Hyperliquid Enters Prediction Market Arena with 'Outcome Trading' Proposal

Hyperliquid, a leading decentralized exchange, has announced plans to enter the prediction market space with a new feature dubbed "Outcome Trading." The move, revealed via a social media post on Monday, signals a strategic expansion for the platform as it seeks to capitalize on surging demand for event-based financial contracts.

The functionality will be implemented through Hyperliquid Improvement Proposal 4 (HIP-4). This upgrade will enable the protocol's core infrastructure, HyperCore, to support fully collateralized contracts that settle within a predefined price range. According to the proposal, these contracts serve as a "general-purpose primitive" suitable for prediction markets and bounded, option-like instruments. The development team cited "extensive user demand" and expects builders to devise novel applications for the technology.

Prediction markets have witnessed explosive growth, with Dune Analytics data showing a staggering $12.4 billion in trading volume last month. Traders are increasingly flocking to these platforms to speculate on outcomes ranging from political elections and sporting events to cultural milestones.

"Hyperliquid's entry is poised to expand the total addressable market for prediction markets, which benefits the entire ecosystem," said Farokh Sarmad, co-founder of Myriad, a prediction market platform. "It will draw more attention, attract new users, and, crucially, enable innovative approaches we haven't previously explored."

Originally drafted in September of last year, HIP-4 promotes non-linear, dated contracts designed as an alternative to traditional leveraged derivatives. By avoiding leverage and the associated risk of liquidation, the proposal aims to offer a less volatile trading experience—a stark contrast to the high-risk reputation of many crypto trading venues.

The "Outcomes" feature is currently in development on Hyperliquid's testnet. The proposal states that once technical work is finalized, canonical markets will launch with contracts denominated in the protocol's USDH stablecoin. It added that, pending user feedback, the infrastructure could later be opened for permissionless deployment.

The market reaction has been positive. Hyperliquid's native HYPE token was trading at $32.83 at press time, reflecting a gain of over 11% in the past 24 hours, according to CoinGecko data.

Hyperliquid's foray comes at a time of heightened regulatory uncertainty for prediction markets globally. Scrutiny has intensified in recent weeks, particularly around markets tied to sports and politics.

Polymarket, a major player in the sector, has faced bans and enforcement actions in jurisdictions including Hungary, Portugal, Nevada, and Tennessee. Regulators in these regions have ordered platforms to cease operations and, in some cases, refund user wagers. The core legal debate hinges on whether these platforms should be classified as gambling sites or as legitimate financial venues offering "event contracts."

Despite these regulatory headwinds, established crypto firms continue to bet on the sector's potential. Just last week, Coinbase launched its own prediction market product to users across all 50 U.S. states, utilizing contracts from platform Kalshi.

"Prediction markets are the ultimate form of truth-seeking," Coinbase CEO Brian Armstrong argued in a public statement. "When there's skin in the game, the output is far more reliable. Everything else is biased by someone's agenda. I think we'll look back at prediction markets as a breakthrough in how we discover truth in the world."

Community Reactions

Alex Chen, Crypto Analyst at Vertex Capital: "This is a logical and sophisticated expansion for Hyperliquid. HIP-4's design directly addresses the excessive risk that has kept institutional players away from many on-chain derivatives. If they can deliver a robust, compliant framework, it could significantly legitimize the prediction market niche."

Maya Rodriguez, Independent DeFi Developer: "The technical approach is fascinating. 'Outcome trading' as a primitive could unlock far more than just betting on elections. Think decentralized insurance, project milestone funding, or community governance mechanisms. The builder community is already buzzing with ideas."

David Keller, Host of 'The Skeptical Investor' Podcast: "Oh, fantastic. Another crypto project diving headfirst into a regulatory minefield. Have they not been paying attention to what's happening to Polymarket? This isn't innovation; it's willful ignorance of the legal firestorm they're inviting. Retail users will be the ones left holding the bag when the regulators inevitably come knocking."

Sarah Lin, Professor of Financial Technology at Stanford: "The timing is particularly interesting. While regulators are focused on sports and politics, Hyperliquid's more abstract, financialized 'outcomes' might navigate through a different interpretive lens. The success of this venture will depend as much on legal strategy as on its technology."