Kinetiq (kHYPE): The catalyst for liquid staking on Hyperliquid

Introduction & Context

The Hyperliquid ecosystem is undeniably one of the most dynamic of recent months. HyperEVM, Hyperliquid’s Layer 2 network, now exceeds $1.5 billion in TVL, largely driven by the performance of HYPE and the promise of airdrops from native protocols.

On July 5, 2025, Hyperliquid deployed a major network upgrade with the introduction of CoreWriters (previously known as “Write Precompiles”). In concrete terms, these smart contracts allow transactions to be sent from HyperEVM to HyperCore, the blockchain used by Hyperliquid’s Perps DEX.

In practice, this means that any decentralized application on HyperEVM can now execute transactions directly on HyperCore. In other words, this finally opens the door to real interoperability between HyperEVM and HyperCore, and to new, unprecedented DeFi functionalities.

Alongside this upgrade, one of the most anticipated launches by both the community and builders is Kinetiq, a native liquid staking protocol for Hyperliquid.

---

Overview of Kinetiq

Kinetiq is a non-custodial liquid staking protocol built on Hyperliquid. The principle: users can deposit their native HYPE tokens for staking on Hyperliquid and receive kHYPE in return—a liquid staking token that can be used throughout DeFi on HyperEVM.

In practice, kHYPE enables users to participate in staking on Hyperliquid while retaining the liquidity of their assets: they earn staking yield and access additional yield strategies via DeFi on HyperEVM.

As a user:

• HYPE contributes to the security and decentralization of Hyperliquid.
• It generates a passive yield of 2.18% annually, without users having to manage validator selection.
• The kHYPE balance automatically accrues.
• kHYPE can be used in a range of DeFi yield strategies.

Kinetiq leverages Read Precompiles and Write Precompiles (now called CoreWriters) to manage HYPE staking in a fully permissionless way.

This allows user-deposited HYPE to be transferred to HyperCore and staked with multiple validators, with allocation actively managed thanks to the StakeHub algorithm.

---

How Kinetiq Works

StakeHub

StakeHub is a validator scoring system for Hyperliquid, initially designed to let users stake HYPE with the highest-performing validators. It assigns a score from 0 to 100, based on strictly objective criteria: performance, uptime, longevity, fees, and rewards.

Kinetiq uses StakeHub for kHYPE’s operation. Rather than delegating staked HYPE to a single validator, the protocol relies on a dynamic algorithm that continuously monitors validator metrics to adjust allocation accordingly.

This approach serves several objectives:

• Maximize Hyperliquid network security by optimizing the distribution of staked HYPE.
• Mitigate centralization/concentration risks by spreading HYPE across multiple validators.
• Align ecosystem incentives via a fully meritocratic selection.

Earn

Kinetiq’s Earn module is designed to let kHYPE holders easily generate additional yield on their tokens, directly from the Kinetiq app. Practically, this is a vault that offers automated yield strategies within DeFi on HyperEVM.

The Earn module is managed by Seven Seas Capital, a risk curator affiliated with Veda Labs, which already manages over $3.7 billion in assets across their vaults.

How it works:

• Users deposit their kHYPE in the Earn module and receive a receipt token certifying their vault position.
• Earn yield comes mainly from liquidity providing (Curve) and leverage on lending platforms (Hyperlend, Felix).
• This setup boosts effective kHYPE yield, with no loss of liquidity.

Naturally, kHYPE holders can also create their own DeFi strategies with their tokens, using Kinetiq’s various partner applications.

Note: According to the docs, kHYPE holders using the Earn vault receive more kPoints (see below for details).

iHYPE

Beyond its retail offering, Kinetiq also provides iHYPE, the first native institutional-grade liquid staking solution on Hyperliquid. The key features of iHYPE:

• Compliance: iHYPE integrates with KYC/AML frameworks and offers reporting standards tailored to institutional requirements, facilitating adoption within strict legal environments.
• Institutional validator deployment: HYPE staked via iHYPE is delegated to a curated set of qualified validators.

iHYPE is designed to meet the specific needs of companies and regulated investment funds wishing to allocate treasury to staking performance, while complying with their regulatory obligations.

This is a growing trend: in recent weeks, several firms (Hyperion DeFi, HYLQ Strategy Corp, Lion Group Holding, Hyperliquid Strategies Inc…) have announced accumulating HYPE as a strategic asset, inspired by MicroStrategy’s treasury approach with Bitcoin.

