Robinhood’s cryptocurrency division deepened its bet on blockchain infrastructure last year as it expanded its offerings into tokenized stocks, staking products, and an upcoming Layer 2 network built on Arbitrum.
The retail intermediary surprised some in the cryptocurrency industry last year by revealing it was building its own blockchain infrastructure on top of Ethereum’s scaling ecosystem, rather than launching a separate layer-1 network. Johan Kelblatt, head of cryptocurrencies at the company, said the decision was ultimately about focus. Kerblat is scheduled to speak at CoinDesk’s Consensus Hong Kong conference next month.
“Our main discussion at this point was actually should we do L1 or should we do L2? And the reason we decided to do L2 was because we wanted to get the security from Ethereum, the decentralization from Ethereum, and the liquidity that is part of the EVM (Ethereum Virtual Machine) space,” Kerblat said. “We also wanted to be able to focus on what we’re good at, like building out the features we’re launching, like equity tokens and other things.”
By pinning its infrastructure to Ethereum rather than reinventing its core blockchain primitives, Robinhood could potentially alleviate some of its most difficult technical problems. “Then we don’t have to focus on decentralization and security, which is something Ethereum provides for free,” Curblat added.
Robinhood’s proprietary Layer 2 chain is still a secret. “The chain is currently on a private testnet and there is no specific news to share regarding how it will be rolled out,” Kerblat said. For now, Robinhood’s tokenized shares already exist in Arbitrum One, Ethereum’s largest rollup by activity. (Rollups are a type of scaling network that batches many transactions together and processes them separately from Ethereum’s main network, making the activity faster and cheaper while relying on Ethereum for security.)
This choice can make the final transition seamless. “The advantage of Arbitrum’s technology is that we can move all our assets and liquidity to the (new) chain the same day the chain goes live on Arbitrum One,” Kerblat said. “We don’t really have such a thing as a migration period.”
These assets are growing rapidly. Robinhood launched its tokenized stock program in July, and while its offering was relatively small, customer demand caused the company to scale rapidly. “When we launched in June, we had about 200 equity tokens, and now we have over 2,000 (tokenized stocks),” Kerblat said. “One of the most common requests from our clients is that 200 stocks is great, but they want access to the entire portfolio.”
This expansion is part of a broader vision for tokenization. “For us, it’s really just the beginning,” Kerblat said. “We think it’s not just public equity…We also think we can move into private equity, real estate, and art, as well as anything that can be tokenized.”
Robinhood is also delving deeper into crypto-native products, including staking, an area fraught with U.S. regulatory uncertainty. “Staking was actually one of the most requested features by our customers,” Curblat said. The company first rolled out staking in Europe and then expanded in the United States. “We first rolled this out in the EU and we saw a lot of adoption. People really liked it. As soon as the SEC updated their guidance, we were able to start rolling it out in June across the U.S. except for five states.”
Looking ahead, Curblat sees tokenized assets reshaping the way yields are generated across cryptocurrencies and traditional finance alike. “I think yields will go up as new assets come on-chain,” he said. “As we get more equity, private equity, real estate, etc., we expect to see new lending programs emerge.”
Even as blockchain infrastructure becomes fragmented, Kerblat believes new layers will emerge. “This technology is already starting to replace some of the infrastructure of traditional finance,” he says. “Fragmentation is a reality, and on top of that you will see a new layer that will bring everything into harmony.”
For Robinhood, the priorities remain clear. “For us, we are focused on asset classes and bringing new equity and real-world assets onto the chain.”
Read more: Robinhood leans toward advanced traders as crypto volatility changes user behavior
