Introduction

Traders often face a dilemma: their market cognition is integrated, but their trading positions are fragmented. For example, betting on price trends, event outcomes, and hedging risks usually require operating on multiple platforms (futures exchanges, prediction markets, options exchanges), with margins split and inefficiencies. Hyperliquid’s new market framework HIP-4 aims to solve this fragmentation, unlocking the imagination space of on-chain finance by turning "event outcomes" into tradable standardized assets.

Outline

1. Background: The Pain Point of Trader Position Fragmentation

Traders often have integrated market judgments (e.g., predicting war-related news over the weekend, unpriced Fed decision outcomes, and needing gap insurance for crude oil/precious metals positions), but they have to execute these judgments on three separate platforms. This fragmentation leads to split margins and disconnected positions, failing to match the wholeness of traders’ cognition.

2. HIP-4 Overview: Definition, Launch Progress and Core Architecture

HIP-4 is Hyperliquid’s new market framework that transforms "event outcomes" into tradable standardized assets, enabling judgments about "whether an event will occur" or "whether a price will reach a certain level by a specific time" to enter Hyperliquid’s trading system. It was launched on the Hyperliquid testnet on February 2, and community members have reverse-engineered its core contracts to reveal its architecture.HIP-4 adopts a dual-layer structure with clear division of labor: HyperCore: Responsible for high-frequency matching of trades;HyperEVM: Handles fund custody, pool management, and complex prediction market contract logic.Its core function is to "transpose" abstract events into tradable assets. For example: An event like "Who will win the 100m sprint" (Event ID 9, Outcome 0 = "Hypurr wins") is mapped to the "#90" token on HyperCore, traded on the order book like a spot asset;Price-related events (e.g., "Will BTC touch a certain price within 15 minutes") operate like options, settling directly on HyperCore based on real-time expiration prices without external oracles;Settlement rules for non-price events (e.g., sprint outcomes) remain unclear.

3. User Profile: Overlap Between Hyperliquid and Polymarket Traders

A study of 15,000 active Polymarket addresses found significant user overlap with Hyperliquid, featuring a group of experienced traders: On Polymarket: Contributed $1.43 billion in trading volume, focusing on long-cycle events (elections, Fed resolutions);On Hyperliquid: Managed $189 million in contract positions with $29 million in margin utilization, holding balanced long/short positions in mainstream assets (BTC, ETH).Currently, these two sets of positions are isolated: $18.3 million in prediction market open interest cannot enter the contract collateral system. Based on the 7x average leverage of overlapping users on Hyperliquid, this theoretically unlocks over $120 million in additional trading capacity.

4. Core Imagination: Composability and New Structured Product Types

The greatest value of HIP-4 lies in its composability, which the community expects to spawn several new structured products addressing TradFi vulnerabilities: Weekend Gap Options: Hedge against gaps between Friday’s close and Sunday’s open for positions in oil, silver, or stocks (from HIP-3), solving the traditional market’s weekend gap risk;Internal-External Pricing Delta: Compensate for maximum deviations between HIP-3’s internal pricing and external oracle prices, hedging clearing risks;Funding Rate Option: Help traders hedge against negative funding rates.

5. Core Advantage: Differentiation from Traditional Prediction Markets

HIP-4 differs fundamentally from traditional prediction markets: Traditional prediction markets: Lack natural counterparty positions, dominated by insiders who exploit uninformed retail investors and market makers;HIP-4 structured products: Have native hedging demand beyond mere speculation, with market makers’ pricing logic, liquidity quality, and market depth operating at a higher level.

Conclusion

HIP-4 solves the core pain point of trader position fragmentation by integrating prediction market functions into Hyperliquid’s existing system. With the same account, same margin, and same settlement system, it enables traders to align their integrated cognition with unified positions. As HIP-4 evolves, it brings Hyperliquid one step closer to its vision of becoming the "House of All Finance," unlocking new possibilities for on-chain finance innovation.