Four authors submitted Hyperliquid Improvement Proposal 4 (HIP-4) on Sept. 16, introducing “Event Perpetuals” to enable prediction markets on the platform’s order book infrastructure.
The proposal lists Kalshi’s head of crypto, John Wang, among its four co-authors. The text addresses limitations in Hyperliquid’s existing HIP-3 builder-deployed perpetuals for prediction market use cases.
The current infrastructure requires continuous oracle updates and limits price changes to 1% per tick, making binary event resolution impractical.
Event Perpetuals’ goal is to eliminate continuous oracle feeds and funding payments, with prices determined entirely by trading activity. The contracts settle with binary payoffs reflecting market-implied probabilities between 0 and 1, resolving instantly to either outcome upon event conclusion.
The proposal demonstrates current limitations through NFL betting scenarios, where sportsbook odds update as step functions during games.
Under HIP-3 constraints, settling a market from neutral (0.5) to zero probability would require 50 minutes due to tick limitations, creating arbitrage opportunities for informed traders.
The attached oracle settling chart illustrates the asymmetric resolution problem, showing rapid settlement toward 1.0 but gradual decay toward 0, highlighting infrastructure challenges that motivated the new proposal.
Oracle price settlement shows asymmetric timing, with upward movement from 0.5 to 1.0 occurring rapidly while downward settlement requires approximately 50 minutes. Image: HIP-4Auction mechanism for fair price discovery
Event Perpetuals launch through single-price clearing auctions lasting approximately 15 minutes.
The system evaluates all candidate prices to maximize matched volume, with tie-breaking favoring minimal imbalance and prices closest to 50%.
The clearing mechanism diagram shows bid and ask distributions across price levels, with the system calculating optimal clearing prices that balance supply and demand.
Auction mechanism diagram shows bid-ask order matching across price levels, with optimal clearing price of $0.50 maximizing matched volume at 270 contracts. Image: HIP-4Orders execute uniformly at the determined opening price before continuous trading begins.
Builders deploy markets by staking 1 million HYPE tokens and can charge up to 50% additional fees above base rates.
The infrastructure supports market recycling, allowing new events to replace resolved markets within existing slots.
Event Perpetuals operate with 1x isolated margin only, requiring buyers to deposit collateral equal to their maximum potential loss.
The proposal concludes that trading occurs within price bands of 0.001 to 0.999, with resolution oracles posting final values during specified challenge windows for dispute resolution.
Source: https://cryptoslate.com/kalshi-exec-submits-hyperliquid-improvement-proposal-to-solve-prediction-market-deployment-challenges/
