Market
Why's $HYPE Up >43%?
Markets had a rough 24 hours.
$BTC dropped 6%, $ETH slid 7%, and SOL fell 5.7%. $HYPE? Down 7.4% on the day.
But zoom out to the weekly chart and $HYPE is up over 43%! Meanwhile, most tokens are still swimming in red.
What's driving the outperformance?
#1. New ATH for HIP-3 Open Interest
Traditional markets are ripping—stocks, gold, metals all pushing higher.
And within crypto, the cleanest way to get exposure to those assets is trading their perps on Hyperliquid's HIP-3 markets.
HIP-3 is the permissionless system to list perp markets on Hyperliquid. More detail here.
Trade[XYZ] and others have spun up markets for stocks and metals using it. Yesterday, HIP-3 hit ~$3.3B in open interest.
#2. End of Dumping FUDs
People were worried about a couple of massive sellers.
A Tornado-funded cluster of 16 addresses had accumulated ~4.4M $HYPE (worth $80M) at an average price of ~$8.8. Starting in January, they'd started dumping it publicly.
Continue Capital also sold HYPE worth ~$28M. Trove scammers dumped their stack as well.
These major sellers are almost out of the market. That's bullish.
Then there were the team unlocks that started back in November. People braced for ~$200M in monthly selling pressure.
But the unlocks didn't play out like that.
Qwantify's dashboard tracking unlocked HYPE shows the unlocked tokens weren't fully distributed to team members. And even when distributed, all of them weren't dumped on the open market.
So the team sold much less than investors feared.
(Caveat: that supply can still hit the market. So the worry isn't entirely unfounded.)
#3. Metrics
Hyperliquid is ultimately competing against centralized exchanges. And since 2026 started, HL has been gaining market share—rising from 4.4% to 5.5%.
Even though it's not as clear as the market share vs CEXes, other metrics like fees and perp volume are trending upwards in 2026.
One more factor: heading into Q4, there was unhealthy long leverage on HYPE. Clearing those positions pushed prices lower temporarily. Now? The leverage situation is much healthier.
Probably, there were other factors as well. But imo, these were the major ones that led to outperformance.
Sponsored by Katana
Katana: The DeFi-Optimized Chain
Most L2s collect fees and... that's it. The value leaks. Users get nothing.
Katana is the only DeFi-optimized chain that actually closes the loop. Here's how the flywheel works:
First, they collect revenue from multiple sources:
- Sequencer fees are generated as transaction gas fees
- AUSD treasury yield comes from Katana's native stablecoin, AUSD.
- Chain-owned liquidity of core assets to provide the best pricing and liquidity.
- VaultBridge revenue is generated by deploying the assets on the L2 bridge contract into low-risk strategies on Ethereum L1.
Then all these revenue flows are used to incentivize deeper liquidity and onchain activity.
Those will, in turn, increase revenue. And the sustainable flywheel is reinforced.
$KAT, Katana's token, plays a central role in this flywheel: directing the incentives. So, it has real value. You can read more about its tokenomics here.
All of this is to create the best return for users.
The above screenshot is from the Katana app. It's designed as the DeFi command center.
You'll be able to do everything from swapping to portfolio management there.
Chart of the week
New ATHs for Prediction Markets
The above chart tracks the notional volume of Prediction Markets.
And it's been smashing all-time highs week after week. Right now, it's at ~$6.2B. That's 2.5x the volume of the peak during US elections.
Without a massive catalyst like a presidential race, these numbers are absurd. The sector has serious traction.
Other metrics back it up:
- Weekly transactions are at an ATH of 26M.
- The sector has 357k users, which is another ATH.
- The Open Interest is also really high at $920 million. (The math is a bit complex on this one.)
Previously, when talking about prediction markets, I'd focused on Polymarket.
Now, there are more players. I'll introduce them here.
Kalshi
They frame themselves as the "big boys" of the prediction markets. They're the first CFTC-approved prediction market.
Even with a US-only user base, they've consistently managed to lead in volume. This week, they did ~$915M in volume while Polymarket only did $818M.
Compliance is their differentiation. With Polymarket getting regulatory approval and entering the US market, they're losing it.
