Robinhood Chain's success proves Ethereum is not dead

Original article by Ryan Berckmans

Translation / Compiled by Golem, Odaily (@web3_golem)

The previous era of the crypto industry dumped tokens through infrastructure, while its next era will choose Ethereum L1+L2 to build real businesses.

Travis Kling posed a question this week: "Is it now obvious that real companies doing real things are not interested in L1/L2s?" Robinhood was the first example he cited. But on the contrary, Robinhood is almost a perfect counterexample: When real companies make business decisions, they almost all choose the Ethereum L1+L2 model.

Robinhood chose an existing L1 — Ethereum. Then, it built its own Ethereum L2 using Arbitrum technology. Robinhood Chain uses Ethereum blobs for data availability, uses ETH as its native gas token, and its security is also provided by Ethereum.

Therefore, Robinhood did not reject the Ethereum L1+L2 model; on the contrary, this model is running as intended on Robinhood.

The "buyers" choosing Ethereum have changed. Past crypto industry projects chose public chains and technologies to sell their own tokens, while the emerging real-world on-chain economy is using the Ethereum L1+L2 model as the foundation for cash-flow businesses.

As the composition of buyers changes, I believe Ethereum's advantages will become more apparent.

The Old Crypto Economy Was Token-Centric

By "real businesses serving real users," I mean a traditional corporate model: building products that customers need, earning profits by serving those customers, and increasing the equity value associated with those profits.

"Real users" here refer to consumer demand arising from ordinary economic needs, rather than speculative demand driven primarily by new token issuance. Crypto-native users are clearly real users. This is not a moral judgment on whether a protocol is useful or its developers are sincere; it is merely a distinction regarding the goal of operating a real-world economy.

The value of a token can only come from the following three sources:

• Cash: a reliable claim on future cash flows, similar to on-chain equity or bonds;
• Utility: access, control, governance, or other特许参与 rights to a valuable system. Even without cash flows, tokens controlling important things clearly have value;
• Monetary Premium: people hold the asset because they expect others to accept and recognize its value in the future. This asset is no longer merely a claim that must eventually be redeemed for something else but becomes a store of wealth — a terminal value asset.

Monetary premium is real but extremely difficult to maintain. It requires deep network effects in trust, liquidity, distribution, integration, and utility. Gold, the US dollar, Bitcoin, and Ethereum have all built versions of this effect, while few other assets have managed to do so.

In retrospect, since programmable cryptocurrencies became popular, the vast majority of industry participants have not been ordinary cash-flow businesses. Their economic goal was usually to sell a token whose value was primarily based on utility, an expected monetary premium, or promises of distant future cash.

Sometimes, their plan was direct — launch a protocol and sell its token; sometimes, it was more indirect — receive a grant from a token-funded ecosystem and then cash out the received tokens; sometimes, a project genuinely anticipated future profitability, but because the token's valuation was disconnected from any possible future cash flow, the actual business model remained confidence in the token itself.

This has become the norm because almost every project was doing something similar, though there were exceptions.

Centralized exchanges are essentially cash-flow business platforms and are natively multi-chain; connecting an additional chain is like adding a deposit and withdrawal channel. Some stablecoin issuers are also cash-flow businesses, initially serving customers in the crypto space and now rapidly expanding into the broader economy.

But these exceptions prove the rule: businesses aiming for ordinary cash flow will choose infrastructure that maximizes the business, not the token's value.

Different Business Goals Lead to Different Projects

A company's ultimate goal determines its technological choices.

If the goal is a cash-flow business, then the blockchain is infrastructure, and selection criteria are to reduce risk, improve products, reach customers, and secure profits; if the goal is token monetization, then there is greater freedom in choosing a blockchain, and after receiving a grant from a public chain, a company can choose to build on that chain.

For example, if a protocol succeeds on Chain A, you can launch a similar protocol on Chain B so that investors can price your token by comparison. Want to generate hype for a new token? A new L1, L2, app chain, gas token, governance system, or some special tech stack can all become selling points.

The issue is not the diversity of technology itself; the crypto industry will continue to see an explosion of applications, protocols, L2 architectures, and specialized execution environments. The problem is the tendency to turn every new idea into a sovereign independent ecosystem (with its own L1 architecture, security validation, liquidity base, and monetary asset), regardless of whether the underlying product merits independence.

As the crypto industry today transitions towards cash-flow businesses, various attempts will continue, but they will increasingly be built on shared infrastructure. Companies will specialize at the application layer or L2, while relying on the Ethereum L1 layer for settlement, security validation, liquidity maintenance, and monetary asset management. The result is not less innovation but a balance: more diversity at the edges, more concentration at the foundation.

The traditional crypto economy often chose architecture based on the token it wanted to sell; the emerging on-chain economy will choose architecture based on the product it hopes its customers will buy.

The Buyers Are Changing

The future of the crypto industry will be vastly different from its past because the "buyers" have changed.

The previous US administration actively suppressed the development of on-chain transactions; this trend has now reversed. The GENIUS Act is now in effect, providing a legal framework for payment stablecoins, and Europe's MiCA regulatory framework is also fully applicable. Brokerages, payment companies, banks, asset managers, and governments worldwide are formulating strategies for stablecoins, tokenization, and on-chain transactions.

This doesn't mean all regulatory issues are resolved, but it does prove that large institutions can pursue more blockchain business experimentation.

We are approaching the beginning of the S-curve for true crypto adoption.

When we emerge from this phase, crypto and traditional finance will no longer be clearly distinct categories. Property, money, transactions, finance, identity, and trust will all be coordinated through a network of on-chain and off-chain systems. Ultimately, "Web3" will fade into obsolescence like "Web2," and everything will just become the internet itself.

