According to Arthur Hayes, co-founder of BitMEX and CIO of Maelstrom fund, Hyperliquid's foray into prediction markets is not just about offering cheaper trades, but also about capturing the upside. Hyperliquid is set to introduce a zero-fee-to-open model for event trading under the Hyperliquid Improvement Proposal (HIP)-4.
Hayes believes that the real differentiator is Hyperliquid's exchange token, HYPE, which allows users to profit from platform activity. He notes that 'HIP-4 will quickly become a dominant prediction market due to Hyperliquid's large user base, lower trading fees, and robust tech infrastructure. Users who own the $HYPE token can directly benefit from their usage of HIP-4.' In contrast, Polymarket and Kalshi do not offer similar benefits to their users.
Polymarket is expected to launch its own token, $POLY, which is currently trading at around $14 on premarket perpetual contracts, implying a fully-diluted valuation of roughly $14 billion. HYPE, on the other hand, has a fully-diluted valuation of about $38 billion. The geographic distribution of users also plays a role, with Hyperliquid having a strong presence in Asia, where crypto-native trading is prevalent.
This is in contrast to Polymarket, which is rebuilding its US business and faces regulatory challenges in Asia. Kalshi, as a CFTC-regulated exchange, has a model built around compliance and licensing, rather than token incentives, which limits its ability to offer users a path to the upside of the platform.