Robinhood discusses creating an Ethereum layer-2: 'Our goal was to leverage Ethereum’s security'

Robinhood Expands Blockchain Initiatives

Over the past year, Robinhood has significantly broadened its involvement in blockchain technology, introducing tokenized stocks, staking services, and preparing to launch a layer-2 network based on Arbitrum.

The popular trading platform surprised many in the crypto community last year by announcing plans to develop its own blockchain infrastructure within Ethereum’s scaling ecosystem, rather than creating a standalone layer-1 blockchain. According to Johann Kerbrat, Robinhood’s head of crypto, this strategic move was about maintaining focus. Kerbrat is scheduled to speak at CoinDesk's Consensus Hong Kong conference next month.

“Our main debate was whether to build a layer-1 or a layer-2 solution. We chose layer-2 to leverage Ethereum’s security, decentralization, and the liquidity available in the EVM ecosystem,” Kerbrat explained. “This allows us to concentrate on our strengths, such as developing innovative features like stock tokens.”

By building on Ethereum instead of creating a new blockchain from scratch, Robinhood can rely on Ethereum’s established security and decentralization, reducing the complexity of technical challenges. “This approach lets us benefit from Ethereum’s security and decentralization without having to build those elements ourselves,” Kerbrat added.

Robinhood’s proprietary layer-2 network is still in development. “Currently, the chain is operating on a private testnet, and we’re not ready to announce public launch details yet,” Kerbrat said. In the meantime, Robinhood’s tokenized stocks are already available on Arbitrum One, Ethereum’s most active rollup. (Rollups are scaling solutions that bundle many transactions together and process them off Ethereum’s main chain, improving speed and reducing costs while maintaining Ethereum’s security.)

This integration is expected to make future transitions smooth and efficient. “The advantage of Arbitrum’s technology is that once our chain goes live on Arbitrum One, we can seamlessly transfer all assets and liquidity to the new chain,” Kerbrat noted. “There’s no need for a lengthy migration process.”

Rapid Growth in Tokenized Assets

Robinhood’s tokenized stock offerings have expanded rapidly. The program launched in July with a modest selection, but strong customer demand prompted swift growth. “When we started in June, we offered around 200 stock tokens. Now, that number has surpassed 2,000,” Kerbrat shared. “Our users have consistently asked for access to a broader range of stocks.”

Broader Vision for Tokenization

This expansion is just the beginning of Robinhood’s ambitions for tokenization. “We see this as the start,” Kerbrat said. “We believe tokenization will extend beyond public stocks to include private equity, real estate, art, and virtually any asset that can be represented on-chain.”

Advancing Crypto-Native Products

Robinhood has also ventured further into crypto-focused services, such as staking, despite regulatory uncertainties in the U.S. “Staking was one of the most requested features from our users,” Kerbrat said. The company initially introduced staking in Europe, where it was well received, and later expanded to the U.S. following updated SEC guidance. “After launching in the EU and seeing strong adoption, we rolled out staking across the U.S. in June, except for five states.”

The Future of On-Chain Assets

Looking forward, Kerbrat anticipates that tokenized assets will transform how yield is generated in both crypto and traditional finance. “We expect new lending opportunities to emerge as more stocks, private equity, and real estate assets become available on-chain,” he said.

Despite increasing fragmentation in blockchain infrastructure, Kerbrat predicts the rise of new layers that will unify these systems. “This technology is already beginning to replace some core elements of traditional finance,” he observed. “Fragmentation is a reality, but we’ll see new layers that bring everything together.”

Robinhood’s main objective remains unchanged: “Our focus is on expanding the asset classes available on-chain, including new stocks and real-world assets.”