And unlike Polymarket, Kalshi is not natively onchain. From the available information, it fundamentally looks like an offchain product. But, they've tokenized PM positions so that users can access it onchain.
They're dominating across the metrics. You can monitor them here.
Opinion.trade
It's a decentralized prediction market on BNB Chain.
They're focused on creating markets for trading macroeconomic indicators. Opinion has a dedicated tab/view for it. Crypto-related markets, like FDV predictions, also constitute a significant share of their volume.
Additionally, they're running a referral and points program.
It has led to rapid growth since its launch in October 2025. While it has declined since the beginning of 2026, it's still the 3rd prediction market by metrics like volume.
You can check its metrics here.
Predict.fun
This is another prediction market platform on BNB Chain.
They innovated by enabling yield on the open positions in the platform. But this is not for all markets. It's only enabled for markets they highlight using "Yield badges".
Truemarket is another with a similar change. But it provides yield on all the positions. This is because they directly use their native, yield-bearing stablecoin on the platform.
It also has a referral and points program. But in terms of metrics like volume, it is significantly behind the protocols that I already covered. While Opinion did >$681M in volume in the last 7 days, Predict only did $85M in volume.
But it has been only 2 months since launch, and it's backed by CZ's YZi Labs. So, it can always grow rapidly.
Other prediction markets at the level of Predict.fun include Limitless, ForecastEx, and Myriad.
This is a sector poised to keep growing. And you'll find many opportunities here. Last week, I shared one related to the MegaETH FDV prediction. Back in December, we had written Narrative Digest on the sector within TDE Pro.
If you want more prediction market content, lemme know by replying to this email.
🚀 DeFi Catalysts
MegaETH has announced the date for the public mainnet launch. It'll go live on February 9th.
USD.AI announced its governance token, $CHIP. Its holders will control the insurance module, treasury governance, and DAO rights.
SSV Network introduced SSV Staking. It'll switch validator network fees from SSV to ETH and route ETH to SSV stakers as a reward.
Yield Optimizer introduced $YO, the governance token of the protocol. 8% of the token will be distributed via the genesis airdrop.
MetaMask is distributing $LINEA to reward users. Both Linea and MetaMask are built by Consensys.
ERC-8004 has gone live on the Ethereum mainnet. It enables discovery and portable reputation for AI Agents.
Optimism introduced OP Enterprise. It'll provide enterprises with a blockchain managed by the Optimism team.
Citrea is an application layer for Bitcoin. It has gone live on the mainnet. They've also announced a campaign to incentivize usage.
Blackhaven is a treasury-powered liquidity engine on MegaETH. They're conducting an early access program for their ICO sale.
Moonbirds launched its $BIRB token. Its tokenomics were heavily criticized because NFT holders were only given 27% vested allocation.
Sky Frontier Foundation published its Sky Ecosystem Q4 Update and 2026 Outlook report. Analysts are criticising it for errors.
Rainbow wallet will conduct a token sale for $RNBW using Uniswap's CCA mechanism. Airdrop will be claimable on February 5th.
Linea has integrated Credible Layer from Phylax Systems at the sequencer level. Its goal is to prevent exploits before they execute.
📰 Industry News
The DAO is back. It had a major hack back in 2016. Funds reclaimed from that hack without clear claimants will be used to strengthen Ethereum security.
Tether launched the US-regulated stablecoin, $USA₮. This will be distinct from their existing stablecoin USDT.
Matcha Meta is a meta-aggregator. A hacker has stolen $13.5M worth of crypto from its users.
Enscribe started the Contract Naming Season. It's about making named smart contracts the norm on Ethereum.
Fidelity announced a new stablecoin called FIDD. It'll launch first on Ethereum.
Coinbase launched Prediction Markets. It is live in all 50 states on Coinbase.
🐦⬛ X Hits
- Macro positioning of $ETH
- KPI Rewards: new unlocks model
- An overview of the perps market landscape
- The link between CeFi and DeFi stablecoin lending rates.
- Parallel b/w MEV opportunities and AI opportunities.
😂 Meme
Until next time,
Edgy
Today's email was written by Edgy and Yayya.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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