---
type: claim
domain: internet-finance
description: The prediction market landscape has structurally segmented into DCM-regulated platforms (Kalshi/Polymarket US) serving US users with fees, offshore decentralized platforms (Hyperliquid HIP-4) capturing non-US volume with zero fees and token ownership, and on-chain governance markets (MetaDAO) operating in a separate functional category with no sports/election exposure
confidence: likely
source: Unchained Crypto, Hyperliquid HIP-4 announcement, Kalshi-Hyperliquid co-authorship
created: 2026-05-01
title: Hyperliquid HIP-4 offshore zero-fee prediction markets formalize the three-way category split between DCM-regulated platforms, offshore decentralized event contracts, and on-chain governance markets
agent: rio
sourced_from: internet-finance/2026-04-30-hyperliquid-hip4-zero-fee-prediction-market-challenge.md
scope: structural
sourcer: Unchained Crypto
supports: ["dcm-registered-prediction-market-platforms-converging-on-perpetual-futures-marks-structural-repositioning-as-full-spectrum-derivatives-exchanges-creating-three-way-category-split", "metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism", "prediction-market-platform-competition-decided-by-ownership-alignment-not-product-features"]
related: ["dcm-registered-prediction-market-platforms-converging-on-perpetual-futures-marks-structural-repositioning-as-full-spectrum-derivatives-exchanges-creating-three-way-category-split", "metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism", "cftc-anprm-scope-excludes-governance-markets-through-dcm-external-event-framing", "kalshi-hyperliquid-hip4-partnership-creates-offshore-decentralized-prediction-market-regulatory-arbitrage-model", "prediction-market-platform-competition-decided-by-ownership-alignment-not-product-features", "polymarket", "kalshi", "hyperliquid-hip4-offshore-zero-fee-prediction-markets-create-three-way-category-split", "kalshi-hyperliquid-regulatory-arbitrage-partnership-licenses-dcm-market-design-to-offshore-platforms"]

### Auto-enrichment (near-duplicate conversion, similarity=1.00)
*Source: PR #10460 — "hyperliquid hip4 offshore zero fee prediction markets create three way category split"*
*Auto-converted by substantive fixer. Review: revert if this evidence doesn't belong here.*

## Supporting Evidence

**Source:** AI Invest, May 4, 2026

HIP-4 launched May 2, 2026 with first event contract on May 4 generating $6.2M Day 1 volume (6.05M contracts). Initial markets are daily BTC price threshold binary bets with zero fees to open positions. Kalshi partnership confirmed, creating the offshore-decentralized regulatory arbitrage model alongside Kalshi's DCM-registered onshore platform and Polymarket's offshore centralized model.

---

# Hyperliquid HIP-4 offshore zero-fee prediction markets formalize the three-way category split between DCM-regulated platforms, offshore decentralized event contracts, and on-chain governance markets

Hyperliquid's HIP-4 announcement makes the three-way prediction market split structurally explicit. HIP-4 is described as 'outcome contracts' — event-based derivatives settling 0 or 1 on external events (sports, elections, crypto) — not governance markets. The platform blocks US users, has no DCM registration, and competes directly with Polymarket/Kalshi using zero fees and HYPE token ownership as competitive advantages. The market design was co-authored by Kalshi's Head of Crypto (John Wang), creating a regulatory arbitrage partnership where Kalshi provides DCM-developed market design expertise while Hyperliquid provides offshore infrastructure to capture non-US markets Kalshi cannot access. This creates three distinct categories: (1) DCM-regulated platforms (Kalshi + Polymarket US) serving US users with regulatory protection but fees, (2) offshore decentralized platforms (Hyperliquid HIP-4) capturing non-US volume with zero fees and token ownership models, (3) on-chain governance markets (MetaDAO) operating in a completely separate functional category with TWAP settlement on endogenous governance decisions, not external event contracts. The HIP-4 coverage is entirely focused on sports/election event contracts — MetaDAO is invisible in this competitive analysis, confirming that governance markets and event contracts are not competing in the same category despite using similar conditional market technology.


## Supporting Evidence

**Source:** CoinDesk / Unchained Crypto / The Information, April 21-27 2026

Kalshi and Polymarket launched perpetual futures products within 6 days of each other (April 21-27, 2026), confirming the three-way category split: regulated DCMs becoming full-spectrum derivatives exchanges (Kalshi/Polymarket entering $61.7T perps market), offshore decentralized platforms (Hyperliquid HIP-4) targeting Asian crypto-native traders, and on-chain governance markets (MetaDAO) as structurally distinct category focused on futarchy governance. The speed of the pivot (6-day launch window) suggests coordinated monitoring of CFTC's margin trading approval and pre-staged product launches.


## Extending Evidence

**Source:** Arthur Hayes, CoinDesk April 30 2026

Hayes provides specific competitive positioning data: HIP-4 will charge zero fees to open positions (fees only on close/settlement), with HYPE-aligned quote token users receiving 20% lower taker fees and 50% higher maker rebates than standard. This creates a HYPE-staking incentive layer on top of prediction market participation, differentiating from Polymarket's up-to-2% winning bet fees and Kalshi's DCM-regulated structure.


## Extending Evidence

**Source:** Bitcoin News / CoinSpectator / CryptoTimes, May 2, 2026

HIP-4 launched on mainnet May 2, 2026 with first live contract 'BTC above 78213 on May 3 at 8:00 AM?' achieving $59,500 in 24-hour volume and $84,600 open interest on Day 1. Technical architecture runs natively on HyperCore with ~200,000 orders-per-second throughput, unified portfolio margin with perps/spot, and zero fees on open/mint (fees only on close/burn/settlement). US users restricted, limiting direct competition with Kalshi's regulated US business.


## Extending Evidence

**Source:** Bitcoin.com News / CryptoTimes / Bitget News / CoinGecko, May 2-3, 2026

HIP-4 launched May 2, 2026 with first market 'BTC above 78213 on May 3 at 8:00 AM?' achieving $59,500 Day 1 volume and $84,600 open interest. Phase 1 deliberately restricted to crypto price threshold binaries. Planned expansion to politics, sports, macro data, crypto events, entertainment with permissionless deployment in Phase 2+. John Wang (Kalshi head of crypto) co-authored HIP-4, confirming strategic hedge thesis.


## Extending Evidence

**Source:** CryptoAdventure, May 2 2026

HIP-4 launched May 2, 2026 with $6M Day 1 notional volume (6.05M contracts), capturing 0.7% of prediction market volume against Kalshi's 546M contracts and Polymarket's 190M contracts on the same day. This corrects prior data showing $59.5K Day 1 volume — actual figure is 100x higher. April 2026 total prediction market volume hit record $29.8B (up from $26.5B in March), with Kalshi at $14.8B/month and Polymarket at $9B/month.


## Extending Evidence

**Source:** Cryptopolitan, May 4, 2026

HIP-4 Day 2 (May 3, 2026) set a Hyperliquid record with 2,441 new original wallets, suggesting the prediction market launch is driving user acquisition beyond organic platform growth. This is the highest single-day new wallet count in Hyperliquid's history, occurring immediately after the HIP-4 mainnet launch on May 2, 2026.
