Hyperliquid challenges Polymarket, asks builders to stake $32M

Hyperliquid announced the HIP-4 proposal on July 19 and plans to activate it on testnet before enabling it on mainnet. The upgrade would allow external operators to create prediction markets on the platform if each deployer locks 500,000 HYPE for six months.

Validators would approve and store standardized templates on-chain that define how questions are structured, which conditions determine settlement, and which data sources are acceptable. Independent deployers must use those approved templates to launch and settle individual contracts. Validators retain authority over the templates and the penalties applied for unclear or improperly resolved markets.

Each deployer would receive initial capacity for 100 outcomes, represented by up to 200 tradable outcome tokens. Questions with multiple possible results would consume multiple slots. Settled contracts would free capacity for future markets. The required HYPE stake remains locked for six months and cannot be withdrawn until all outstanding markets are settled.

Validators can vote to seize part or all of a deployer’s stake if an operator records an incorrect result, fails to resolve a contract within one week, or launches a market whose terms do not allow a clear settlement.

Outcome markets on Hyperliquid settle at 0 or 1 and are fully collateralized. Contracts do not use leverage, so traders do not face margin calls or liquidations. Outcome markets will operate alongside the platform’s spot and perpetual futures products within HyperCore, Hyperliquid’s native trading engine.

The HIP-4 proposal includes an auction mechanism for larger allocations and would let deployers receive up to a 50% share of fees from the markets they operate. Final fee economics are subject to community feedback.

Hyperliquid previously deployed a permissioned builder model for perpetual futures under HIP-3. Builder-deployed perpetuals rose from about 2% of the platform’s perpetual volume at the start of 2026 to roughly half of daily trading volume later in the year. Open interest in contracts tied to real-world assets reached $3.6 billion, and total open interest climbed to $11 billion in 2026.

Current prediction-market venues led by Polymarket and Kalshi maintain advantages in liquidity, distribution and brand recognition. As of July 2026, decentralized venues had processed more than $311 billion in cumulative volume across over 1.65 billion transactions and had attracted over 4 million users.

Prediction-market trading during the World Cup equaled about 27% of legal U.S. sports-betting volume, up from roughly 9% earlier in the year. Analysts project annual prediction-market volume could grow from $51 billion in 2025 to about $1 trillion by 2030 as contracts tied to cryptocurrencies, economic indicators and corporate risks see wider use.

Hyperliquid is positioning HIP-4 to let external teams build and operate outcome markets while the platform supplies execution infrastructure and on-chain template controls. The proposal sets a high financial threshold for deployers and retains validator oversight of market templates and penalties.