Robinhood Ventures into L2, Focusing on RWA Tokenization
- Core Viewpoint: Robinhood has launched its own Layer 2 network, Robinhood Chain, built on Arbitrum, aiming to tokenize real-world assets (RWA) such as stocks. This move seeks to enable 24/7 trading, instant settlement, and enhance asset composability, marking a blurring of the lines between traditional finance and crypto finance.
- Key Elements:
- The technical architecture is built on Arbitrum Orbit, leveraging Ethereum mainnet security while allowing for independent governance and compliance customization, providing flexibility for financial regulatory requirements.
- It has already launched approximately 2,000 tokenized stock and ETF products in the European market. These are essentially derivative contracts pegged to stock prices, licensed and custodied by the acquired Bitstamp, with a total value of $15.1 million.
- The core advantages lie in providing 24/7 markets, instant settlement, and potential asset composability (e.g., for collateralized lending), with a low entry barrier starting from 1 Euro and zero commission fees.
- Major challenges faced include ambiguous legal definitions of assets (being derivatives rather than direct ownership), counterparty (Robinhood Europe) concentration risk, and a currently relatively closed ecosystem, which creates tension with decentralized principles.
- This move is seen as a strategic extension for Robinhood beyond "zero commission," attempting to use blockchain technology to eliminate the temporal and spatial barriers of traditional finance and promote financial democratization.
Original Author: KarenZ, Foresight News
At the end of January 2026, Robinhood CEO Vlad Tenev revisited the "GameStop short squeeze" that shocked Wall Street five years ago on social media, stating bluntly: if blockchain technology's real-time settlement capability had existed back then, the infamous "pulling the plug" moment that angered countless retail investors could have been avoided.
Just two weeks later, Robinhood officially announced the launch of the Robinhood Chain public testnet based on Arbitrum, which will support tokenized real-world assets, including stocks, ETFs, private assets, and other financial instruments.
Architecture Choice: Why Arbitrum?
For its architecture, Robinhood chose to build the Ethereum Layer 2 network, Robinhood Chain, based on Arbitrum Orbit. It uses Ethereum Blobs to ensure data availability and ETH as the native gas token.
Robinhood clearly understands it doesn't need to reinvent the wheel. Arbitrum provides EVM compatibility, allowing existing DeFi protocols and wallet infrastructure to migrate at near-zero cost. More importantly, Arbitrum Orbit allows Robinhood to build a "dedicated chain" that possesses independent governance and custom logic (such as compliance checks) while still sharing the unbreakable security consensus of the Ethereum mainnet.
This is crucial for Robinhood, which must meet financial regulatory requirements. It can implement compliance rules on-chain, restrict access for specific wallet addresses, all without detaching from Ethereum, the largest pool of capital.
Most critically, as early as mid-2025, Robinhood had already been piloting its tokenized stock business on Arbitrum. Now, launching its own chain on Arbitrum is a natural progression.
Robinhood's Tokenized Stock Pilot
Prior to the Robinhood Chain testnet launch, Robinhood had been conducting an 8-month "tokenized stock" experiment in the European market.
At the Consensus 2026 conference, Johann Kerbrat, General Manager of Robinhood Crypto, stated that Robinhood has already launched approximately 2,000 tokenized stock and ETF products in Europe, covering mainstream U.S. stocks and ETFs. Future plans include tokenizing real-world assets like private equity, real estate, and art to enable 24/7 trading and instant settlement.
According to Dune data, as of February 9th, the total value of Robinhood's tokenized stocks is currently $15.1 million, with cumulative trading volume reaching $74.43 million. Admittedly, this scale appears modest.
How It Works: How Does Robinhood's Tokenized Stock Put U.S. Stocks "On-Chain"?
- Underlying Architecture: These tokenized stocks were initially issued on Arbitrum and will be fully migrated to Robinhood Chain in the future.
- Essential Nature: These tokenized stocks are not actual ownership certificates but are derivative contracts pegged to the price of the underlying stock or ETP. This means the tokens held by users track the performance of the U.S. stocks, but users do not own the corresponding shares.
- Issuance and Burn Mechanism: When a user buys a U.S. stock derivative contract on Robinhood, the platform immediately mints a corresponding fungible token on the blockchain. This token represents the user's ownership of that contract, but it cannot be transferred to others. When the user closes the position, the platform burns the corresponding token on the blockchain. The blockchain record is updated immediately, and the token becomes permanently invalid.
