The Aave DAO is evaluating a proposal that would extend official recognition to HyperLend's new deployment on Elysium, Kinetiq's high-throughput Layer 2 settlement built atop the Hyperliquid ecosystem. The move represents a calculated expansion of Aave's friendly fork model—a governance structure where independent teams deploy Aave's battle-tested protocol while returning a portion of protocol revenue to the original DAO. Under this new arrangement, HyperLend commits to sharing 50% of all Elysium-generated fees directly with Aave, a substantial improvement over the 10% terms negotiated for the team's original HyperEVM deployment.
HyperLend's operational track record provides the empirical foundation for this expansion. Since launching on HyperEVM in early 2025, the protocol has originated roughly $2 billion in loans and currently manages over $530 million in total value locked, with $250 million deployed across active positions. The protocol has maintained stable risk management throughout this period, supported by Block Analitica's ongoing oversight. This performance demonstrates that friendly forks can function as genuine capital allocators within their ecosystems rather than speculative experiments—a critical consideration for Aave as it evaluates expansion beyond Ethereum and established Layer 2s.
Elysium itself represents a specialized infrastructure layer within the Hyperliquid environment. As an Arbitrum Orbit chain that settles to HyperEVM while running co-located with HyperCore, Elysium is architected for high-frequency onchain activity that its parent chain cannot accommodate. The network uses HYPE as gas and attracts the type of frequent trading and derivative activity that naturally generates consistent demand for lending liquidity. HyperLend's positioning captures this flow while structuring the arrangement so Aave DAO governance actively benefits from ecosystem development—converting what might otherwise be autonomous protocol expansion into a revenue-sharing partnership.
From a strategic perspective, this proposal illustrates how Aave's governance can leverage friendly forks as capital-light expansion vehicles. Rather than deploying DAO resources or risking treasury capital, Aave essentially licenses its protocol and risk frameworks to proven operators while maintaining revenue participation. The higher fee-sharing percentage reflects HyperLend's demonstrated operational competence and suggests the DAO's willingness to negotiate more favorable terms as protocol operators prove their reliability. As liquidity fragments across increasingly specialized Layer 2 solutions, this model may become central to how Aave maintains market presence without operational overhead.