Galaxy Deep Research Report: How Hyperliquid's HIP-4 Upgrade Changes the Landscape of Prediction Markets?

§ 01 Executive Snapshot

• What: Hyperliquid's HIP-4 upgrade introduces a new prediction market model, expanding its offerings in the financial landscape.
• Who: Hyperliquid, Polymarket, Kalshi, and their respective user bases.
• Why it matters: This upgrade positions Hyperliquid to compete effectively within the growing prediction market sector, which has seen substantial trading volumes recently.

§ 02 Key Developments

• HIP-4 officially launched on the Hyperliquid mainnet on May 2, 2026, following its announcement on February 2.
• As of May 25, HIP-4 has captured 20.1% of the total 24-hour trading volume in the BTC prediction market, with $2.38 million compared to Polymarket's $9.46 million.
• The historical cumulative trading volume of prediction markets surpassed $150 billion in April, with Kalshi recording $14.81 billion and Polymarket at $9.01 billion.

§ 03 Strategic Context

• Prediction markets have emerged as significant financial primitives for hedgers and speculators, with a notable increase in trading volume over the past two years.
• The competitive landscape includes established platforms like Polymarket and Kalshi, which have developed consumer-friendly interfaces, contrasting with Hyperliquid's focus on crypto-native traders.

§ 04 Strategic Implications

• Immediate market consequences include Hyperliquid's potential to disrupt existing prediction market dynamics and attract a niche user base focused on crypto trading.
• Long-term implications may involve a shift towards a unified trading model across prediction markets, as all platforms strive to integrate diverse financial instruments.

§ 05 Risks & Constraints

• Potential regulatory hurdles could arise as Hyperliquid and its competitors navigate compliance in the evolving prediction market landscape.
• Competition from established players like Polymarket and Kalshi, who are also adapting their offerings, poses a challenge to Hyperliquid's market penetration.

§ 06 Watchlist / Forward Signals

• Key upcoming milestones include the June 17 settlement for the Federal Reserve's interest rate decision market and the June 10 settlement for the May CPI year-on-year growth rate.
• Future developments to monitor include how HIP-4's performance influences market shares and whether it can sustain its initial trading volume growth against competitors.