The cryptocurrency HYPE experienced a surge, climbing as much as 20% on February 2nd, 2026, following the Hyperliquid team's announcement of its plans to introduce prediction markets. This new initiative, known as HIP-4, aims to add "outcome" trading to the decentralized exchange (DEX), allowing for prediction markets and options-inspired derivatives.

HIP-4 introduces "Outcomes," fully collateralized contracts that settle within a fixed range. These contracts are designed to support prediction markets, insurance-like products, and other bounded services. Unlike leveraged perpetual contracts, Outcomes operate on a "pay-as-you-go" principle, eliminating the risk of liquidation for traders. The nonlinear settlement mechanism provides traders with flexibility similar to options, allowing for sophisticated hedging strategies.

Hyperliquid's expansion into prediction markets is seen as a strategic move to capture a share of this rapidly growing market. The exchange's native token, HYPE, reflected this positive sentiment, initially rising over 10% to around $33.68 before stabilizing near $33.00. HYPE's price has shown considerable volatility, with a 24-hour trading volume of $897 million.

The implementation of HIP-4 is currently in the testing phase on the testnet. Once the technical development is complete and user feedback is evaluated, Hyperliquid plans to deploy canonical markets based on objective settlement sources. These markets will be represented in USDH, Hyperliquid's native stablecoin.

Analysts view Hyperliquid's move into prediction markets as a potential catalyst for increased adoption. By offering both leveraged and non-leveraged trading options, the DEX can attract a broader range of users. Some analysts suggest that Hyperliquid is currently undervalued compared to other platforms in the prediction market space.

Hyperliquid is a Layer 1 blockchain designed for decentralized finance (DeFi). Its architecture allows it to process transactions with sub-second latency and handle a high volume of orders per second. The platform combines the speed of traditional exchanges with the transparency of blockchain technology.