How to hedge a Hyperliquid perp with HIP-4 outcome markets

Contents

Why hedge a perp with an outcome market?#

Because the protection has a fixed cost and can't be taken away from you mid-move. HIP-4 outcomes are fully collateralized, with no leverage or liquidations, so the most a hedge can cost is what you paid for it. And it trades on HyperCore, the same exchange as your perp, often settling on the same mark price. What Hyperliquid is explains how HyperCore runs both.

Compare the usual tools:

• A stop-loss closes your position, in a fast market at whatever the book offers, and leaves you out if BTC bounces.
• A short cancels your upside along with your downside, and needs margin with a liquidation price of its own.
• An outcome keeps your perp and its upside open for a premium you know on day one. Like insurance, you pay it even if nothing happens.

Which HIP-4 markets can hedge a perp?#

Price markets on the asset you hold. They come in two kinds.

Recurring outcomes are deployed and settled by the protocol. Hyperliquid's contract specifications define a daily BTC binary that settles Yes if the interpolated mark price is at or above its target, and a three-bucket question: below P1, P1 to below P2, and P2 or above. As of 11 November 2026 at 03:05 UTC, the binary asked whether BTC would be at or above 74,798 at 06:00 UTC, with BTC's mark at 73,682. The bucket books had bids near 0.01 and asks near 0.99: no usable price. Both reset daily, so they suit a hedge for hours, not weeks.

Deployer markets are listed by staked deployers. At about the same time, the Totalis markets API listed 37 BTC price markets. They included binaries at fixed strikes up to five days out, and touch markets that pay Yes if BTC reaches a level any time before 1 December. Each has its own settlement rule; bitcoin price prediction markets sets the families side by side.

What HIP-4 is covers how these markets settle, and bounded options on HIP-4 covers scalar markets, which pay by how far a price moved.

How do you hedge a long perp?#

Buy Yes on a market that pays if BTC falls to a level that would hurt. In this worked example the position is hypothetical; prices come from Hyperliquid's public info API (BTC mark price and the outcome's order book) as of 11 November 2026, 03:05 UTC, before fees.

The position. Long 0.1 BTC at 73,682 with 5x isolated leverage: 7,368.20 notional and 1,473.64 margin. BTC's maximum leverage is 40x, so maintenance margin is 1.25%. With the formula on Hyperliquid's liquidations page, liquidation lands roughly at 59,700, before funding and fees. Rather than hedge liquidation itself, pick the loss you care about: a fall to 65,000 costs 868.20.

The hedge. Yes on "BTC touches 65000 by Dec 1, 2026 00:00 UTC". Its rules pay Yes once the 3-second TWAP of the BTC perp's mark price reaches 65,000, and it can settle as soon as that happens. Buying 870 Yes shares walked the book from 0.21068 to 0.21292. That cost 185.02 USDC, an average of 0.2127.

In the first row, a loss of 868 became one of about 183. The last row shows the gap the hedge leaves. A touch market suits a perp because liquidation also happens on the path, the moment the mark crosses your price, not at a set time.

How do you hedge a short perp?#

Buy Yes on a market that pays if BTC rises to the level you fear. Take a short of 0.1 BTC at 73,682 with 5x leverage. By the same formula, it liquidates roughly at 87,300, and it loses 631.80 if BTC reaches 80,000. At the same snapshot, 632 Yes shares on "BTC touches 80000 by Dec 1" cost 214.81, an average of 0.3399.

A further strike is cheaper and covers less: 1,132 Yes shares on the 85,000 touch market, sized to the 1,131.80 loss there, cost 93.20 (an average of 0.0823) but pay nothing on a rise that stops short. On fixed-strike binaries, a short hedges with Yes on "above", while a long hedges with No.

How much should you hedge?#

Each winning share pays 1 USDC, and its price is your cost per share. So:

Shares = position size × distance from entry to strike

Cost = shares × average fill price

For the long above, that is 0.1 × (73,682 − 65,000) = 868.20, rounded up to 870 shares, at 0.2127 for 185.02. It's the same arithmetic as hedging the Fed rate decision, applied to a price level. Two choices change the number:

• Hedge ratio. Half the shares cost about half: 435 shares on the 65,000 market cost 92.40 and cover half the loss.
• What you'll do at the strike. If you close the perp when the strike hits, size to the loss at the strike. If you'd hold toward liquidation, the loss keeps growing past the payout. At 5x the most you can lose is the 1,473.64 margin, so 1,474 shares would cover it, and would leave you a profit if BTC touched 65,000 and bounced.

