[DigitalToday reporter Chi-gyu Hwang (황치규)] The first Layer 2 blockchain has appeared on decentralised derivatives exchange Hyperliquid. It is Elysium, released by the Kinetiq team.

A recent Bankless report says the Hyperliquid chain consists of 2 layers. Hypercore runs the order book where most trading takes place, while HyperEVM runs smart contracts for apps such as lending markets and decentralised exchanges (DEXs).

Because the two share a consensus structure, a cap is applied to HyperEVM throughput so the order book does not slow even if smart-contract activity surges.

That allows the exchange to run stably, but HyperEVM has had limits in handling apps with frequent transactions.

Elysium targets that gap. Its target throughput is 300 million gas per second, about 100 times that of HyperEVM. Settlement is done on HyperEVM, and fees are paid in the HYPE token.

The start has been smooth. In DeFi, Aero, Nest and Uniswap have gone live on Kinetiq, and in memecoins, Ascend, Fomo and Pumpfun have started operating. It also includes several apps that had kept their distance from HyperEVM, citing poor economics. Omnia co-founder at Kinetiq said it processed close to 10 million transactions within hours of launch and blocks were produced every 50 to 90 milliseconds. Bankless said infrastructure provider Conduit had to briefly limit traffic in the first 5 minutes.

Rising transactions are also a positive signal for Kinetiq's token KNTQ. That is because half of the fees Elysium receives for processing trades goes into buying KNTQ. The purchased tokens go to the Hyperliquid Assistance Fund and are permanently removed from circulating supply. The other half is split evenly between app developers and Kinetiq.

Ascend, a memecoin issuance platform, has drawn attention by adopting KNTQ instead of launching its own token. Ascend allocates 90 percent of protocol fees to buybacks, with KNTQ and HYPE weighted 8 to 2.

Whether the early excitement will translate into sustained demand remains unclear.

Bullish trader KoolKrypto disputes the conventional view that Elysium siphons off Hyperliquid's value. HyperEVM fees account for less than 1 percent of Hyperliquid revenue, he says, so even if Elysium absorbs all of it, HYPE would lose almost nothing.

He also appears to be watching the opportunity for Elysium to attract Solana trading volume. Spot trading volume on Solana is 25 to 50 times larger than Hyperliquid's on-chain layer, and HyperEVM being too slow is cited as one reason professional market makers prefer Solana.

He expects that if a faster chain emerges alongside Hypercore, they could come to Hyperliquid.

Worsening sentiment around Solana memecoins could also be an opportunity.

On Solana, money often flows out due to new coins that spike and then crash within minutes. On Elysium, trading fees lead to KNTQ purchases and revenue for app developers, which Bankless said could be seen as a trading environment where the speed is the same but participants are left with more.

Turning interest into sustainable DeFi activity is also a challenge Elysium must solve.

Elysium is slated for an upgrade in about 4 weeks. After the upgrade, Elysium apps will be able to read and write directly to the Hypercore order book.

But Hypercore is already expanding support for financial activity, including lending and trading, so it remains to be seen how large the impact will be.

Bankless analysed it as follows: "Elysium must also prove that it is not merely replicating existing services, but actually expanding what users can do with Hyperliquid assets and liquidity. The early report card showed demand is real, but success or failure depends on whether it can convert speculative interest into a useful, safe and lasting DeFi ecosystem."