Kinetiq Aims to Revamp Hyperliquid with Elysium, a High-Speed Layer 2 Solution
On August 22, Hyperliquid's HYPE price reached an all-time high of $80. The attention and capital that followed led to a meme rally for HyperEVM, with assets egg and joff experiencing significant market cap growth.
However, this hype was short-lived, and no asset has been able to sustain momentum on the platform. This is partly due to the lack of trading infrastructure capable of supporting speculative demand.
HyperEVM uses a dual-block architecture that connects to HyperCore but leaves complexity to developers and traders. During network congestion, gas for simple swaps can exceed $10 and reach up to $20 in extreme cases.
Kinetiq, the largest liquid staking protocol on Hyperliquid, has identified this gap and is launching Elysium, a Layer 2 (L2) solution for Hyperliquid. Following the announcement, discussions around KNTQ repricing, HYPE value capture, and new application migration spread across the community.
Elysium aims to address the liquidity problem of staked HYPE by allowing users to delegate their tokens to the protocol and receive kHYPE, which accrues staking rewards. This kHYPE can then enter DeFi scenarios such as lending and yield strategies, making the same asset serve both staking and liquidity functions.
Elysium's block speed and throughput at launch will be several orders of magnitude higher than HyperEVM's, with a long-term goal of bringing block times close to HyperCore's. The new L2 also plans to upgrade L1Read to provide developers with richer market depth and quotes near the top of the block.
Elysium seeks to channel incremental on-chain activity back to HyperCore by using HYPE as gas, assets establishing spot markets on HyperCore, and derivatives returning to HIP-3. The Kinetiq token, KNTQ, also has a dedicated value capture path, with 50% of Elysium's sequencer revenue being used to repurchase KNTQ from the open market and send it to the Hyperliquid Assistance Fund for burning.
Kinetiq's founder, Omnia, specifically called out PaperTrade after releasing Elysium: 'It now has a home.' This suggests that Elysium offers an alternative path for complex financial logic alongside liquidity on HyperCore.