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ResearchAfter the World Cup, HIP-4 awaits its "Election Day"

After once supporting nearly half of the platform's trading volume and then plunging by 90%, can Hyperliquid's prediction market regain momentum with the midterm elections? Written by: David Christopher Translated by: Saoirse, Foresight News Hyperliquid HIP-4's biggest success so far has come from World Cup-related trading. I did not anticipate this situation before. When HIP-4 was first launched, I suggested that Hyperliquid was not actually aiming to compete head-on with Polymarket or Kalshi. These kinds of outcome prediction markets are more like an extension tool of its trading system: providing daily cryptocurrency binary contracts to hedge perpetual contracts, build option-like risk exposures, and allow traders to keep all their positions unified within the Hyperliquid platform. But the subsequent development was unexpected. Hyperliquid successively launched markets related to the NBA Finals, single World Cup matches, and overall championship outcomes. These three types of markets (with the latter two contributing the vast majority of trading volume) together account for about 48% of HIP-4's total trading volume to date. After the peak of World Cup trading enthusiasm, the scale of related open contracts dropped by more than 90%. Objectively, this does not mean HIP-4 has failed; it just currently lacks event targets with trading heat. At this stage, the system is still in permissioned mode, where all trading markets need to be manually created and launched by validators. Most of the remaining markets on the platform are related to cryptocurrency price trends, with dismal trading volume, completely incomparable to the volume driven by sports events. Now Hyperliquid wants to break this limitation. On July 31, the permissionless HIP-4 deployment feature was launched on the testnet, clearing the way for third-party teams to independently create and operate outcome prediction markets, while also clarifying the conditions required for live operation. From May to August 2026, 47.8% of HIP-4's trading volume came from sports event markets, with the World Cup contributing the vast majority of sports trading volume, highlighting the platform's heavy reliance on major hot events to attract trading flow. HIP-4 operation mechanism under permissionless mode Note: Permissionless deployment ≠ unrestricted arbitrary market creation. According to the preliminary mainnet plan: validators first approve market templates, which are reusable standard frameworks defining market creation rules and settlement methods. Deployers then select approved templates to create specific trading markets, filling in trading topics, optional outcomes, expiration times, settlement criteria, and other information. For example, a political-related case (explained later why political markets are emphasized): an approved binary event template can build markets related to candidate election wins or losses. However, Hyperliquid has not yet disclosed the scope of template applicability, so it is currently unclear whether one template can cover Senate, House, governor elections; or if party control, seat numbers, multiple candidate races require separate templates. One thing is certain: deployers only need to call templates already approved by validators to generate markets, without applying for approval for each individual market. Consistent with the HIP-3 mechanism, deployers need to precisely define market rules and properly complete settlements. If major errors occur, validators have the right to penalize and confiscate their staked assets. The plan requires deployers to stake 500,000 HYPE (same standard as HIP-3), with a 6-month lock-up period; only after all markets under their name are settled can deployers withdraw their staked assets. Initially, each deployer can create up to 100 outcome targets; after market settlement, the quota can be reused. The platform plans to expand additional quotas through auctions later. Deployers can ultimately earn up to 50% of the trading fees from markets they create. After the World Cup craze, where is the next core opportunity? The most obvious target: the U.S. midterm elections. Prediction markets initially entered the public eye through political topics. Kalshi and Polymarket have long established comprehensive election trading panels covering congressional control, district races, total seats, and other markets, while HIP-4 has not yet launched any related targets. This is data from Kalshi's prediction market, with 92 days until the U.S. midterm elections. The market predicts a 54% chance the Republican Party will control the Senate. Currently, Democrats hold 49 seats, Republicans 47; 51 seats are needed to control the Senate. The map shows each state's probability of party victory. Whether third-party deployers can fill this gap depends on when permissionless HIP-4 launches on the mainnet. Historically: HIP-3 took 164 days from the first permissionless testnet minimal version launch to mainnet deployment; but from mainnet initial specification release, bug bounty program start to official launch was only 18 days. HIP-4's current progress is between these two: the mainnet preliminary architecture has been disclosed, the testnet deployment function is open, but the mainnet-level bug bounty program has not yet been launched, so the overall progress remains uncertain. If this system can launch on time, deployers will be able to build a complete election trading zone based on the midterm elections, rather than launching scattered independent election topic markets — provided validators simultaneously approve trading templates supporting election scenarios. If permissionless deployment misses the midterm election window, validators can still manually launch various midterm election markets. Even so, HIP-4 can still obtain trading flow, but it will miss its first major practical opportunity: proving to the market that external third-party deployers can continuously supply timely popular trading markets to the platform. The World Cup has already proven that Hyperliquid users are willing to participate in trading on major real-world events. At the same time, the rapid decline in trading volume after the World Cup exposed a pain point: without major events, the platform struggles to maintain activity. The current midterm election hype is a great opportunity for HIP-4. The platform can maintain market heat and promote permissionless deployment landing. In the coming weeks, this progress can be closely tracked.

