HIP-4: Outcome markets

Overview

Outcomes are fully collateralized contracts that settle within a fixed range. They are a general-purpose primitive that are useful for applications such as prediction markets and bounded options-like instruments.

Outcomes bring non-linearity, dated contracts, and an alternative form of derivative trading that does not involve leverage or liquidations. The outcome primitive expands the expressivity of HyperCore, while composing with other primitives such as portfolio margin and the HyperEVM.

The first market is a recurring binary outcome that settles daily at 06:00 UTC to the BTC mark price on HyperCore mark prices. See the spec here. Multi-outcome markets will be supported but not part of the initial mainnet release. Additional features and markets will be rolled out in stages.

The outcome trading API is similar to spot, with key differences highlighted here: https://hyperliquid.gitbook.io/hyperliquid-docs/for-developers/api/asset-ids.

Mechanics

Each outcome market consists of two sides, each with a token. Usually the tokens are labeled Yes and No. Settlement automatically converts either Yes to 1 quote token and No to 0 quote tokens, or vice versa.

The order books of Yes and No tokens for the same outcome are merged to share liquidity. For example, an order to buy Yes at price p is equivalent to an order to Sell No at price 1-p. Under the merged book, price-time priority generalizes to price-side-time priority. In other words, for orders at the same merged price level, the resting sell orders are sorted before all resting buy dual orders. Advanced users may also manually split and merge outcomes to convert between primary and dual balances. See here for API examples.

Most operations abstract the dual book's liquidity from the user's perspective. However, there are a few examples whose ergonomics will be improved on a future network upgrade. For example, historical orders can return the primary and dual orders separately if a user sends an order that both matches and rests on the book.

Questions are collections of outcomes that where exactly one outcome will settle to Yes, and all others will settle to No. Each outcome trades on a separate order book, but are linked by negate and merge operations. See here for API examples. In other words, users with No shares on different outcomes of the same question can redeem quote tokens before the underlying outcomes settle.

Fees are currently zero for outcome markets for initial testing. However, builder codes do work the same as normal spot trading, where builders earn builder fees on sell orders that specify their builder code.