Robinhood's Layer-2 Bet: Building the Rails for Tokenized Finance

Robinhood's decision to build its own blockchain infrastructure is a classic first-principles bet on the future of finance. The company chose not to launch a standalone layer-1 network, a path that would demand immense capital and engineering focus to solve foundational problems like security and decentralization. Instead, it opted for a layer-2 solution built on Arbitrum, a choice that frames the entire strategy. As crypto chief Johann Kerbrat explained, the core debate was about focus: should we do an L1 or should we do an L2. The answer was clear. By anchoring to Ethereum's scaling ecosystem, Robinhood inherits the security and decentralization of the world's most battle-tested network. This approach lets us benefit from Ethereum's security and decentralization without having to build those elements ourselves.

This architectural choice is a direct enabler for Robinhood's growth engine. Offloading the hardest technical problems to Ethereum frees its engineering teams to concentrate on high-growth features that define its competitive edge. The company's immediate priority is tokenized stocks, a product line that has already shown explosive demand. When we launched in June, we had about 200 stock tokens. Now we have passed 2,000. This rapid scaling from a modest start to a broad offering is the kind of adoption curve that infrastructure must support.

Building on a rollup like Arbitrum, which batches transactions off Ethereum's main chain, provides the speed and low cost needed for such a product to work at scale. The technology also offers a seamless path forward; Robinhood's new chain can eventually move assets and liquidity to its own network with no migration period. The beauty of the technology from Arbitrum is that the day the chain is live on Arbitrum One as well, we are going to be able to move all the assets, the liquidity, to the [new] chain.

The strategic rationale is complete only when viewed through the lens of its user base. Robinhood isn't building infrastructure for a hypothetical future. It's building it for the $51 billion in crypto assets under custody as of Q3 2025. That massive, existing user base represents the critical mass needed for any new financial protocol to gain traction. The company's infrastructure investment is a bet that this user base, already engaged in crypto, will be the first to adopt tokenized stocks and other advanced features. By focusing its engineering on these high-value applications rather than reinventing blockchain basics, Robinhood is positioning itself to capture the next wave of adoption. It's not trying to be the rails; it's trying to be the first major train running on them.

The Infrastructure Layer: How the L2 Fits the S-Curve

The layer-2 isn't just a technical detail; it's the essential rail for the next paradigm shift. Ethereum's foundational security is now a given, but its scalability remains the bottleneck for mass adoption. The network's high transaction fees and limited processing capacity have long been a barrier, especially for applications requiring frequent, low-cost interactions like tokenized stocks. This is where layer-2 solutions like Arbitrum step in. They operate as a high-throughput, low-cost layer built on top of Ethereum, inheriting its security while dramatically increasing transaction speed and reducing costs. For Robinhood, this means the technology is a necessary condition for its ambitious product line to work at scale.

By building its new chain on Arbitrum, Robinhood is positioning itself on a proven, high-performance rail for its tokenized stock offerings in the EU. The company has already launched US stock and ETF tokens in the EU, giving European customers exposure to US equities with zero commissions. This product requires a system that can handle the settlement of thousands of tokenized trades daily without the friction of high fees or slow confirmations. Arbitrum's rollup architecture, which batches transactions off the main chain, provides exactly that. It ensures the user experience remains fast and seamless, which is critical for converting crypto-native users into holders of tokenized assets.

More broadly, this infrastructure layer is key to harmonizing the fragmented landscape of traditional finance on-chain. The vision is for a future where assets from different markets-stocks, bonds, real estate-can be represented and traded as tokens on a single, interoperable network. Robinhood's move on Arbitrum is a strategic bet that this "fragmentation" can be unified. By using a widely adopted Ethereum L2, the company ensures its tokenized stocks can potentially interact with other DeFi protocols and assets built on the same ecosystem. The technology provides the common language and shared settlement layer that could eventually bring global finance into a single, programmable system. In the adoption curve, Robinhood is building the first major train to run on these new rails.

Financial Impact and Exponential Growth Metrics

The infrastructure bet is now the engine for a new growth trajectory. By launching tokenized stocks in the EU, Robinhood is no longer just a crypto platform; it's an all-in-one investment app for a global audience. The company aims to reach over 400 million people across 30 EU and EEA countries. This expansion dramatically widens its addressable market, bringing in users who may have never touched crypto before but are drawn to the simplicity of zero-commission US stock exposure. The financial implication is a potential step-change in user acquisition and engagement, moving beyond the crypto-native base to capture the mainstream.

This product suite is designed to turbocharge trading volume. The company already commands significant scale, with $232 billion* of crypto notional trading volume over the last twelve months as of Q3 2025. Tokenized stocks, with their 24/5 access and seamless settlement, are likely to increase the frequency and notional value of trades. Each tokenized stock trade represents a new transaction on the underlying layer-2 network, directly contributing to the volume that could eventually support new revenue streams. The goal is to create a flywheel: more users adopt tokenized stocks, leading to higher volume, which in turn validates the infrastructure and attracts more users.

More importantly, the layer-2 network itself could become a direct profit center. While the initial focus is on powering Robinhood's own products, the architecture is built for broader use. The company's own chain, optimized for tokenized real-world assets, is a foundational layer that could eventually generate revenue from transaction fees and staking rewards. This would diversify Robinhood's income away from its traditional commission model and into the infrastructure layer of the new financial paradigm. The exponential growth metric here is the transition from being a pure intermediary to becoming a platform owner. By building the rails, Robinhood positions itself to capture a share of the economic activity flowing over them, not just the fees from each individual transaction.

Catalysts, Risks, and What to Watch

The thesis now hinges on a few near-term milestones that will test whether this infrastructure bet translates into exponential growth. The primary catalyst is the official launch of the layer-2 network itself. While the chain is currently on a private testnet, its public debut will be a critical stress test. It must demonstrate it can handle the volume of tokenized stocks and other real-world assets without the high fees and congestion that have plagued Ethereum. Success here validates the core assumption: that a well-built L2 can be the essential rail for mass adoption of tokenized finance.

A key risk is execution complexity. Building a secure, high-performance L2 is a monumental engineering challenge, and Robinhood must do it while maintaining its focus on its core crypto trading business. The company is already expanding into new products like staking, which adds to the operational load. As Johann Kerbrat noted, the debate was about focus. The risk is that the dual mandate-building infrastructure and running a live trading platform-creates friction. Any major outage or security flaw on the new chain could damage trust in both the infrastructure and the broader Robinhood brand.

Beyond the launch, the real test of exponential growth will be in the platform's ability to onboard new assets and expand geographically. Watch for the integration of new real-world assets beyond stocks and ETFs. The architecture is built for this, but the pace of tokenization will show if the infrastructure can drive adoption. Similarly, the expansion of tokenized stocks to other regions outside the EU will measure the platform's global scalability. Each new market and new asset class represents a potential new adoption curve. If Robinhood can smoothly add these layers, it will prove its platform is becoming a foundational layer for a new financial paradigm. If it stumbles, the narrative of exponential growth will face a hard reality check.