Pick a strike between today's price and your liquidation price, so the hedge pays before the exchange closes your position. A strike past liquidation pays after the damage is done.

Why can a hedge still lose money?#

• Strike gap. A move that stops short of the strike pays nothing. In the example, a fall to 66,000 lost 953.22 including the hedge.
• Timing. The touch markets end on 1 December at 00:00 UTC and the daily binaries settle at 06:00 UTC, but a perp has no expiry and liquidation can come at any moment. Roll a hedge that ends before your position.
• Where the payout lands. The USDC goes to the account that holds the outcome. If that isn't the account holding your perp, it adds no margin until you move it.
• Mark price vs the market's rule. Liquidations use Hyperliquid's mark price. Recurring binaries use the mark interpolated at settlement time, and the touch markets a 3-second TWAP of the mark. On 11 November, one deployer listed BTC binaries on a 90-second TWAP of Pyth's BTC/USD price and others on a 90-second TWAP of Hyperliquid perp trades, while another used 180 to 600-second averages of the perp's 1-minute candles. A brief wick can liquidate you while a slower average never reaches the strike.
• "Above" vs "at or above". Recurring binaries settle Yes at or above the target, while the deployer binaries we checked say "above". If BTC settles exactly on the strike, the two pay differently.
• Fees. Perp takers pay 0.045% at Hyperliquid's base tier. On HIP-4, Hyperliquid's docs conflict: the HIP-4 page says outcome fees are currently zero for initial testing, while the fees page says outcome trades pay on close or settlement, not on open. Singles in the Totalis app usually add a 0.1% builder fee, per the Totalis limits and fees page. Hyperliquid fees sets the schedules side by side.
• Thin books. The 870 shares above walked three price levels, and a bigger hedge walks further. Some books, like the bucket question at our snapshot, show no usable price.

Can a Combo hedge a perp?#

Mostly no. A Combo joins 2 to 5 outcomes into one position that pays in full only if every leg wins, so it protects you only when every leg happens. A hedge should pay whenever the loss happens; a single does.

A Combo can fit when your loss needs two linked events at once. Say you hold long BTC and long ETH perps and can ride out either falling alone, but not both. A Combo of a BTC downside leg and an ETH downside leg pays only in that joint scenario, priced by a maker as one event.

The Combo trading guide sets the rules. A Combo holds one leg per question, so two buckets of the same BTC question can't share one. A market joins Combos only within 7 days of its event and with a price on both sides; at our snapshot the touch markets were outside that window. Combos sit in the Totalis vault on HyperEVM and cost 1.5% of stake on entry plus 1% of profit.

How do you do this on Totalis?#

Hedges are singles, which go straight to the HyperCore order book. What Totalis is covers singles and Combos in full.

1. Write down your perp. Note its size, its entry and the liquidation price Hyperliquid shows.
2. Sign up with an invite code. Totalis is not available to US persons or anyone in the US.
3. Open the BTC markets on Totalis. Pick one whose strike sits between the price and your liquidation, and whose end date covers how long you'll hold. Read its rules.
4. Buy the shares as a single. Check the book's depth before a large order.
5. Close or roll when you close the perp or the market nears its end.

This guide is educational, not financial advice.

About the author#

Turk is a founding engineer at Totalis, the prediction market app on Hyperliquid.

Sources and further reading#

• Hyperliquid, HIP-4 outcome markets, accessed 2026-11-11
• Hyperliquid, contract specifications: recurring outcomes, accessed 2026-11-11
• Hyperliquid, liquidations, accessed 2026-11-11
• Hyperliquid, fees, accessed 2026-11-11
• Totalis, limits and fees, accessed 2026-11-11
• Totalis, public markets API, accessed 2026-11-11

Related: how to trade prediction markets on Hyperliquid, the best HIP-4 apps.

FAQ#

Can you lose more than you pay for a HIP-4 hedge?#

No. HIP-4 outcomes are fully collateralized, with no leverage or liquidations. The most you can lose on the hedge is what you paid for the shares, plus fees.

Does a HIP-4 hedge stop my perp being liquidated?#

No. It pays USDC to the account holding the outcome. Your perp still liquidates at its own price unless you add margin or close it.

Is a touch market or a binary better for hedging a perp?#

For most perps, a touch market. It pays if the price reaches a level any time before it ends, which matches how liquidation works. A binary pays on the price at one moment.

Can you hedge ETH, SOL or HYPE perps the same way?#

Yes, where a market exists. As of 11 November 2026, the Totalis markets API also listed ETH, SOL and HYPE price markets; check each one's rule and depth first.