> ## Documentation index
> Fetch the complete documentation index at: https://hypertake.net/llms.txt
> Use this file to discover all available pages before exploring further.

# What are prediction markets?

> How Hyperliquid's HIP-4 prediction markets work: Yes and No shares, prices as chances and a $1 payout

Source: https://hypertake.net/docs/outcomes/prediction-markets · Last updated: 2026-10-17

A **prediction market** is a market on a question with a definite answer, such as "Will BTC be above $81,000 at 08:00 UTC?". You buy Yes or No shares; each share on the side that turns out right pays **$1**, each share on the wrong side pays **$0**. On Hyperliquid these markets are called **outcomes**, added by the HIP-4 upgrade, and Hypertake is an interface for trading them.

## How it works in four lines

1. **A question with a deadline.** Every market fixes, before it opens, what counts as Yes, when it's measured and what source decides it.
2. **Two sides that add up to $1.** A Yes share and a No share together always settle to exactly $1, so their prices sit between 0¢ and 100¢.
3. **The price is the crowd's chance.** If Yes trades at 40¢, the market as a whole is pricing a roughly 40% chance of Yes. See [Price is the chance](https://hypertake.net/docs/outcomes/price-is-the-chance.md).
4. **Settlement pays the winners.** After the deadline, Hyperliquid converts every winning share to $1 of USDC in its holder's balance, with nothing to claim.

**Example: Sam buys Yes at 40¢**
- The market: "BTC above $81,000 at 08:00 UTC?". Yes costs 40¢, No costs 61¢.
- Sam thinks BTC will finish above $81,000. He spends $10 on Yes and gets 25 shares at 40¢.
- At 08:00 BTC settles at $81,240. Yes wins: his 25 shares pay $25, a $15 profit before Hyperliquid's settlement fee.
- Had BTC settled at $80,900, No would have won and Sam's shares would pay $0: he'd lose the $10.

Flow: $10 → 25 Yes shares at 40¢ → close at 08:00 → $25 (Yes wins) or $0 (No wins)

## Who is on the other side?

Other traders. There is no bookmaker setting odds: prices come from buy and sell orders on Hyperliquid's order book, and Hypertake doesn't trade against you. When you buy Yes at 40¢, someone else is effectively buying No at 60¢; together the two of you put up the $1 that the winning side collects.

**Every share is fully backed**

Sam pays 40¢ (for 1 Yes share) → Another trader pays 60¢ (for 1 No share) → $1.00 held (on Hyperliquid until settlement) → Winning side gets $1 (losing side gets $0)

Because each Yes is matched by a No, the $1 that a winning share pays already exists. Nothing is borrowed, so there's no leverage and no liquidation.

Hyperliquid joins the two sides into one order book: in its own words, "an order to buy Yes at price `p` is equivalent to an order to sell No at price `1-p`" ([HIP-4](https://hyperliquid.gitbook.io/hyperliquid-docs/hyperliquid-improvement-proposals-hips/hip-4-outcome-markets)). That's why a market's Yes and No prices always mirror each other.

## What makes HIP-4 markets different

- **On-chain order books**: Orders are matched by Hyperliquid's own engine and settled on its chain. Trading costs no gas.
- **Fully collateralised**: In Hyperliquid's words, outcomes are "fully collateralized contracts that settle within a fixed range", with no leverage or liquidations. The most you can lose on a share is what you paid for it, plus fees.
- **Paid in USDC**: Prices and payouts are in USDC, from the same balance you use for perps. See [Unified account](https://hypertake.net/docs/money/unified-account.md).
- **Rules fixed in advance**: Each market is created from a template whose wording Hyperliquid's validators vote on, filled in with its strike, time and settlement source. See [How markets settle](https://hypertake.net/docs/outcomes/settlement.md).
- **Fees on the way out**: Hyperliquid charges outcome fees when you close or settle a position, not when you open one ([fees](https://hyperliquid.gitbook.io/hyperliquid-docs/trading/fees)). Hypertake charges nothing on a buy and 1% on a sell. See [Fees](https://hypertake.net/docs/fees.md).

## Three ways to finish a trade

| You can… | What happens | Guide |
| --- | --- | --- |
| **Sell before the close** | Your shares sell to buyers on the book at the current bid, so you lock in a profit or cut a loss early. | [Selling shares](https://hypertake.net/docs/outcomes/selling.md) |
| **Set a take profit** | A resting sell of all your shares at a price you choose, filled by Hyperliquid when a buyer pays it, even with Hypertake closed. | [Take profit](https://hypertake.net/docs/outcomes/take-profit.md) |
| **Hold to settlement** | Do nothing. After the close, each winning share pays $1 to your balance and each losing share $0. | [Payouts](https://hypertake.net/docs/outcomes/payouts.md) |

> **Warning: You can lose what you put in**
> A share on the losing side pays nothing. Prices can swing hard in the last minutes before a close, and a thin book can leave you without a buyer. Read [Risks](https://hypertake.net/docs/risks.md) before you trade.

### Is this betting?

It works like a bet on an outcome, but you trade with other people on an order book at prices they set, and you can sell your position before the result is known. Whether prediction markets are allowed where you live is for you to check.

### Do I need HYPE or any special token?

No. Outcome markets are priced and paid in USDC. You need USDC in your Hyperliquid balance; see [Deposits](https://hypertake.net/docs/money/deposit.md).

### Can I lose more than I put in?

No. There's no leverage and no margin call: the most you can lose on a position is what you paid for it, plus any fees.

### Is Hypertake the same as Polymarket?

No. Polymarket is a separate prediction market on a different chain. Hypertake trades Hyperliquid's HIP-4 markets; on some markets it also shows Polymarket's own short-term odds as a read-only reference, and nothing is traded on Polymarket.

### Who creates the markets?

A few recurring markets are deployed and settled by Hyperliquid's protocol itself. Most are created by approved deployers, who stake HYPE and must settle each market by its template's rules. See [How markets settle](https://hypertake.net/docs/outcomes/settlement.md).

- [Price is the chance](https://hypertake.net/docs/outcomes/price-is-the-chance.md): How to read 40¢, the spread, and estimates.
- [Buying shares](https://hypertake.net/docs/outcomes/buying.md): Your first order, step by step.