From LST Foundation to "Exchange Factory," why is Kinetiq said to be changing the on-chain landscape?

Kinetiq’s story begins with establishing a solid position within the Hyperliquid ecosystem. As the largest liquidity staking protocol in the ecosystem, Kinetiq manages over $700 million in assets. Its core product—liquidity staking token kHYPE—forms a critical underlying infrastructure within the HyperCore and HyperEVM ecosystems.

A true turning point occurred after the Hyperliquid core team launched the HIP-3 protocol. This technological upgrade fundamentally changed the game, transforming HyperCore from a single product into an open platform. Kinetiq keenly recognized the potential of this transformation, moving beyond being just a service provider to building a grander vision—the “Exchange Factory.” This strategic shift reached a significant milestone on January 12, 2026, with the official launch of its flagship DEX product, Markets, supporting perpetual contracts for diversified assets including BABA, crude oil index, and Russell 2000 index. Markets is not only the first HIP-3-based DEX but also the first full demonstration of Kinetiq’s “Exchange-as-a-Service” business model.

Model Breakdown: How HIP-3 Is Redefining DEX Creation Rules

In traditional DEX creation, teams need to build matching engines, clearing systems, and oracle integrations from scratch, which involves high technical barriers and resource consumption. However, the innovation of the HIP-3 protocol lies in its complete removal of these technical obstacles. Now, any participant willing to stake 500,000 HYPE can deploy their own perpetual contract markets using the same core infrastructure as Hyperliquid’s main site.

This revolution marks a shift in the core competitive advantage of market creation—from backend engineering capabilities to capital and market design skills. Builders can focus on identifying speculative demand for specific assets or data sets and anchoring them to reliable oracles. The XYZ100 market on Hyperliquid exemplifies this model’s immense power: within just three weeks of launch, trading volume exceeded $1.3 billion.

Kinetiq’s Markets exemplify this new paradigm. It focuses on bringing traditional financial assets into the perpetual contract framework, with a strong emphasis on oracle construction details, aiming to become the authoritative trading pair within HIP-3 products tracking the same underlying assets.

Ecosystem Blueprint: Launch Platform—The Core Engine of the “Exchange Factory”

The Launch platform is the core production engine enabling Kinetiq’s “Exchange Factory” model. Founder Omnia vividly compares it to a “Shopify + Kickstarter” combo. It’s a ready-made platform allowing creators to deploy their customized DEX by raising a minimum of 500,000 HYPE through permissionless crowdfunding.

The operation of the Launch platform balances multiple interests:

• For project teams: They can raise the necessary startup capital through community crowdfunding without bearing the high financial burden—up to $20 million or more. After the initial staking period, they can choose to renew with the community or replace part of the community stake with their own funds, offering great flexibility.
• For stakers: They can stake HYPE into specific exchange pools they favor, receive corresponding exLST tokens (like exHYPE), and share in the trading fees generated by that exchange. This design deeply aligns staker interests with the success of specific projects.
• Incentive alignment: Kinetiq encourages project teams to maintain incentive consistency with stakers through a hybrid model of tokens and revenue sharing. As the first HIP-3 exchange built via Launch, Markets allocates 10% of its revenue to kmHYPE holders, with 90% reinvested for growth, setting a market standard for future projects.

Growth Flywheel: Liquidity, Asset Innovation, and Institutional Channels

Kinetiq’s business model creates a powerful growth flywheel driven by three engines:

1. Liquidity Solutions: Facing potential liquidity fragmentation under HIP-3, Kinetiq employs a dual approach. They selectively list assets with strong order demand to naturally incentivize market makers, and as the largest LST protocol on Hyperliquid, they have built a robust network of market maker relationships to ensure Markets receives ample liquidity support.
2. Asset Innovation: Kinetiq expands tradable assets beyond traditional cryptocurrencies to include real-world data sets, commodities indices, and other “thick middle” and “long tail” assets. Analysis shows that 30-55% of stock perpetual contract trading volume occurs outside traditional market hours, strongly validating the huge potential for decentralized markets to fill gaps in traditional finance.
3. Institutional Channels: Through the licensed, KYC/KYB-compliant fund pool launched in partnership with Hyperion DeFi—iHYPE—Kinetiq has built a compliant bridge for traditional financial capital to enter the Hyperliquid ecosystem, providing compliant staking solutions for future products like DAT and ETFs.

Value Reconfiguration: From Narrative-Driven to Cash Flow-Driven

By 2026, the valuation logic in the crypto market is undergoing a profound shift. Capital no longer flows indiscriminately into all projects but selectively toward protocols that generate real revenue and flow into tokens.

Kinetiq’s business model aligns perfectly with this new valuation logic. As an “Exchange Factory,” it not only generates direct revenue through its flagship exchange Markets but also supports the creation of more exchanges via the Launch platform, forming a scalable revenue matrix. According to official sources, Kinetiq’s governance token KNTQ is central to the protocol, with stakers (sKNTQ holders) accumulating value across all of Kinetiq’s business lines, including through programmatic KNTQ buybacks utilizing all revenue streams.

This design, which directly links protocol growth to token value, offers a significant advantage in today’s performance-oriented market environment. As of February 24, 2026, data from Gate.io shows HYPE token price fluctuating around $26.07, with the overall health of the ecosystem providing strong support for KNTQ’s long-term value.

Conclusion

Kinetiq’s “Exchange Factory” model represents a broader industry trend—DEX competition shifting from backend engineering to market design and user experience. Once the technical barriers to creating exchanges are removed, differentiation depends on who can better identify market needs, design attractive trading products, and deliver smooth user experiences.

This shift also transforms DEX from a competitor to centralized exchanges into a new growth path. By introducing non-crypto assets and real-world data, the HIP-3 model brings new traffic and users to the market.

For comprehensive platforms like Gate, this trend is both an inspiration and a challenge. Recently, Gate upgraded its Web3 ecosystem to Gate DEX, offering a unified multi-chain trading experience, reflecting industry demand for specialized, integrated DEX solutions. Gate DEX combines the convenience of CeFi with the freedom of DeFi, demonstrating the enormous potential of a hybrid CeFi-DeFi model.

In the future, competition among trading platforms will be a comprehensive contest of ecosystem integrity, innovation speed, and user value. Kinetiq’s “Exchange Factory” lowers barriers to innovation, fostering more specialized, vertical DEXs and greatly enriching the decentralized trading ecosystem.