Kinetiq has unveiled Elysium, a proposed Layer 2 network built around Hyperliquid that would keep HYPE as its gas token while shifting application activity into a faster execution environment. The network is designed to address a growing practical constraint in the Hyperliquid ecosystem: applications that need frequent on-chain updates can face high costs and delayed confirmations on HyperEVM, even when they rely on HyperCore’s trading infrastructure and market data.
The announcement arrived after HYPE moved above $80 on Aug. 22 and reached a new all-time high, placing added attention on the ecosystem’s capacity to support trading applications beyond HyperCore’s central order books. Kinetiq’s proposal focuses less on replacing HyperCore than on feeding it. Elysium would host application logic, liquidity formation and settlement-heavy activity, while projects could eventually route established markets into HyperCore spot books and perpetual listings.
Kinetiq said Elysium would use HYPE for transaction fees, removing the need for users and developers to acquire a separate Layer 2 token. That approach also links network usage directly to the same asset used across the existing Hyperliquid environment rather than fragmenting liquidity and fee demand among multiple base assets.
High gas costs have limited some HyperEVM applications
HyperEVM currently connects smart contracts with HyperCore through a two-block architecture, allowing developers to build applications that interact with the exchange’s trading layer. The design has enabled new projects, but gas costs can rise sharply when network activity increases.
Kinetiq said a basic swap on HyperEVM can cost more than $10 in gas under congestion, with extreme cases reaching $20. Such costs are manageable for large trades but can make frequent user actions uneconomic for smaller transactions, automated market-making systems, on-chain games and products that need to update balances or positions after every trade.
That issue becomes more pronounced for applications that use smart contracts for settlement rather than relying solely on an exchange order book. PaperTrade, one of the models cited by Kinetiq, uses HyperCore prices while managing profit queues, liquidity-provider balances and PAPER token minting through smart contracts. Each user trade can therefore trigger several on-chain actions beyond the original order.
Elysium is intended to give such products a lower-cost execution venue without disconnecting them from HyperCore’s pricing and liquidity. Kinetiq said the network would launch with block speeds and throughput “several orders of magnitude” above HyperEVM, with a longer-term goal of moving closer to HyperCore-level block times.
Expanded HyperCore data could support faster market making
A central part of the Elysium design is deeper access to HyperCore market data. HyperEVM’s current L1Read precompile allows smart contracts to read information from HyperCore, though Kinetiq said the tool largely exposes the best bid and ask.
Elysium plans to extend that connection with deeper order-book information and prices available closer to the top of each block. For smart-contract applications that quote prices, hedge exposure or manage collateral automatically, faster and more detailed data can reduce the gap between an on-chain action and the market conditions that informed it.
Kinetiq highlighted proprietary automated market maker, or PropAMM, designs as an early use case. PropAMMs use their own capital to post quotes and then hedge rapidly as trades arrive. Unlike a traditional automated market maker, which generally uses a fixed pricing curve and pooled liquidity, a PropAMM can adjust quotes dynamically in response to market conditions.
Kinetiq said PropAMMs on Solana have consistently handled spot volumes far above HyperCore’s spot market. The comparison does not guarantee the same outcome on Hyperliquid, but it shows the type of market structure Elysium is attempting to accommodate: applications that need rapid pricing, quick hedging and low-cost state changes.
A planned route from token launch to HyperCore markets
Elysium’s rollout also seeks to simplify the path from a new token launch to deeper trading markets. Projects on HyperEVM have often had to assemble separate venues for initial automated market maker liquidity, spot trading and perpetual contracts. That can split liquidity and leave users moving between different interfaces before a market develops enough activity for a more mature listing.
Kinetiq’s proposed pipeline starts with long-tail AMMs on Elysium, designed to provide early liquidity for newly issued assets. As trading flow expands, projects could move toward PropAMM-style liquidity. The next stage would be the creation of a HyperCore spot order book, followed by a potential perpetual market through HIP-3, Hyperliquid’s framework for permissionless perpetual futures deployment.
The sequence is particularly relevant after several meme-token cycles on HyperEVM failed to sustain follow-on liquidity. Tokens including egg and joff drew brief attention before activity faded. During an earlier meme cycle in June, BUDDY reached a market capitalization of $35 million, according to the supplied market data, but later launches did not maintain comparable momentum.
A unified issuance and market-development route would not determine whether a token retains demand. It could, though, reduce the technical and liquidity fragmentation that makes it harder for early trading interest to develop into durable spot and derivatives markets.
Kinetiq ties sequencer revenue to KNTQ buybacks
Kinetiq, which describes itself as the largest liquid staking protocol in the Hyperliquid ecosystem, said it currently holds roughly $1.214 billion in total value locked. Its core product issues kHYPE, a liquid staking token designed to let users deploy staked HYPE in decentralized finance while continuing to receive staking yield.
The project also published a proposed allocation for Elysium sequencer revenue tied to KNTQ, Kinetiq’s token. Under the structure, 25% of sequencer income would go to applications consuming block space and another 25% would be directed to a treasury. The remaining 50% would be used to buy KNTQ on the open market and send it to the Hyperliquid Assistance Fund for destruction.
That arrangement would make network activity a direct source of KNTQ buying pressure only if Elysium attracts sustained transaction demand. It also gives applications a stated share of sequencer revenue, potentially creating an incentive for developers to build products that generate regular block-space use rather than short-lived token launches.
Elysium’s proposal places Hyperliquid’s next development challenge in application infrastructure rather than exchange throughput alone. HyperCore has established a fast trading venue, while HyperEVM has opened a smart-contract layer around it. Kinetiq is betting that a specialized Layer 2 can connect those two systems more efficiently for products whose economics break down when each on-chain update costs several dollars.
Want deeper insight into scaling and L2 design like Elysium? Explore our guide on Layer 2 blockchains today.
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