đ Why Hyperliquid's HIP-4 is a big deal
valuable weekly insights
Theo launched a first-of-its-kind yield-bearing stablecoin powered by gold. Learn more about it here!
GM friends.
Hereâs what Iâll cover today:
đWhy Hyperliquidâs HIP-4 is a big deal
đ Crypto chart of the week
đď¸ The latest DeFi news
đWhy Hyperliquidâs HIP-4 is a big deal
Hyperliquid has finally released its highly anticipated HIP-4 upgrade.
And I think the significant hype around it is justified.
Iâve seen a lot of people on CT reduce HIP-4 to just prediction markets, but HIP-4 is actually way more interesting than that and could unlock many new use cases.
Let me break it down:
What does HIP-4 actually bring to Hyperliquid?
In short, HIP-4 introduces outcome markets on Hyperliquid.
Outcome markets are binary markets that resolve to either 0 or 1.
This includes prediction markets, but HIP-4 can support any type of event-based market with a yes/no outcome.
Any Hyperliquid ecosystem builder that stakes enough HYPE can deploy custom outcome markets on Hyperliquid. Thatâs one of the most interesting things about HIP-4, in my view, as market creation is permissionless, unlike on Polymarket/Kalshi.
Several Hyperliquid eco projects like Kinetiq are already building on top of HIP-4.
Kinetiq, the largest liquid staking HYPE protocol, is among the first to confirm it will launch a set of HIP-4 outcome markets.
New use cases beyond classic prediction markets
Prediction markets are the most obvious use case of HIP-4.
But in addition to this, HIP-4 could also be used to launch insurance products and a wide range of novel derivative products.
For instance, letâs say that a DeFi investment fund has $10 million lent on Aave.
To hedge against the risk of an exploit, they could create a HIP-4 market titled âWill Aave get exploited this year?â. Then they could buy 10 million YES shares at a low price, since the probability of this happening would likely be low.
In this way, even if Aave gets exploited, they will get their money back, as the capital they lose in Aave will be offset by the money they make on Hyperliquid.
Now, technically, could something similar also be done via a prediction market on Polymarket?
Yes. But HIP-4 has two big advantages that make it fundamentally different:
The creation of new outcome markets is permissionless - Anyone with enough HYPE staked will be able to create an outcome market for any event, while on Polymarket, users cannot directly create their own prediction markets
Cross-margin efficiency - The collateral used to buy shares in outcome markets on Hyperliquid can also be used as cross-margin collateral for trading perps
Letâs say you are bullish on BTC, but youâre worried it will crash if Trump decides to attack Cuba later this year.
Thanks to HIP-4, you could make money in both scenarios:
Use your collateral to long BTC on Hyperliquid
Simultaneously buy YES shares in a HIP-4 market like: âWill the US attack Cuba in 2026?â using the same collateral
On Polymarket, once you use your capital to participate in a prediction market, your money is stuck there until you close the position. On Hyperliquid, your capital can be deployed across perps, spot, and outcome markets simultaneously.
That unlocks an entirely new level of capital efficiency.
How do HYPE holders benefit from HIP-4?
First of all, HIP-4 markets obviously generate trading fees.
Thereâs no opening fee, but a trading fee is applied when closing a trade.
These fees are used for HYPE buybacks. But in addition to this, creating outcome markets with Hyperliquidâs HIP-4 requires staking 500k HYPE.
That means projects building on top of HIP-4 will either need to acquire large amounts of HYPE themselves or borrow it through platforms like Kinetiq.
Either way, demand for HYPE increases if HIP-4 adoption grows.
Overall, I am excited to see that HIP-4 went live. Itâs still early days for it, but I think it has a lot of room for growth.
Combining perps trading and outcome markets under the same portfolio margin is going to unlock new trading strategies that werenât possible before.
Together with Theo
The yield-bearing stablecoin powered by gold
Most DeFi yield opportunities rely on unsustainable incentives.
Theo is flipping this model with thUSD - the first yield-bearing stablecoin backed by a delta-neutral gold strategy that has just gone live.
Its strategy is designed to generate yield regardless of whether gold goes up or down.
Hereâs how it works:
thUSD can be bought with USDC
Under the hood, the collateral backing it is used to buy thGOLD (a tokenized yield-bearing gold product) and open a short hedge on CME gold futures
The yield then comes from two sources: thGOLD lending to established retailers, and the gold futures basis generated by the gold short hedge
What makes thUSD stand out is that, unlike other yield-bearing stablecoins, it is highly scalable as it is backed by gold - the worldâs deepest commodity market.
Those who participated in Theoâs pre-deposit program, which filled up in just 24h, can now claim their thUSD tokens here, as thUSD is now live for everyone.
If you wish to buy thUSD, you can do it directly on Theo website by swapping USDC to thUSD. You can also stake it there to start accruing yield.
Check out thUSD on Theoâs website today!
Chart of the week
Non-USD stablecoins are gaining significant traction
Crypto meme of the weekđ
The latest developments in DeFi
Hyperliquidâs HIP-4 upgrade went live
Telegram replaced the TON Foundation and became TONâs largest validator
Polymarket intern revealed that $POLY stakers will have lower trading fees
Ondo Perps announced plans to become the first perps DEX to accept tokenized equities as trading collateral
Trade[XYZ] launched pre-IPO perps powered by Hyperliquid
Ethenaâs Season 5 airdrop became available for claiming
Securitize partnered with Jump Trading and Jupiter to launch regulated trading for on-chain tokenized equities on Solana
Liminal introduced limUSD - a yield-bearing asset that automatically allocates capital across the highest Hyperliquidâs yield opportunities
Kelp DAO announced it is migrating the rsETH bridge from LayerZero to Chainlink
Apyx allocated 5% of its token supply to its S1 points program
MegaETH surpassed $600M in USDm issued on its blockchain
Jito announced JTX - its upcoming trading platform on Solana
Drift announced it will issue recovery tokens for the users affected by its exploit
Lighter rolled out V2 of its mobile trading app
Solstice scheduled its TGE for late May
Thatâs all for this week!
Until next time,
The DeFi Investor
Want to sponsor this newsletter?
Please send me a DM on Twitter (X). I have a sponsorship deck that I can send you.