ResearchPOAP shutdown, the end of an on-chain badge experiment

Passion ultimately could not overcome reality. Written by: Eric, Foresight News On the evening of August 3rd Beijing time, Isabel Gonzalez, co-founder of POAP, announced that after more than five years of operation, POAP will officially shut down its service. In fact, this farewell began as early as March this year, when POAP announced it would enter maintenance mode starting March 16th. New issuers could no longer create new badges through the platform interface, and existing functions would only be maintained without active development. A few months later, maintenance mode turned into a complete shutdown. The POAP badges already minted remain on-chain, and users can still view them through wallets and blockchain explorers, but the platform that carried countless on-chain memories for many will officially close. The story of POAP began at the ETHDenver hackathon in February 2019. At that time, founder Patricio Worthalter distributed the first batch of digital badges to attendees, who claimed an ERC-721 token via a link distributed on-site as proof of their attendance on-chain. The idea became a "business" in 2021. That year, the NFT market heated up, and POAP happened to catch the wave of community operations. Various offline conferences, online AMAs, and Discord community events began issuing their own POAPs. Collecting badges became an identity game for crypto natives, with the POAP list in wallets serving as an on-chain resume. Around this resume, many use cases emerged within the industry. Some events used holding specific POAPs as an entry requirement; without the corresponding badge, attendees could not enter venues or private channels. Some projects included users holding POAPs from certain events on whitelist lists for airdrops to filter genuine participants from opportunists. In DAO governance, some tried to use POAPs to measure community contribution, giving badge holders greater voting weight. At the peak of its popularity, even brands outside the crypto circle participated; Adidas, Porsche, Johnnie Walker, and Time magazine all used POAP for event marketing. In May 2021, BanklessDAO’s BANK token airdrop used previously issued Bankless POAP NFTs as one of the main criteria; in January 2022, the anti-MEV DEX Cow Swap included users holding CoW POAPs in its token airdrop list. In 2022, POAP secured a $10 million seed round led by Archetype, with Sapphire Sport, Collab+Currency, Protocol Labs, and others participating. By mid-2023, over 670 million POAPs had been minted by more than 37,000 issuers on the platform. Shortly after completing financing, from the second half of 2022, NFT trading volume and floor prices continued to decline. Although POAP existed as a commemorative credential and was not intended for speculation, it also lost the soil for community expansion. POAP’s long-term free minting for all users was a weapon during growth but became a burden during the plateau. In April 2023, the platform announced charging commercial clients, with Isabel Gonzalez candidly stating this was for the platform’s long-term sustainability. However, the charging transition failed to reverse the situation. In the March announcement, Gonzalez admitted the platform found a clear niche market but never found a way to survive within it. Just one month before POAP decided to enter maintenance mode, Espresso, with nearly $60 million in total funding, included users who obtained POAPs at various Espresso online and offline events in its airdrop targets. At that time, the team said they were shifting to build an open collectibles underlying standard, but the decision to shut down current services itself already indicated how low the ceiling of this niche market was. POAP is not the only "NFT experiment" to fall in recent years. Starbucks shut down its Odyssey membership program in March 2024 after less than a year and a half of operation. This project, based on Polygon-issued Journey Stamp NFT, remained in closed beta throughout, and the first $100 series didn’t even sell out. Participants complained bluntly that to collect badges they had to watch twenty-minute videos and take quizzes, while all they wanted was a cheap cup of coffee. Meta ended support for NFT features on Instagram and Facebook earlier, in March 2023. Reddit’s collectible avatars were once considered the most successful NFT case among big companies, with over 33 million minted, but monthly secondary market trading volume dropped to around $100,000 in 2024. The project lead left in early 2025. In September of the same year, Reddit announced the termination of its creator program; the avatar store closed in November, and the built-in Vault wallet was completely removed before New Year 2026. The problems of these projects are surprisingly similar. They all launched at the peak of the bull market sentiment, treating NFTs as an end rather than a tool, packaging things that could be done without blockchain as on-chain credentials. Starbucks’ loyalty program could be fully implemented with traditional points, and Reddit’s avatar collection wouldn’t lose user experience without NFTs. When market enthusiasm can no longer support operating costs, and symbolic meaning cannot be converted into real cash flow, shutdown is only a matter of time. POAP’s exit is particularly poignant because it was the least speculative among these projects. Its problem was never a bubble but a ceiling. Digital commemorative badges represent a real but narrow demand, too small to support the future of a company that raised tens of millions of dollars. The badges remain on-chain, but the people who issued them have left the stage. This is probably the most common ending in the crypto industry in recent years.