With iHYPE, these actors now have a native, transparent, and compliant channel to include HYPE staking in their allocations.

---

Ecosystem & Partners

Kinetiq’s launch is highly anticipated, both by HyperEVM users and other builders. At launch, many partners are already mobilized to offer kHYPE-based products.

Main announced partners include:

• Felix: Lending/borrowing suite (CDP markets, Vanilla markets). TVL: $385M.
• Hyperlend: Lending/borrowing protocol. TVL: $374M.
• Hypurr Fi: Lending marketplace offering leveraged loops. TVL: $204M.
• Hyperdrive: Stablecoin money market protocol enabling yield generation. TVL: $45M.
• Laminar, Valantis, Veda, Neko, Pvp.trade: Suite of native DeFi apps covering farming, asset management, market creation, cross-asset liquidity.
• Curve: Curve’s HyperEVM deployment gives kHYPE immediate access to deep liquidity for liquidity providing, boosting the token’s secondary market depth and generating extra revenue via pools.

In reality, virtually all DeFi protocols on HyperEVM are expected to offer kHYPE-backed products at launch.

---

Benchmark & Growth Potential

Liquid staking is a key challenge for any ecosystem: it unlocks liquidity for staked assets, secures the network, smooths capital allocation, boosts DeFi liquidity, and offers additional yield opportunities to investors.

A quick benchmark of liquid staking on Ethereum and Solana shows:

• About 30% of ETH is staked, with 31% of that in liquid staking. Lido commands 25% market share.
• About 67% of SOL is staked, with 16% in liquid staking. Jito commands 61% market share.

Lido’s TVL is around $27B, while Jito’s is about $2.8B, making them leaders in their respective ecosystems.

For HYPE staking, key figures are:

• 418.9M HYPE staked on Hyperliquid, about 41.9% of the total supply (1B HYPE). About 301M HYPE are locked with the foundation.
• 117.9M HYPE (unlocked) staked, about 35% of the current circulating supply (334M HYPE).
• The main LST (Staked Hype) holds 11.1M HYPE in liquid staking (9.4%).

At the time of writing, about $250M in HYPE (5.3M tokens) are currently being unstaked. This process was initiated a week before Kinetiq’s launch, suggesting they will be used to mint kHYPE.

It should be noted that many users anticipated kHYPE’s launch well in advance. Therefore, we can expect Kinetiq’s TVL to reach $300M on launch day.

Now, let’s estimate Kinetiq’s potential growth. Assuming liquid staking’s share on HYPE increases to 20–30%, and Kinetiq’s market share is in the 40–60% range, here’s the result:

In other words, our estimate is that Kinetiq’s kHYPE TVL could quickly reach between $450M and $1B.

As of now, there is no information available on Kinetiq’s fee structure, except for the 0.1% user withdrawal fee. It is therefore not possible to estimate protocol revenue at this stage.

---

Perspectives for Kinetiq

HIP-3 and “Perps-as-a-Service”

The introduction of HIP-3 (Hyperliquid Improvement Proposal 3) enables third-party operators to deploy derivative markets on HyperCore and integrate them into their own interfaces.

This is a major step in Hyperliquid’s vision to become backend infrastructure for all on-chain finance.

However, to open a new perps market on HyperCore, each operator must stake at least 1M HYPE (~$48M at current prices). This is a significant barrier, especially since these funds are inaccessible for the entire market lifespan.

One of Kinetiq’s ambitions may be to move towards a Perps-as-a-Service system. This could take several forms: using staked HYPE to enable perps markets in exchange for revenue to holders, or simply letting operators retain access to their liquidity.

kPoints & Potential Airdrop

To drive protocol adoption and reward active users, Kinetiq has introduced an incentive system called kPoints. These points are awarded to users who actively contribute to Kinetiq’s growth and kHYPE usage, through staking or using the Earn module.

Here’s what we know:

• Distribution: kPoints distribution began July 15, 2025.
• Snapshots & Distribution: Snapshots every Tuesday, distribution every Thursday.
• Volume: 800,000 kPoints distributed weekly.
• Flexibility: The kPoints program is adaptable; Kinetiq reserves the right to adjust terms at any time as the platform evolves. No end date specified.

No official announcement has yet been made about kPoints’ future use, but it is fairly clear they will be converted when the Kinetiq token launches.

Note (07/16/2025): Kinetiq's TVL has exceeded $400 million, less than 24 hours after launch.