From perps to prediction markets: understanding HIP-4 and Hyperliquid’s next phase
How Hyperliquid is evolving from a trading venue into programmable market infrastructure
Debbie Soon
|May 18, 2026
Hyperliquid has already established itself as one of the most important venues in onchain trading. But increasingly, the ecosystem is expanding beyond perpetual futures alone.
At Privy, we’ve seen this evolution firsthand through the teams building on Hyperliquid, from trading infrastructure to new consumer market experiences.
At the start of the month, Hyperliquid introduced HIP-4, a proposal enabling permissionless prediction and outcome markets on the network using a quote asset model. Initially, those markets were expected to use USDH, Hyperliquid’s network-aligned stablecoin launched by Native Markets in September 2025.
USDH also pioneered Hyperliquid’s Aligned Quote Asset (AQA) model, where reserve yield generated from the stablecoin supply is shared back with the protocol itself rather than retained entirely by the issuer. That structure aligned stablecoin growth directly with ecosystem growth, positioning USDH to become a core piece of Hyperliquid’s expanding market infrastructure.
Last week, Coinbase announced plans to become the official treasury deployer for USDC on Hyperliquid under the next iteration of that framework, AQAv2, with USDC expected to become the ecosystem’s primary aligned quote asset over the coming months.
Taken together, these developments signal something much larger than a new market category or stablecoin transition. They represent Hyperliquid’s evolution from a single trading product into a broader financial ecosystem, one now attracting institutional participation, regulatory attention, and entirely new classes of applications.
The rise of the Aligned Quote Asset (AQA) model
When Native Markets secured the USDH ticker through Hyperliquid governance last year, defeating proposals from players including Paxos and Ethena, it signaled that the ecosystem was prioritizing alignment over simply defaulting to incumbent stablecoin issuers.
USDH also introduced the Aligned Quote Asset (AQA) model, where reserve yield generated from stablecoin supply is shared back with the protocol rather than retained entirely by the issuer.
That structure changed the incentives around stablecoin growth on Hyperliquid. Instead of value accruing solely to the issuer, increased adoption and trading activity could directly benefit the broader ecosystem. USDH was also expected to become the primary quote asset for HIP-4 outcome markets, positioning it at the center of Hyperliquid’s expansion into prediction and event-based markets.
This week, however, the ecosystem entered a new phase when Coinbase announced plans to become the official treasury deployer for USDC under AQAv2. With this move, USDC is expected to become Hyperliquid’s primary aligned quote asset over the coming months.
The institutionalization of onchain markets
This transition goes far beyond stablecoin branding. Hyperliquid is no longer operating at the edge of crypto experimentation. It has reached a scale where ecosystem participation is becoming strategically important for major industry players.
Under AQAv2, Coinbase will share 90% of reserve yield generated from USDC supply on Hyperliquid back to the protocol, creating a direct link between stablecoin growth and ecosystem value creation.
This shift also arrives at a moment when onchain markets are increasingly entering serious policy conversations. Last week, Hyperliquid founder Jeff Yan shared that members of the Hyperliquid team spent time in Washington meeting with policymakers during the advancement of the Clarity Act, discussing both Hyperliquid itself and the broader future of onchain derivatives markets in the United States.
Coinbase’s involvement likely accelerates that institutional shift. As the most regulator-aligned crypto company in the US, Coinbase becoming the treasury deployer for Hyperliquid materially changes how the ecosystem may be perceived by policymakers and institutions alike.
None of this guarantees regulatory approval. But it does signal that Hyperliquid is starting to operate within serious discussions around market structure, consumer access, and the future of internet-native financial infrastructure.
HIP-4 and the future of programmable markets
While much of the attention this week focused on stablecoins and ecosystem economics, HIP-4 may ultimately prove just as important to Hyperliquid’s long-term trajectory.
At a technical level, HIP-4 enables permissionless prediction and outcome markets built directly on Hyperliquid infrastructure. Strategically, it signals the expansion of Hyperliquid from a trading venue into a more generalized market layer.
Prediction markets are one of the clearest examples of internet-native financial infrastructure, allowing users to trade probability and real-world outcomes in real time.
Election markets, sports markets, creator-driven markets, social forecasting, and eventually agentic coordination systems all point toward the same trend: markets are becoming programmable interfaces for coordination itself.
HIP-4 lowers the barrier for developers to build those experiences directly on Hyperliquid. As market infrastructure becomes increasingly permissionless, differentiation shifts upward into user experience, onboarding, distribution, and liquidity access.
What HIP-4 unlocks for builders
With HIP-4, the next generation of market applications may not look like traditional exchanges at all. Instead, markets become embedded directly into consumer products, social experiences, and entirely new financial interfaces.
We’re already seeing teams across the Privy ecosystem begin exploring these experiences. Outcome has already started building with HIP-4. In just 14 days, HIP-4 markets crossed $50 million in total volume on a single market, with Outcome contributing $1.5 million in volume, representing 3% of all HIP-4 activity.
Larger Hyperliquid-native platforms are beginning to move in this direction as well. Trade.xyz, which currently drives over $2 billion in daily volume, controls roughly 90% of all HIP-3 open interest on Hyperliquid, and has helped onboard more than 50,000 non-crypto traders onchain for the first time, is also preparing to build on HIP-4.
At Privy, we’re excited to support the teams building this next generation of market experiences on Hyperliquid. HIP-4 is an early signal of where onchain markets are heading: more programmable, more embedded, and more native to the internet itself. Start building on Hyperliquid with Privy today.
