According to Arthur Hayes, co-founder of BitMEX and CIO of Maelstrom fund, Hyperliquid's foray into prediction markets is not just about reducing trading costs, but also about capturing the upside. Hyperliquid's zero-fee-to-open model for event trading under HIP-4 is expected to give it a competitive edge.
However, Hayes argues that the real differentiator is the HYPE token, which enables users to benefit from platform activity. This sets Hyperliquid apart from competitors like Polymarket and Kalshi, which do not offer similar token-based incentives. With a large user base, lower trading fees, and robust technology infrastructure, Hyperliquid's HIP-4 is poised to become a dominant player in the prediction market space. The HYPE token has a fully diluted valuation of around $38 billion, compared to Polymarket's implied valuation of $14 billion.
While Polymarket is expected to launch its own token, its geographical constraints, particularly in Asia, may hinder its growth. In contrast, Hyperliquid faces no equivalent constraints and has a user base that skews towards Asia, where crypto-native trading is already well-established.
The contrast with Kalshi, a CFTC-regulated exchange, is also notable, as its model is built around compliance and licensing, rather than token incentives, limiting users' access to the platform's upside.