speed of content diversity expansion.

Industry cases have shown that topic operation capability is harder to maintain than infrastructure. For example, Opinion reached a market share of 26% in January but quickly fell to around 3.3%. Dragonfly partner Haseeb Qureshi has also predicted that 90% of prediction market projects may face a lack of interest by the end of the year.

The adjudication mechanism also poses potential risks. Price contracts can be objectively settled through oracles, but if political or sports events become controversial, credibility will be tested. The Chainstack technical report mentions that early community documentation for HIP-4 mostly comes from reverse analysis of the testnet, and official specification documents are still being gradually improved. In contrast, Polymarket has accumulated experience in handling multiple controversies through its community voting mechanism.

Additionally, there is a structural misalignment in user profiles. Galaxy Research's report shows that Kalshi is benchmarking against FanDuel and DraftKings, designing beginner, intermediate, and advanced interfaces for different user complexities. Hyperliquid's core users are hardcore traders accustomed to high-frequency trading, while the main incremental users of prediction markets often prefer entertainment and event-driven gameplay. This difference cannot be quickly bridged by simply adjusting the interface.

Overall, Hyperliquid has certain competitive advantages in crypto price and macro data prediction markets. However, to replicate the dominant success of the perp DEX era, it needs to prove its capabilities in topic operation, credibility building, and user attraction, areas that are not traditionally its strengths and may take time to achieve.

4. A Competition of Bidirectional Invasion

From an industry-wide perspective, the overall market for prediction markets is rapidly expanding. According to on-chain data, prediction market trading volume has exceeded $10 billion for four consecutive months since 2026. Bernstein Research has listed it as one of the three core trends in the digital asset space, alongside tokenization and stablecoins.

In terms of market share, Kalshi has performed notably, rising from 29.4% in January to 47%, setting monthly trading volume records for several consecutive months. Polymarket saw a slight decline in trading volume in April compared to March after fully implementing fees at the beginning of the year, but still exceeded $4 billion, with market share increasing from 27.9% to 38.9%, remaining firmly in second place.

The dual oligopoly pattern is further solidified in rapid growth, which means that Hyperliquid is entering a highly concentrated market, with traditional capital accelerating its influx and the competitive threshold significantly raised.

Centralized exchanges are also accelerating their layout in the prediction market. According to public information, MEXC launched its native prediction market feature in March 2026, Gate became the first CEX to directly integrate Polymarket; Binance integrated on-chain prediction markets through Predict.fun in April and undertook part of the fee subsidies, while Crypto.com is also advancing CFTC-compliant prediction contracts; Coinbase has partnered with Kalshi and has launched prediction market features in all 50 states in the U.S.

At the same time, the boundaries between prediction markets and derivatives are being simultaneously broken. Polymarket is preparing leveraged contracts for BTC, Nvidia, and gold; Kalshi has launched a perpetual contract product called Timeless and completed its first customized institutional bulk trade. While Hyperliquid is invading the prediction market, its competitors are also invading its home turf.

Notably, one of the co-authors of the HIP-4 proposal is John Wang, the head of crypto business at Kalshi, and the two platforms announced their partnership in March 2026. This indicates that Hyperliquid and Kalshi are not purely in competition, and there is potential for cooperation and integration in the future.

Delphi Digital pointed out that the real breakthrough lies not in direct competition with leading platforms, but in splitting the tech stack and serving different user types. Aggregated terminals and advanced analytical tools cater to professional traders, while socialized interfaces tap into a broader mass entertainment market.

The entire industry is moving towards an infrastructure layer that integrates prediction markets and derivatives, and the platform that first seamlessly connects the two will form a structural advantage in this track.

Conclusion

Overall, Hyperliquid's comprehensive infrastructure advantages are relatively prominent, as it possesses strong liquidity, a shared margin structure, and a zero opening fee design, giving it certain competitive advantages in crypto price and macro data prediction markets. However, fully replicating the dominant success of the perp DEX era is no small feat.

Prediction markets are essentially a content and operations business, and HIP-4 needs to prove its capabilities in topic supply, credibility building, and user profile adaptation. These areas are not Hyperliquid's traditional strengths and may take time to achieve.

Regardless, Hyperliquid has become one of the on-chain competitors that centralized exchanges like Binance should be most wary of. Each of its category expansions compresses the survival space of CEXs and reshapes the entire derivatives market landscape.

The World Cup in June 2026 is approaching, which will be the first major test for HIP-4 after its permissionless creation is fully opened. If stable and sizable liquidity can emerge in political and sports markets at that time, Hyperliquid is likely to transform its local advantages into a breakthrough overall; otherwise, it may only provide an additional hedging tool for existing perp users in the prediction market, rather than becoming a true player in the field.