kHYPE: The Native Hyperliquid LST

This is a guest post by Keegan Selby, a Founding Partner at the investment firm 4RC.

To celebrate today’s kHYPE launch, this piece will cover the rise of Hyperliquid and our investment thesis in Kinetiq, HyperEVM’s native liquid staking platform — now live.

Hyperliquid Origin Story

Hyperliquid was founded in 2023 by Jeff Yan and a Harvard classmate known pseudonymously as iliensinc. Following the collapse of FTX, they set out to create a sovereign L1 delivering CEX-grade performance with DeFi transparency.

In less than two years, Hyperliquid has grown into a ~$50B behemoth dominating decentralized derivatives with over 85% market share, nearly $5T in annualized volume, and $700M+ annualized protocol revenue. Launched without VC funding, market maker incentives, or paid listings, Hyperliquid has grown purely through product excellence and key design differentiators (centralized validators, atomic liquidations, builder codes, etc.).

In November 2024, Hyperliquid launched its native token $HYPE and rewarded roughly 94K early users with 27.5% of the total supply, currently worth over $12B making it the largest airdrop in crypto history. With over 97% of protocol fees (~$4M per day) being funneled into the Assistance Fund for HYPE buybacks, Hyperliquid has now amassed over $1B of HYPE in its treasury, and has signaled the potential to recycle these tokens into rewards or burn them for supply deflation in the future.

Today, Hyperliquid isn’t just the world’s premier perp DEX and onchain orderbook, it’s the “Blockchain to House All Finance” custom-built with HyperBFT consensus for sub-second block times and the HyperEVM smart contract layer, supporting dapps from DeFi (DEXs, liquid staking, stablecoins, money markets, yield providers, etc.) to onchain social and gaming.

With ~$2B of TVL already allocated to DeFi apps on Hyperliquid L1, points programs kicking off for HyperEVM airdrops, and almost daily recurring ATHs — HYPE has cemented its place as the fourth major cryptoasset for discerning investors alongside BTC, ETH, and SOL. The stage is now set for Hyperliquid’s next major catalyst.

Introducing Kinetiq

Kinetiq is Hyperliquid’s first truly native LST, allowing users to stake HYPE for kHYPE, a liquid receipt token that natively earns yield (currently 2–3% APY) and is composable across DeFi apps (borrow / lend, trade, loop, LP, etc.).

Kinetiq leverages Hyperliquid’s Read precompile and CoreWriter contract for interoperability between Hyperliquid’s DEX (10%+ of Binance’s OI), staking system (42% HYPE staked worth ~$20B), governance modules on HyperCore and rapidly growing DeFi ecosystem on HyperEVM.

kHYPE use cases include:

• Secure staking with optimized risk-adjusted yield and enhanced validator transparency

• Collateralization on Hyperliquid-native money markets and trading protocols

• Liquidity provisioning via AMM and order book pairs (e.g., kHYPE/HYPE, kHYPE/USDC)

• Network participation in governance for protocol upgrades and mechanism design

Kinetiq is also launching iHYPE, a custody-compliant variant of kHYPE targeting institutional participants including funds and market makers — current strategic validator and custody partners include Pier Two (SOC2 infra) and Hyperion DeFi (NASDAQ: HYPD).

For more on Hyperion there’s lots of alpha in this podcast 👀 

Thanks to our sponsors for making it possible to share this content for FREE!

| NEWSLETTER CONTINUES BELOW |

Thanks!

| NOW BACK TO THE NEWSLETTER |

Kinetiq Protocol Overview

While the final Kinetiq product roadmap is still in flight — community members anticipate three main flagship products: StakeHub, an autonomous validator selection system, Order Flow Auctions (OFA) creating a MEV engine with a 95/5% revenue split between kHYPE stakers and the Kinetiq treasury, as well as a HIP-3 perp deployer for tokenized RWAs on Hyperliquid.

StakeHub

StakeHub monitors and scores validators to algorithmically optimize user deposits for risk-adjusted yield in real-time based on three core metrics:

• Operational Performance: block proposals per second, normalized by stake weight

• Compliance: whether the validator has been slashed, jailed, or penalized

• Staked HYPE: total stake delegated, signaling network trust

Importantly, the system enforces a decentralization floor, ensuring stake isn’t overly concentrated in select nodes. As validator behavior becomes more observable (e.g., voting patterns, MEV usage), StakeHub’s scoring model will expand to capture additional layers of accountability and resilience.

MEV & Order Flow Auctions

​​In parallel with liquid staking, Kinetiq is rumored to be building a native MEV protocol designed to route and capture order flow value at the validator level. The system is built around permissionless Order Flow Auctions (OFA), allowing searchers, protocols, and wallets to submit transaction bundles directly to Kinetiq-managed validators, with economic value allocated via open auctions.

