On August 22, the price of HYPE broke through $80, setting a new all-time high. Capital and attention returned to Hyperliquid, and meme activity reappeared on HyperEVM for the first time in a while, with two high-market-cap tokens, egg and joff, emerging.
Popularity rises quickly but fades even faster.
This has almost become the standard script for memecoins on HyperEVM. During the first memecoin season in June last year, BUDDY’s market cap briefly reached $35 million, but since then, no other token has been able to sustain that momentum. HyperEVM never lacks retail investors willing to take risks—it lacks the trading infrastructure capable of absorbing this speculative demand.
HyperEVM uses a dual-block architecture, leaving complexity to developers and traders while connecting to HyperCore. During network congestion, the gas fee for a simple swap can exceed $10 and reach as high as $20 in extreme cases. After a new token launch, users must separately seek out AMM, spot liquidity, and perpetual futures markets—there is no unified token launch platform on HyperEVM to streamline these processes.
Kinetiq recognized this gap. As the largest liquid staking protocol on Hyperliquid, it announced the launch of Elysium, Hyperliquid’s L2. Following the announcement, discussions around KNTQ revaluation, HYPE value capture, and the migration of new applications quickly spread throughout the community.
Kinetiq initially addressed the liquidity issue after HYPE staking. Users deposit HYPE into the protocol to receive kHYPE, which accrues staking rewards; kHYPE can then be used in DeFi scenarios such as lending and yield strategies, enabling the same asset to fulfill both staking and liquidity functions simultaneously.
Kinetiq's current TVL is approximately $1.214 billion. In addition to kHYPE, Kinetiq has launched products such as Earn, kmHYPE, Launch, and Markets.
According to Kinetiq’s disclosed design, Elysium will continue to use HYPE as gas. Users will not need to purchase a new base asset to enter the new network, and the transaction demand generated by Elysium will directly increase the use cases for HYPE.
Performance is the first-layer upgrade. Kinetiq states that, at launch, Elysium’s block speed and throughput will be several orders of magnitude higher than HyperEVM, with the long-term goal of achieving block times approaching those of HyperCore. Clearly, Kinetiq aims to create an execution environment capable of supporting high-frequency spot trading, automated market making, and applications requiring continuous state updates.
An even more critical part is the connection between Elysium and HyperCore.
The existing L1Read precompiled contract in HyperEVM allows smart contracts to read HyperCore data, but the order book information available is primarily limited to the best bid and ask prices. Elysium plans to enhance L1Read to provide developers with richer market depth and fresher quotes closer to the top of the block.
For regular traders, this is simply reading a few more levels of the order book. For market makers, it means something entirely different—it allows them to continuously quote prices on Elysium’s AMM while reading the depth and prices from HyperCore to hedge their positions.
Kinetiq views PropAMM as the first type of application Elysium aims to attract. These AMMs rely on proprietary market makers’ own capital to provide quotes and are highly sensitive to latency and hedging efficiency. According to data disclosed by Kinetiq, the spot volume handled by PropAMM on Solana has consistently far exceeded that of HyperCore. Elysium seeks to capture the spot trading demand that Hyperliquid has missed.
Hyperliquid's shortcomings in spot trading extend far beyond trading speed.
To issue spot assets on HyperCore, participants must join a Ticker auction and rebuild the order book; to issue tokens on HyperEVM, developers must independently find launch platforms, AMMs, and market makers. Even if a new asset gains short-term attention, it is difficult to channel that liquidity into HyperCore. Spot and perpetual contracts appear to belong to the same ecosystem, but they operate on two separate pathways.
Elysium offers a complete pipeline: new tokens are first generated on Elysium and undergo cold start via long-tail AMM; after liquidity expands, they move to PropAMM; next, users can choose to establish a HyperCore spot order book; finally, perpetual futures markets are launched via HIP-3.
This is also what Kinetiq refers to as a "value-accretive L2." While L2s on Ethereum are often criticized for siphoning off mainnet activity and fees, Elysium aims to redirect new on-chain activity back to HyperCore. It uses HYPE as gas, establishes spot markets for assets on HyperCore, and routes derivatives back to HIP-3. The more active Elysium becomes, the more transaction volume HyperCore theoretically gains.
Kinetiq’s token, KNTQ, also has a separate value capture mechanism. Elysium’s sequencer revenue plan allocates 25% to applications that consume block space, 25% to the Kinetiq treasury, and the remaining 50% to repurchasing KNTQ from the open market and sending it to the Hyperliquid Assistance Fund for burning.
Among Elysium’s potential use cases, memes are merely the most easily understood. What truly tests the limits of this chain are novel perpetual DEXs like PaperTrade, with complex settlement logic.
We previously introduced PaperTrade. It reads Hyperliquid order book prices, allowing users to settle profits and losses directly with the public LP pool. Trades do not enter HyperCore matching; the profit queue, LP balance, and PAPER token minting logic all run on HyperEVM smart contracts.
This design inherently relies on frequent state updates. Every position opening, closing, profit queueing, and subsequent settlement requires on-chain execution, and HyperEVM’s slow transaction confirmations and high gas fees directly undermine the user experience. More realistically, any high-performance chain that integrates an external price oracle can replicate PaperTrade’s mechanism while offering lower gas fees and more aggressive token incentives. PaperTrade’s choice of Hyperliquid stems from its native quotes and native users; however, HyperEVM’s performance is eroding these very advantages.
Elysium offers another possibility: PaperTrade can continue reading HyperCore prices, leverage the extended L1Read for richer order book data, and move settlement and token logic into a faster execution environment. It doesn’t need to leave Hyperliquid for performance, nor does it have to hand over its most critical price source to an external oracle.
No wonder Omnia, founder of Kinetiq, specifically mentioned PaperTrade after the launch of Elysium: “It now has a home.”
Similar opportunities will arise in options, automated trading, and lending protocols requiring real-time hedging. HyperCore already has the most active traders and deepest liquidity on-chain; Elysium aims to enable developers to run more sophisticated financial logic alongside this liquidity.
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