ResearchBitcoin Breaks into Real Estate: 250% Collateralization Rate, An Experiment of Integrating Crypto Assets into the Banking System

While banks queue up to enter the market, lawmakers issue urgent warnings. Written by: Boaz Sobrado Translated by: Chopper, Foresight News Twelve years ago, Vishal Garg personally experienced the difficulty of buying a home and has since been seeking solutions. "At that time, I realized I had to liquidate assets and pay capital gains tax to get cash to pay for the house. Why can't I just pledge assets instead of having to cash out?" said the CEO of Better Home & Finance in an interview. What’s more complicated is the transaction sequence. "What if you don’t get the house after making an offer? But real estate agents require you to have cash ready, or the seller won’t seriously consider your offer. Buyers are forced to sell assets and pay taxes first, only then do they know if their offer is accepted." In March this year, Better partnered with Coinbase to launch a solution. Borrowers pledge Bitcoin or USDC to obtain two loans: one conforming to Fannie Mae standards as a first lien mortgage; the other an independent private financing loan to cover the down payment, secured by crypto assets and accompanied by a second lien on the house. The Wall Street Journal reported that Fannie Mae accepted crypto-backed mortgages for the first time. In early June, a couple in their early 30s in Ann Arbor, Michigan, completed the first loan under this model. Better revealed that before the product’s official summer launch, the reservation list corresponded to a potential loan volume of about $250 million, with 41% of applicants lacking sufficient cash for the down payment. Regarding the funding recipients of these loan assets, Garg said, "These assets meet bank investment standards, and multiple banks are already lining up to acquire and take on these loans, including major leading U.S. banks." He believes this will become an important channel for digital assets to formally enter the banking system. Real Costs and Collateral Rules The loan-to-value ratio directly determines the product’s target users. Pledging Bitcoin requires a 250% collateral ratio; if the down payment loan is $100,000, $250,000 worth of Bitcoin must be pledged as collateral; the stable USDC collateral ratio is 125%. This product has no margin call mechanism; a drop in Bitcoin price does not change the mortgage terms. Only if the borrower is 60 days overdue on payments will asset liquidation be triggered, consistent with standard compliant mortgage loans. This mechanism is clearly designed for homebuyers who are "asset-rich but cash-poor." Real estate research firm Redfin data shows that recently 12.7% of young homebuyers have used crypto assets to raise down payments. The National Association of Realtors data indicates that by the end of 2025, the median age of first-time homebuyers will reach a historic high of 40 years, while the proportion of first-time buyers among all buyers will hit a historic low of only 21%. (The Mortgage Bankers Association disputes this figure citing federal loan data.) Census data shows that in Q2 this year, homeownership among those under 35 was only 35.2%. Using borrowers’ continuously held assets to issue loans is not a new model. PayJoy co-founder and CEO Doug Ricketts said on the podcast "On The Margin" that smartphones can serve a similar role to real estate as collateral. "Our initial innovation was setting the phone as collateral; in a sense, a smartphone is like the property in mortgage business." PayJoy provides lending services to credit-thin populations in Latin America, Africa, and South Asia. If users default, device functions are locked, a well-known digital collateral model. Ricketts has a clear bottom line on collateral pricing logic: "For lending to low-income groups, one model is to charge extremely high interest, tolerate many defaults, and rely on a few borrowers for high returns. But that’s not PayJoy’s path." PayJoy loans charge only a one-time fixed fee, with no rolling interest, which is rare in tech consumer credit. Seven Senators Call for a Halt On April 30, seven senators sent a letter to Federal Housing Finance Agency (FHFA) Director William Pulte, naming Better and Coinbase, demanding regulators "revoke related approvals and prohibit government-backed entities from assuming crypto asset-related risks." The letter was led by Dick Durbin and Elizabeth Warren, with signatories including Jeff Merkley, Chris Van Hollen, Richard