On August 22, the HYPE price surpassed $80, hitting a new all-time high once again. Funds and attention flowed back to Hyperliquid, and the HyperEVM saw a rare meme market. Two high market cap targets, egg and joff, emerged.

What comes hot, goes out even hotter.

This has almost become a recurring script for memes on HyperEVM. During the first meme season in June last year, BUDDY's market cap once reached $35 million, but since then, it has been difficult to find another target that can sustain the momentum. HyperEVM has never lacked retail investors willing to speculate but lacks a trading infrastructure to capture this speculative demand.

HyperEVM adopts a dual-block architecture, connecting to HyperCore while leaving complexity to developers and traders. During network congestion, a simple exchange's gas fee may exceed $10, and in extreme cases, even reach $20. After a new coin is issued, one still needs to separately find AMMs, spot liquidity, and perpetual contract markets. There is also no unified token launchpad on HyperEVM to link these stages.

Kinetiq saw this gap. As the largest liquidity staking protocol on Hyperliquid, it announced the launch of Elysium, Hyperliquid's L2. Following the announcement, discussions around KNTQ revaluation, HYPE value capture, and new app migrations quickly spread across the community.

Transitioning from Staking Protocols to Hyperliquid Infrastructure

Kinetiq initially addressed the liquidity issue after HYPE staking. Users stake HYPE with the protocol to receive kHYPE, which can accumulate staking rewards. kHYPE can then enter DeFi scenarios such as lending and yield strategies, allowing the same asset to simultaneously perform staking and liquidity functions.

Currently, Kinetiq's TVL is approximately $1.214 billion. In addition to kHYPE, Kinetiq has launched products like Earn, kmHYPE, Launch, and Markets.

According to Kinetiq's disclosure, Elysium will continue to use HYPE as gas. Users do not need to acquire another base asset to enter the new network, and the transaction demand generated by Elysium will directly increase HYPE's use cases.

Performance is the first-layer overhaul. Kinetiq stated that Elysium's block speed and throughput at launch will be several orders of magnitude higher than HyperEVM, with the long-term goal of bringing block time close to HyperCore. Clearly, Kinetiq aims to build a system that can provide a usable execution environment for high-frequency spot trading, automatic market making, and applications requiring continuously updated states.

A 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 visible order book information is mainly the best bid and ask prices. Elysium plans to revamp L1Read, providing developers with richer market depth and fresh quotes close to the top of the block.

For regular traders, this is just a deeper order book. For market makers, it's a whole different story. They can provide continuous quotes in Elysium's AMM while hedging using HyperCore's depth and prices.

Kinetiq sees PropAMM as the type of application that Elysium needs to attract first. These AMMs use proprietary market makers' funds to quote, are highly sensitive to latency, and focus on efficiency. According to data disclosed by Kinetiq, the spot volume taken by PropAMM on Solana has long been much higher than on HyperCore. Elysium aims to replicate this part of the spot trading demand missed by Hyperliquid.

Token Lifecycle Refactoring

Hyperliquid's current shortcomings in spot trading go far beyond transaction speed.

When issuing spot assets on HyperCore, one needs to participate in the Ticker auction and rebuild the order book; when issuing tokens on HyperEVM, developers must seek out the launch platform, AMM, and market maker. Even if a new token gains short-term attention, it's challenging to sustain that liquidity flow into HyperCore. Spot and perpetual contracts may seem part of the same ecosystem but are actually following two separate paths.

Elysium has proposed a complete pipeline: new tokens are first minted on Elysium, undergo a cold start through a long-tail AMM, expand liquidity through PropAMM, then choose to establish a HyperCore spot order book, and finally launch into the perpetual contract market with the help of HIP-3.

This is also what Kinetiq calls "Value-accruing L2." L2s on Ethereum are often criticized for capturing on-chain activity and fees, but Elysium attempts to bring additional on-chain activity back to HyperCore. It uses HYPE as gas, assets are settled on HyperCore's spot market, and derivatives return to HIP-3. The more active Elysium is, the more trading volume HyperCore theoretically gains.

Kinetiq's token KNTQ also has a separate value capture path. Elysium's sequencer revenue plan allocates 25% to dApps consuming block space, 25% to the Kinetiq treasury, and the remaining 50% is used to buy back KNTQ from the open market and send it to the Hyperliquid Assistance Fund for burning.

Tackling Complex Use Cases

In Elysium's potential use cases, memes are just the most easily understood. What truly stress-tests this Layer 1 is a new type of Perp DEX with complex settlement logic like PaperTrade.

We have previously introduced PaperTrade. It reads Hyperliquid's order book prices, allowing users to settle PnL directly with the public LP pool. Trades do not go through HyperCore matching, and the profit queue, LP balances, and PAPER token minting logic all operate within the HyperEVM smart contract.

This design inherently relies on high-frequency state updates. Every opening, closing, PnL queuing, and subsequent payments need on-chain execution, and HyperEVM's slow transaction confirmation and high gas costs directly impact the product experience. The more realistic problem is that any high-performance chain that integrates an external price oracle can replicate PaperTrade's mechanism, offering lower gas fees and more aggressive token incentives. PaperTrade chooses Hyperliquid, relying on native pricing and native users; however, HyperEVM's performance undermines these two advantages.

Elysium offers another possibility. PaperTrade can continue to read HyperCore prices, leverage the extended L1Read for richer order book information, and place settlement and token logic in a faster execution environment. It does not need to leave Hyperliquid for performance or hand over the most critical price feed to an external oracle.

No wonder Kinetiq's founder Omnia specifically mentioned PaperTrade after launching Elysium: "It now has a home."

Similar opportunities will also arise in options, automated trading, and lending protocols that require real-time hedging. HyperCore already has the most active traders and depth on-chain. What Elysium aims to do is enable developers to run more complex financial logic alongside this liquidity.

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