Unlike traditional MEV capture, which often fragments across relays or favors centralized operators, Kinetiq’s design aims to integrate MEV routing directly into the validator layer. At launch, the MEV client will likely be tightly scoped to searchers operating on HyperEVM, but the roadmap could include generalized auction logic, fee abstraction for dApps, and deeper integration into StakeHub’s validator scoring. This evolution turns kHYPE into an active MEV yield layer, tied directly to execution revenue at the validator level.

HIP-3 Perp Deployer

Finally, community members are also speculating that Kinetiq will partner with a key market operator to tokenize and deploy HIP-3 markets to bring the world’s most popular offchain assets (stocks, forex, commodities, indices, etc.) to Hyperliquid. Trading fees from the Kinetiq perp deployer would likely be distributed between market operators, kHYPE stakers, and the Kinetiq treasury for buybacks.

The Hyperliquid LST Opportunity

With nearly 90% of perp DEX market share by volume as the premier onchain venue for non-toxic flow, Hyperliquid is no longer just competing with decentralized orderbooks, but is now chipping away at market share from the leading centralized incumbents, i.e., Binance, Coinbase, Robinhood, etc.

As liquid staking remains a top category for TVL capture across chains, Kinetiq is uniquely positioned to dominate the LST opportunity on Hyperliquid.

Kinetiq’s Key Differentiators:

• Purpose-built for Hyperliquid ecosystem and validator infrastructure

• Autonomous delegation via Stakehub’s validator scoring algorithm

• Revenue share via MEV client and Order Flow Auction protocol

• Revenue share via protocol-owned HIP-3 markets

• kPoints and partner incentives from integrated ecosystem protocols

• Support from qualified custodians and extensive protocol audits

• Institutional onramps via iHYPE for large funds and market makers

Industry Benchmarks

• ETH: 29% staked, ~30% of staked ETH is liquid, Lido has 25% market share, 20–30% of LST TVL is unstaked annually (Dune)

• SOL: 67% staked, ~15% of staked SOL is liquid, Jito holds ~61% of LST share, 30–50% of LST TVL is unstaked annually (Dune)

Hyperliquid LST Market

• HYPE Supply: ~1B (~42% Staked = ~420M staked HYPE)

• Estimated Liquid Staking TAM: 20% of staked HYPE = 84M staked HYPE)

• Kinetiq Market Share: 30–60% = 25M — 50M kHYPE

• TVL Range: $1B — $2B+ ($45 HYPE Price)

kHYPE Yield Profile

• Base Yield: ~2.3% (Optimized via Stakehub)

• MEV Boost (OFA): +1.0%

• Protocol-owned HIP 3 Markets: TBD

• Total APY to kHYPE Holders: ~3.3%

• Annualized Yield for kHYPE Holders: $33M — $66M+

Kinetiq Protocol Revenue

• Unstaking Fee: 10bps

• MEV Rev Share: TBD

• Protocol-Owned HIP 3 Markets: TBD

Kinetiq Token Offering

• kHYPE: HYPE LST with auto-compounding yield, protocol revenue share, and incentivized DeFi composability

• iHYPE: Institutional HYPE LST for funds, market makers, and custodians.

• KNTQ: Governance token used to vote on upgrades, manage treasury, and control MEV routing strategy

Cracked Team

Kinetiq was co-founded by Omnia and a group of OG HL community members / seasoned solidity engineers, spanning backgrounds from traditional finance, systems architecture, MEV, and deep onchain trading. Most of the team has now been acquired, totaling 12 core contributors.

Concluding Thoughts:

Hyperliquid is a once-a-cycle paradigm shift, closing the gap between centralized exchanges and decentralized protocols. With major exchange listings, demand from public company treasuries, and the possibility of the Assistance Fund alone buying all ready-for-sale HYPE within the next few years, our conviction lies solely in one long-term direction of travel for HYPE and kHYPE: higher.

Kinetiq is the natural next chapter in Hyperliquid’s success arc. By embedding native liquid staking (kHYPE), MEV capture (OFA), validator intelligence (StakeHub), and injecting trading fees on endogenous perp markets (HIP-3 deployer) into the fabric of the protocol, kHYPE transforms passive staking into a high-performance yield engine, built for scale and all-weather sustainability.

Today’s Kinetiq launch provides the holy trifecta of alpha: pure secure HYPE exposure, native yield from differentiated revenue streams, and the opportunity to farm one of the most anticipated HL eco airdrops in KNTQ.

TLDR: Fade HYPE at your own risk. Stake on Kinetiq.

Hyperliquid.

Disclaimer: Investor in Kinetiq and Hyperliquid. Not Financial Advice.

• Follow Keegan on X here 

• Follow the team at 4RC here!

• For qualified investors, learn more about 4RC Fund II here.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered financial advice. Always conduct your own research or consult a financial professional before making any investment decisions.