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BTC $63.9k |
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HYPE $54 |
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ETH $1.8k |
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FLUID $1.3 |
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SOL $74 |
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VVV $12.4 |
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Bankless Nation, Hyperliquid’s HIP-4 markets found their first real hit in the World Cup, with sports driving nearly half of all volume. Since the tournament ended, open interest has fallen more than 90%, not because users lost interest, but because there is little left to trade. Permissionless deployments are now live on testnet. If HIP-4 wants a second act, it must be ready for the midterms. It's not ready right now, so let's catch you up on the basics here in today's article below. —David C ✍️
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NEED TO KNOW
Coldcard BTC Toll Climbs
- 🚩 Coldcard's five-year-old RNG bug has now reportedly compromised over 1,750 BTC across multiple attack waves since July 30th, after a 2021 firmware error quietly let attackers reconstruct Bitcoin private keys offline.
- 💰 BlackRock just launched two new tokenized Treasury funds on Ethereum, BSTBL and BRSRV, both of which are built to double as GENIUS Act-eligible reserve assets for stablecoin issuers.
- 💸 Kalshi, Polymarket, and Polymarket US just posted a combined $50.6 billion in July trading volume, a new all-time high milestone largely powered by interest around World Cup betting.
. . .
ANALYSIS
HIP-4 Must Get Ready for the Midterms
Hyperliquid's HIP-4 markets have had their largest success stem from the World Cup. I didn’t expect this. When HIP-4 launched, I argued that Hyperliquid was not really coming for Polymarket or Kalshi. That outcome markets rather looked more like an extension of its trading stack: daily crypto binaries for hedging perps, options-like exposure, and another way to keep every leg of a position inside Hyperliquid.
Instead, Hyperliquid launched markets for the NBA Finals, individual World Cup matches, and the tournament winner. Those three categories, though overwhelmingly the latter two, have accounted for roughly 48% of HIP-4 volume to date. Since the height of the tournament, open interest is down more than 90%. To be clear though, HIP-4 has not failed. It’s simply run out of things to trade for the time being. The system is still permissioned, so validators currently deploy every market. What remains is a thin book of price-related questions pulling trivial amounts of volume compared to that spurred by sports. That constraint is what Hyperliquid is now trying to remove. On July 31st, permissionless HIP-4 deployments went live on testnet, paving the way for teams to create and operate outcome markets on their own, while showing what it will take to do so.
How Permissionless HIP-4 WorksNote that permissionless deployments will not mean unlimited deployments. Under the preliminary mainnet design, validators first approve market templates, i.e. reusable structures that define how a market can be created and settled. A deployer then uses an approved template to launch a specific market, supplying details like the question, possible outcomes, expiration, and resolution criteria. Take politics for example — you’ll see why in a minute — where an approved binary-event template could potentially support a market on whether a candidate wins an election. But Hyperliquid hasn't disclosed how broad each template will be, so it is unclear whether one could cover Senate, House, and governor races, or whether different structures would be needed for party-control, seat-count, or multi-candidate questions. What is clear is that deployers will launch markets by instantiating templates validators have already approved, rather than seeking approval for each individual market. As in HIP-3, deployers are responsible for defining and settling markets correctly, and validators can slash their stake if they get it wrong. That proposed stake is 500,000 HYPE (same as HIP-3), locked for six months and withdrawable only when no outstanding markets exist. Each deployer will initially receive capacity for 100 outcomes, reusable once markets settle, with an auction for additional capacity planned later. Deployers will eventually be able to receive up to 50% of the trading fees from their markets.
What’s Next After the World Cup?The most obvious target is the U.S. midterms. Prediction markets first broke into the mainstream through politics, and both Kalshi and Polymarket already run broad election dashboards covering congressional control, individual races, and seat totals. HIP-4 currently offers none.
Whether outside deployers can go ahead and fill that gap depends on how quickly permissionless HIP-4 moves to mainnet. HIP-3 took 164 days from its first permissionless testnet MVP to mainnet, though only 18 days from publishing its initial mainnet specification and making HIP-3 eligible for mainnet-level bug bounties. HIP-4 sits somewhere between those points. Its preliminary mainnet structure is public and deployer actions are live on testnet, but there are no mainnet-level bug bounties. We’re in limbo for now. If this system arrives in time, a deployer could use the midterms to build an entire election venue rather than launch isolated questions, so long as validators also approve templates supporting elections. If permissionless deployment misses that window, validators could still list midterm markets themselves. HIP-4 could recover activity either way. What it would lose is its first major opportunity to prove that outside deployers can keep it supplied with timely markets. The World Cup proved Hyperliquid users will trade major real-world events. It also proved that, when these events end, there’s not much else to go on. The intensity of this midterms cycle would be a strong opportunity for HIP-4 to act on, helping it simultaneously stay relevant and jumpstart permissionless deployments. Keep an eye on this in the weeks ahead.
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