Kinetiq, the dominant liquid-staking protocol on Hyperliquid's HyperEVM, has announced Elysium, a new layer-2 network designed to improve performance and throughput on HyperEVM while deepening its connectivity with HyperCore, Hyperliquid's core trading engine. Wu Blockchain reported that Elysium will use HYPE, Hyperliquid's native token, as its gas asset — tying the new layer-2's usage directly to demand for the token that already secures the base chain.
Kinetiq launched in July 2025 and quickly became the leading liquid-staking option on Hyperliquid, addressing the classic trade-off between staking rewards and capital liquidity by issuing a tradeable receipt token, kHYPE, against staked HYPE. Elysium extends that infrastructure focus a layer further: rather than just handling staking, it aims to give HyperEVM a faster, higher-throughput execution environment while staying tightly coupled to HyperCore's order book and market data.
How the Fee Model Is Structured
According to research from OAK Research, Elysium's sequencer fees will be split three ways: 50% goes toward buying and burning KNTQ, Kinetiq's own governance token, on the open market; 25% goes to developers building on the network; and the remaining 25% funds the protocol treasury. That structure gives Elysium's usage a direct deflationary link back to KNTQ, mirroring a design pattern that has become increasingly common among L2s looking to tie network activity to token value rather than relying purely on staking yield or governance rights.
Why This Matters for Hyperliquid's Ecosystem
Hyperliquid has built its reputation as a high-performance on-chain perpetuals exchange, but HyperEVM — the general-purpose smart contract layer sitting alongside HyperCore — has faced more conventional EVM performance constraints. A dedicated L2 that plugs directly into HyperCore addresses a real bottleneck: it lets developers build more complex DeFi applications without being limited by HyperEVM's base throughput, while keeping HYPE as the economic center of gravity across both layers.
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What to Watch
Kinetiq has said more details are still coming, including how the Elysium testnet token faucet and rollout timeline will work. The key metrics to track once Elysium goes live will be sequencer fee volume (which feeds the KNTQ buy-and-burn) and whether developer activity meaningfully migrates from HyperEVM's base layer to the new L2.