- Dividend Pass-Through: Although users do not own the stock, Robinhood achieves dividend pass-through. When the underlying stock pays a dividend, the system automatically distributes the dividend in cash to the investor's account.
- Compliance Armor: Robinhood's ability to legally launch tokenized stocks in Europe is due to its thorough regulatory preparation:
1. In June 2025, Robinhood acquired Bitstamp for $200 million in cash. The core value of this acquisition lies in Bitstamp's Slovenian MiFID Multilateral Trading Facility (MTF) license.
2. In mid-2025, Robinhood obtained the EU MiCA (Markets in Crypto-Assets) license and a Lithuanian MiFID brokerage license.
Consequently, Robinhood's tokenized stocks are custodied by Bitstamp.
In terms of trading thresholds and fees, the barrier to entry for these tokenized stocks is extremely low, starting from just 1 Euro. Trading hours cover 5*24; users can place advance orders during non-trading hours, which are executed automatically when the market opens. Regarding fees, Robinhood implements a zero-commission, zero-spread policy, charging only a 0.1% foreign exchange fee during transactions, minimizing user trading costs to the greatest extent.
The "Second Half" of Financial Democratization
If Robinhood's first half was defined by "zero commissions," its second half is about "eliminating the barriers of time and space."
The core narrative of Robinhood Chain lies in the comprehensive on-chain representation of RWA (Real World Assets). Its significance is reflected in three dimensions:
- 24/7 Market: Robinhood Chain brings U.S. stocks into the Crypto time dimension, freeing capital flow from the constraints of Wall Street's schedule.
- Instant Settlement: Faster trade confirmation speeds.
- Asset Composability: This is the greatest potential. Imagine, in the future, you could not only hold Tesla stock but also deposit it into protocols like Aave or Compound as collateral to borrow USDC for buying coffee. The properties of assets are fully unleashed. Of course, at this stage, Robinhood's stock tokens cannot be transferred to other digital wallets or trading platforms.
- Permissionless: Robinhood Chain is designed to be permissionless and developer-friendly. Anyone can interact with the network, build applications, and deploy smart contracts.
- Erosion of Global Investment Barriers: An investor in Southeast Asia can participate in the growth dividends of top global companies through Robinhood Chain with minimal friction costs.
Unavoidable Challenges and Variables
However, the voyage to the new world still faces several "high walls":
Legal Ambiguity in Asset Definition: Currently existing as "derivatives" rather than direct tokenization of the underlying securities, there remains a layer of opacity regarding legal clarity.
- Robinhood Europe is the Sole Counterparty: Robinhood Europe is the sole counterparty for these financial derivatives. This counterparty concentration could pose potential liquidity and credit risks. However, Robinhood's official documents indicate that Robinhood hedges the risk of its issued U.S. stock derivatives by purchasing U.S. stocks or ETFs on a 1:1 basis.
- Ecosystem Closedness: Robinhood Chain currently exhibits strong centralized control attributes. Its terms of service clearly state that the platform can reset, restrict, or revoke access for specific wallets at any time. While this design is necessary to meet compliance requirements, it also conflicts with the core spirit of Web3 decentralization, placing it in the controversy of "imbalance between compliance and decentralization." However, to some extent, decentralization and compliance are inherently conflicting, which is understandable. Over the past few months, Robinhood's approach to opening up tokenized stocks has also been continuously expanding.
- Resistance from Third-Party Companies: OpenAI previously issued a public statement "not recognizing" the legality of certain tokenized equities. This exposes a core contradiction in RWA: the recognition of rights between third-party companies and the asset tokenizer (Robinhood).
Summary
The launch of the Robinhood Chain testnet did not trigger a frenzy in the Crypto industry, but this might be a revolution flowing deep beneath calm waters.
When a giant like Robinhood, deeply entrenched in traditional retail finance, begins seriously deploying blockchain and promoting the on-chain representation and trading of real-world assets, the clear boundary between traditional finance and crypto finance is gradually being blurred and dissolved.
Whether Robinhood Chain will become a super gateway connecting traditional finance and Web3, or become a closed "island" due to an excessive focus on compliance, remains a question only time can answer.
