Kinetiq has announced the introduction of Elysium, a layer-2 solution designed to enhance the Hyperliquid protocol by moving beyond its initial focus on derivatives trading.
Performance Upgrades and Infrastructure Changes
Elysium was developed to address persistent performance issues observed in HyperEVM, the existing network environment for Hyperliquid. Kinetiq identified limitations with HyperEVM’s dual-block architecture, restricted throughput, and high transaction fees, especially during network congestion. The company noted that basic swap transactions could incur fees as high as $20, making the system costly for both traders and developers operating high-frequency strategies.
With Elysium, Kinetiq aims to provide a high-performance EVM network more deeply integrated with HyperCore, the liquidity engine that underpins Hyperliquid. The new environment promises faster block times and a significant increase in transaction throughput compared to HyperEVM. These improvements are expected to attract advanced trading systems, automated market makers, and decentralized finance applications that require low latency and robust performance.
Elysium will introduce HYPE as its native gas token, lower transaction costs, and offer more efficient access to HyperCore data, according to Kinetiq. The company expects that these changes will make the environment more attractive to developers and high-frequency traders.
Mini dictionary: Kinetiq is the technology company developing infrastructure for Hyperliquid, a decentralized derivatives and spot exchange built on a proprietary blockchain stack. HyperCore is the protocol’s core matching and execution engine, while HyperEVM is its general-purpose smart contract execution environment.
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AAPLReviving Spot Markets and Enabling Composability
While Hyperliquid has achieved notable success in the perpetual futures market, its decentralized finance and spot trading activities have not grown at a similar pace. Kinetiq reported that Hyperliquid’s share of spot market volume, compared to major centralized exchanges like Binance, has declined to one of its lowest points since the rise of large spot markets. Activity in the HIP-2 spot market has also decreased over time.
According to Kinetiq, Elysium aims to reverse this downward trend by providing new opportunities for DeFi development, token launches, and improved spot trading experiences.
The firm highlighted the introduction of proprietary automated market maker (AMM) protocols known as PropAMM, which leverage Elysium’s proximity to the HyperCore protocol. This structure is expected to facilitate more efficient market-making and position management for participants, alongside enhanced market data access. Furthermore, Elysium will adapt the L1Read precompile from Hyperliquid, granting developers deeper insight into HyperCore data streams.
Composability in Elysium can extend the asset lifecycle—new tokens can be launched and bootstrapped through AMMs, spot markets, and eventually receive perpetual listings via HIP-3, according to Kinetiq. They believe this feature can position Elysium as a central launchpad within Hyperliquid’s broader ecosystem.
Kinetiq has designed Elysium’s tokenomics to allocate sequencer fee revenue in the following manner: 25% to builders, 25% to Kinetiq’s treasury, and 50% for buying back KNTQ, the protocol’s governance token. These purchased tokens will be burned using the Hyperliquid Assistance Fund, potentially reducing the circulating supply of KNTQ.
| Metric | HyperEVM | Elysium |
|---|---|---|
| Native gas token | Not HYPE | HYPE |
| Block times | Slower | Faster |
| Transaction fees | Up to $20 | Lower (expected) |
| Market focus | Derivatives | DeFi, spot, launches |
| Sequencer fee allocation | N/A | Builders 25%, Treasury 25%, Buyback & burn 50% |
Next Steps for Elysium and Hyperliquid
The Elysium network launch is described as imminent, with technical details and ecosystem partnerships to be announced soon. Kinetiq stated that Elysium’s success will depend on its ability to sustain liquidity, attract developers, and grow its user base. If these conditions are met, Elysium could help transform Hyperliquid from a derivatives-centered platform into a broader financial ecosystem, supporting a wide range of decentralized finance applications and asset launches.
