Kinetiq has unveiled Elysium, a layer-2 network designed to increase transaction capacity within the Hyperliquid ecosystem while using HYPE as its gas token from launch.
An Ethereum-Compatible L2 for Hyperliquid
Elysium is intended to provide an Ethereum-compatible execution environment with stronger connections to HyperCore, Hyperliquid's native order-book and trading infrastructure. Kinetiq argued that HyperEVM's dual-block architecture and limited capacity create problems for traders and application developers. The protocol said transaction costs for a simple swap have reached as much as $20 during periods of heavy activity.
Kinetiq claimed Elysium will deliver performance orders of magnitude above HyperEVM, though the company has not published benchmarks or technical specifications supporting that comparison. The project also aims eventually to approach HyperCore's block times, but that remains a development target rather than demonstrated mainnet performance.
HYPE as the Gas Token
Elysium will use HYPE for transaction fees instead of introducing another network asset. Kinetiq said this approach should reduce the need for users to acquire a separate gas token when moving between HyperCore, HyperEVM and Elysium. The decision could create another source of HYPE utility if the network attracts users, though Kinetiq has not explained how collected gas payments will be handled beyond its planned distribution of sequencer fees.
Elysium will modify Hyperliquid's L1Read precompile to give applications access to trading information from HyperCore. The existing implementation allows HyperEVM contracts to read data such as asset prices and order-book information. Kinetiq said its version would expose additional information beyond the best bid and offer, though the available fields have not been published.
Sequencer Fee Distribution and KNTQ Burns
Kinetiq plans to allocate 50% of Elysium sequencer fees to programmatic KNTQ purchases on the open market. All acquired tokens would be sent to the Hyperliquid Assistance Fund for burning. Applications consuming Elysium blockspace would receive 25% of sequencer fees, which developers could use for rebates or incentives. The remaining 25% would enter the Kinetiq treasury.
The model links KNTQ demand to Elysium transaction activity, though its financial effect will depend on network usage, fee levels and actual buyback execution. Kinetiq did not publish revenue forecasts or minimum purchase commitments. Kinetiq currently holds approximately $1.26 billion in total value locked, according to DefiLlama.
Targeting Spot Markets and HIP-3 Perpetuals
Elysium's planned token-generation system would let projects launch through long-tail automated market makers before pursuing HyperCore spot markets and HIP-3 perpetual listings. HIP-3 enables qualified builders to deploy perpetual markets on HyperCore after meeting staking requirements, including markets tracking equities, commodities and cryptocurrency assets.
Kinetiq said Elysium would connect token issuance, proprietary automated market maker liquidity and perpetual markets within one ecosystem. Each stage would still depend on applicable technical requirements and sufficient market liquidity. The next verified updates should include Elysium's technical architecture, security audits, launch partners and mainnet schedule.
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