Today, Hyperliquide’s first L2 was launched.
Called Elysium, it gives Hyperliquid the throughput that HyperEVM deliberately lacks, and Kinetiq, the team behind it, is betting that this gap has left substantial demand for block space untapped.
Some see this as the start of a new chapter for Hyperliquid, and day one has provided them with plenty of evidence. But whether Elysium can turn this initial business into sustainable demand is another question.
Let’s break down what it is, what’s live, and what it will take to keep the channel going.
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Hyperliquide is actually made of two layers: HyperCore, which manages the order books where almost all transactions take place, and the underutilized HyperEVM, which manages smart contracts for applications like lending markets and DEXs.
These two layers share consensus, and since HyperCore is the largest element of Hyperliquid’s stack, HyperEVM’s throughput is capped so that heavy contract activity never slows down Core’s order books. This protects the exchange but limits the potential of the EVM.
High-frequency applications such as Memecoin launchpads, active AMMs, and trading bots need more space, and with the continued success of HyperCore, it will likely be some time before the team focuses on expanding EVM capacity.
Enter the Elysée, which aims for 300 million gases per secondor approximately 100 times the capacity of HyperEVM. In theory, this gives the ecosystem a fast enough environment for more demanding DeFi applications, memecoins, and the rest of the high-speed on-chain activity that HyperEVM cannot support, while sitting on top of HyperEVM and using HYPE for gas.
This capability has already attracted a significant range, including several applications that adopted HyperEVM because the juice wasn’t worth it.
On the DeFi side, Aero, Nest and Uniswap are the most notable protocols from day one. On the memecoin side, Ascend, fomo and Pump.fun offer traders launchpads and portals to discover and trade tokens.
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The traders arrived quickly. In a post published hours after the launch, Kinetiq co-founder Omnia said Elysium had processed nearly 10 million transactions, with blocks landing every 50 to 90 milliseconds. Infrastructure provider Conduit even had to briefly limit traffic in the first five minutes.
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This activity also powers KNTQ. Half of Elysium’s sequencer fee goes to purchasing KNTQ and sending it to the Hyperliquid Assistance Fund, which permanently removes it from supply, while a quarter goes to the manufacturers and the rest to Kinetiq’s treasury.
Among the launch apps, Ascend is the most important for KNTQ because it adds a second source of buying pressure. Rather than launching its own token, the launchpad adopted KNTQ and, according to its documents, devotes 90% of protocol fees to redemptions, split 80/20 between KNTQ and HYPE. Of the KNTQ purchased, 40% is allocated to burning.
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In other words, memecoin activity generates both sequencer fees and, through Ascend, additional KNTQ purchases from launchpad revenue.
But the biggest expansion of what Elysium can actually do is yet to come. An upgrade expected in about four weeks will allow Elysium applications to read and write to HyperCore’s order books, opening up new ways for applications to interact directly with Hyperliquid’s trading infrastructure.
Staggered deployment could really help. This gives Elysium time to find its footing in the middle of this sour market before another catalyst expands what builders can do and, potentially, attracts a new wave of protocols.
Beyond the initial burst of activity, the bullish argument relies on Elysium attracting trading volume that Hyperliquid would have otherwise missed.
Trader KoolKrypto, whose conversation with David Hoffman will be published on Wednesday, makes the most thorough argument.
He begins by rejecting the popular idea that Elysium drains the value of Hyperliquid. HyperEVM’s fees represent less than 1% of Hyperliquid’s revenue, so HYPE loses almost nothing even if Elysium absorbs them all. Better yet, additional USDC introduced into the ecosystem via Elysium could increase revenue-generating reserves AQAv2, the Hyperliquid program launched in August that sends 90% of the yield from its USDC reserves into HYPE redemptions.
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The biggest opportunity, he says, lies in Solana’s trading flow, which handles 25 to 50 times the spot volume of Hyperliquid’s onchain layers, in part because HyperEVM is too slow for professional market makers. A fast chain next to HyperCore can host them, and the coverage they generate lands on Hyperliquid.
There could also be an opportunity to attract Solana’s more speculative activities. As is the case every few months, sentiment hardened against Solana’s memecoin machine this past weekend, Pump.fun in particular.
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If this persists, Elysium may present itself as an equally fast but more positive sum place. On Solana, value often flows to launches that pump and drain within minutes. On Elysium, trading also generates fees for KNTQ redemptions and the manufacturers behind its applications.
I think this distinction could go some way toward Elysium being seen as a more positive-sum environment in which to trade.
Yet attracting speculative traffic is one thing. Making it a sustainable source of business will be the real test.
KoolKrypto itself admits that a memecoin season could raise fees and then die. This is important because, beyond the immediate enthusiasm, KNTQ faces a significant supply schedule. Starting November 27, approximately 310 million KNTQ contributors and investors begin vesting rights over two years, with monthly releases equivalent to approximately 4% of current circulating supply.
Offsetting this supply will require more than a short-lived rush on memecoin exchanges. Elysium needs to draw attention to a sustainable DeFi business, and this is where its range of established protocols and the upcoming integration of HyperCore become particularly important.
But even that presents challenges. HyperCore already supports a growing range of financial activities, including borrowing and trading. Elysium must demonstrate that its additional capacity and smart contracts can enable applications that significantly expand what users can do with Hyperliquid assets and liquidity, rather than simply replicating existing services.
And all this must be done amid the ever-increasing capabilities of AI-assisted hacks. Quite a hostile environment.
Overall, day one suggests the demand Kinetiq is banking on is real. But Elysium’s success will depend on its ability to transform this speculative interest into a useful, secure and sustainable DeFi ecosystem capable of generating the sustained activity necessary for its token economy to function properly.
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