Blumenthal, Bernie Sanders, and Mazie Hirono. The senators’ core argument targets Better’s claimed 250% collateral rule representing risk control. The letter states: "This mechanism requires buyers to pledge crypto assets worth up to 2.5 times the down payment to qualify for a loan. This itself acknowledges crypto assets as high-risk; additionally, buyers must pay interest on two loans simultaneously." The senators estimate the combined financing cost could be up to 1.5 percentage points higher than standard Fannie Mae mortgage rates and warn: "The high burden may prompt borrowers to default outright, with losses ultimately borne by U.S. taxpayers." They requested a response by May 30, but FHFA has yet to publicly reply. The National Consumer Law Center’s Alys Cohen and Consumer Federation of America’s Corey Frayer jointly published a more radical opinion in June: the federal government "risks repeating the 2008 foreclosure crisis." They conclude this is not consumer financial innovation but a disaster trigger. Market conditions also cast a shadow over this business. Bitcoin peaked around $123,000 in October last year, fell to about $62,800 in February this year, and hovered around $60,000 throughout July, only half its peak value. Garg’s Long-Term Vision Bitcoin is just the start. "Currently we support Bitcoin and USDC; next, we plan to integrate various mainstream tokenized assets, including equity tokens of SpaceX, Tesla, Coinbase, Better, Apple, Amazon, and others," Garg said. The project will not support meme coins, only targets with liquidity and institutional attention; Ethereum and Solana will be the next to launch. He has further ideas: parents can pledge retirement account assets to help children buy homes, aligning with the crypto asset pension track. Future buyers only need to take photos of listings and let software handle the entire process. "AI smart agents on the Better platform submit purchase applications and automatically calculate bid limits. In the long run, ordinary people can hold shares of properties and flexibly swap between homes. This is hard to realize now; the only obstacle is complex transaction friction." This vision is based on a judgment of young people’s asset allocation trends. "Today’s youth lack assets that hedge inflation and share in housing price appreciation." Controversy Behind Token Pledging Tokenized equity business faces a key unresolved question: what legal rights do token holders actually have? Currently, the "tokenization of everything" track is generally troubled by this. Tessera founder and CEO Chan Ahn revealed on "On The Margin" podcast that the company launched a SpaceX tokenized product in February. He candidly said the business model "deliberately does not set up KYC processes, not by oversight." The project’s original intent is to lower entry barriers—private markets have long relied on complex procedures, high minimum investments, and geographic restrictions, keeping 99.9% of ordinary investors out. Kula co-founder Chris Turner distinguished on the same podcast that most tokenized assets only represent contractual rights to asset income, not direct ownership of underlying assets; another model makes tokens equal to assets, where holding tokens means owning the underlying. There is a fundamental difference. For mortgage underwriters, it is essential to distinguish which type of rights they hold when valuing collateral. Meanwhile, Better is restructuring its financing channels. In February, the company partnered with Framework Ventures to deploy up to $500 million relying on the stablecoin ecosystem Sky; Framework Ventures also invested $45 million for about 10% equity. Better expects this adjustment to reduce capital costs by over 100 basis points. The company says tokenized financing could bring customer loan rates below 5%, while industry rates generally exceed 6%. The company urgently needs to lower funding costs. In Q1, Better’s loan volume was $1.64 billion, up 89% year-over-year, revenue $47.5 million, but still a loss of about $70 million. Since 2016, the company has cumulatively loaned over $110 billion; in December 2021, it laid off 900 employees in one online meeting. Garg has faced ongoing external criticism over this. The heavy pressure has not weakened his determination to bet on this track. "The worst outcome is no one cares after the product launch, but that’s not the reality." Regarding the industry outlook, he said, "No need to just fantasize about the future; what matters is creating the future with your own hands."