Robinhood’s crypto division has deepened its bet on blockchain infrastructure over the past year, expanding its products into tokenized stocks, staking products and an upcoming layer-2 network built on Arbitrum.
The retail brokerage stunned parts of the crypto industry last year when it revealed that it was building its own blockchain infrastructure on top of Ethereum’s scalable ecosystem, rather than launching an independent layer 1 network. The decision, said Johann Kerbrat, the company’s crypto chief, was ultimately about focus. Kerbrat will speak at CoinDesk’s Consensus Hong Kong conference next month.
“The main discussion for us at this point was really should we do an L1 or should we do an L2, and the reason why we decided to do an L2 was that we wanted to get the security of Ethereum, the decentralization of Ethereum, and also the liquidity that is part of the EVM [Ethereum Virtual Machine] space,” Kerbrat said. “We also really wanted to be able to focus on what we’re good at, which is building a feature that we’re trying to launch, like stock tokens and other things.”
By anchoring its infrastructure to Ethereum instead of reinventing core blockchain primitives, Robinhood could solve some of its toughest technical problems. “That way we don’t have to focus on decentralization and security. This is virtually free through Ethereum,” Kerbrat added.
Robinhood’s own layer 2 chain is still secret. “The chain is currently on a private testnet and we don’t really have any news to share on how it will go public,” Kerbrat said. For now, Robinhood’s tokenized stock is already living on Arbitrum One, Ethereum’s largest aggregation by activity. [Rollups are a type of scaling network which batches large numbers of transactions together and processes them off Ethereum’s main network, making activity faster and cheaper while still relying on Ethereum for security.]
That choice could make the eventual transition seamless. “The great thing about Arbitrum’s technology is that on the day the chain is also live on Arbitrum One, we transfer all the assets, the liquidity, to the [new] chain,” Kerbrat said. “There’s really no migration period or anything like that for us.”
Those assets have grown quickly. Robinhood launched its tokenized stocks program in July with a relatively small supply, but customer demand forced the company to scale up quickly. “When we launched in June, we had around 200 equity tokens. Now we’ve passed 2,000 [tokenized stocks]said Kerbrat. “One of our top requests from our clients is that 200 stocks is great, but they want access to the entire portfolio.”
The expansion is part of a much broader vision of tokenization. “For us, this is really just the beginning,” Kerbrat said. “We think it won’t just be public equities… We also think we can go into private equity and real estate and art – like anything that can be tokenized.”
Robinhood has also delved deeper into crypto-native products, including staking, an area fraught with regulatory uncertainty in the US. “Staking was really one of our most requested features from our customers,” said Kerbrat. The company first introduced staking in Europe before expanding to the US. “We launched it in the EU first and we saw a lot of adoption. People loved it. Once the SEC updated their guidance, we were able to launch it everywhere in the US in June, with the exception of five states.”
Looking ahead, Kerbrat sees tokenized assets reshaping how returns are generated in both crypto and traditional finance. “I think the returns will come because of the new assets coming onto the chain,” he said. “We expect that with more equities, private equity, real estate and all of this, you’ll see new lending programs.”
Even as the blockchain infrastructure fragments, Kerbrat believes new layers will emerge. “This technology is already starting to replace some of the foundations of traditional finance,” he said. “The fragmentation is real and you see a new layer on top that harmonizes everything.”
For Robinhood, the priority remains clear. “For us, we’re really focusing on the asset class – bringing new equities and real assets to market.”
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