A new proposal, Hyperliquid Improvement Proposal 4 (HIP-4), seeks to fundamentally transform how prediction markets function on the Hyperliquid platform. Co-authored by Kalshi's head of crypto, John Wang, this initiative introduces "Event Perpetuals" to overcome significant deployment and resolution challenges inherent in the existing infrastructure.
Revolutionizing Prediction Market Functionality
The current Hyperliquid system, based on HIP-3, presents considerable hurdles for prediction markets. It necessitates constant oracle updates and imposes a restrictive 1% price change limit per tick, making rapid binary event resolution impractical. This limitation, illustrated by NFL betting scenarios, could delay a market's settlement from neutral to zero probability by as much as 50 minutes, creating ripe arbitrage opportunities and an asymmetric settlement problem where upward movement is fast but downward decay is slow. Event Perpetuals are designed to directly address these issues by eliminating continuous oracle feeds and funding payments. Instead, prices are solely determined by trading activity, settling instantly to a binary outcome (0 or 1) upon an event's conclusion. These contracts reflect market-implied probabilities between 0 and 1, offering a streamlined and efficient mechanism for event-based trading.
Fair Price Discovery and Market Mechanics
The launch of Event Perpetuals begins with a single-price clearing auction, typically lasting around 15 minutes. This auction mechanism meticulously evaluates candidate prices to maximize matched volume, with tie-breaking favoring minimal imbalance and prices closest to 50%. Orders are executed uniformly at the determined opening price before transitioning into continuous trading within defined price bands of 0.001 to 0.999. Builders deploying these markets are required to stake 1 million HYPE tokens and have the flexibility to charge up to 50% additional fees on top of base rates. The system also supports market recycling, enabling new events to seamlessly replace resolved ones within existing slots. Operating with 1x isolated margin, buyers must deposit collateral equivalent to their maximum potential loss, while resolution oracles post final values during specified challenge windows for dispute resolution.