As this progresses, a larger proportion of crypto market participants will be real-world businesses serving ordinary consumers in the broader economy. This proportion will be reflected not only in the number of companies but also in capital scale, user numbers, asset size, and institutional influence.

These companies are no longer crypto projects looking for a business model to support a token; they are businesses using crypto technology to optimize existing or emerging cash-flow operations. This determines their technology choices; infrastructure selection aimed at a token economy is a poor guide for infrastructure selection aimed at a cash economy.

Real-World Businesses Will Not Build Infrastructure from Scratch

Typically, real-world businesses have limited budgets for venturing into infrastructure building. They do not want consensus mechanisms, cross-chain bridges, validator economies, gas tokens, governance tokens, and liquidity bootstrapping to be six unrelated side-projects. Every additional component must create customer value, or it becomes a burden.

The chain should serve the business, not the other way around.

Some businesses are inherently multi-chain. Exchanges, wallets, stablecoin issuers, and certain asset issuers may require broad distribution. Even so, "multi-chain" rarely means every chain is equally important; different chains usually have their own specializations regarding liquidity, issuance, settlement, product state, or deeper integration.

Most on-chain businesses require special commitments to one or a few chains. Their choices typically take three forms:

• When an on-chain business needs maximum decentralization, credible neutrality, minimal risk, or liquidity, it uses Ethereum L1. L1 execution is more expensive because it bears the most powerful shared environment.
• When a business needs control, customization, compliance, predictable unit economics, low latency, or high throughput, it builds its own Ethereum L2. Because it can get its own dedicated chain tailored to its needs while maintaining a direct connection to Ethereum.
• When a business doesn't need L1 and doesn't require building its own L2, it typically uses one or more mature shared L2s. Base, Arbitrum One, Robinhood, and other established Ethereum L2s have become common deployment platforms.

These on-chain businesses will still bridge assets, "export products," and connect to other networks. Having a home chain does not mean being isolated; importing, exporting, and interoperability are core components of on-chain business. But the home chain remains crucial; it determines the system's security, canonical state, liquidity relationships, operational model, and long-term dependencies.

Why the Ethereum L1+L2 Model Still Works

Ethereum separates the two key elements that large enterprises need.

The L1 layer provides a highly decentralized, credibly neutral, and extremely liquid global hub. The L2 provides a market for fast, low-cost, specialized, controllable, and customizable execution environments.

The L1 remains neutral, while the L2s at the edge can adapt to different operators, jurisdictions, products, and users. L2s not only scale Ethereum technically but also politically: organizations can operate on their own terms without requiring the global center (L1) to become their private chain.

An independent L1 can offer control and performance advantages. In some cases, full sovereignty over consensus and data availability is worth it for a project, but obtaining it is not cheap.

A new L1 must create and maintain its own security system, set of validators or operators, cross-chain bridges, liquidity, tools, integrations, and reputation. It creates a new security and liquidity silo, increasing the cost and friction of interoperating with Ethereum L1 and the broader L2 economy (i.e., the dominant on-chain economic network).

For the vast majority of enterprises, the value created by an independent L1 does not offset these costs.

A custom Ethereum L2 can capture most of the business advantages that an enterprise would seek from an independent L1: high TPS, control over execution, upgrades, fees, ordering, latency, access rules, and product-specific features.

Furthermore, L2 offers advantages that an independent L1 itself does not provide: Ethereum for settlement and data availability, a standard L1 bridge, proximity to Ethereum's assets and capital, and a path towards increasingly trust-minimized interoperability.

L2 design is still critical. Admin keys, upgrade keys, proof systems, and withdrawal guarantees determine the level of security users have at any given moment. But even an L2 controlled by a small set of operators can provide users with a solid settlement basis on Ethereum L1. A company doesn't need to run and maintain its own L1 layer to operate its business.

An Ethereum L2 is both an independent blockchain and a part of the Ethereum economic system. It can own and customize its execution environment while utilizing Ethereum for settlement, data availability, and interoperability management.

L2s often deeply integrate ETH into their application economy, for example, as the native gas token. Canonical cross-chain models provide a trust-minimized path for capital and assets on L1 to enter the "local economy" of the L2. Each new L2 offers a unique product interface, and Ethereum's network effects will continuously strengthen.

Robinhood Made This Business Decision

Robinhood's development path is highly instructive.

It first issued stock tokens on a mature L2, Arbitrum One. After validating the product and understanding its own needs, Robinhood launched its own proprietary chain built on the Arbitrum platform.

This is likely to become a standard strategy for real-world businesses: first build on an existing blockchain, then, upon reaching a certain scale, product requirements, and unit economics, upgrade to a dedicated L2.

Robinhood Chain is purpose-built for the financial services industry. It uses Arbitrum technology, offering 100-millisecond latency, predictable transaction pricing, high throughput, and infrastructure tailored to Robinhood's performance, security, and regulatory requirements.

At the same time, Robinhood Chain remains an Ethereum L2. It uses Ethereum blobs for data availability, uses ETH as native gas, and its official bridge to Ethereum requires no third-party validator set. This is what it looks like when a real-world business builds a true on-chain product.

Robinhood didn't need to launch a Robinhood gas token or convince the public it deserves a lasting monetary premium. Robinhood itself has stock; its economic returns come from customers, products, assets, transactions, and cash flow. The blockchain is just its infrastructure.

Using ETH as gas is a simple business decision. L2 services already pay L1 service fees with ETH; ETH is highly liquid, widely used, and is the system's native token. If Robinhood used a proprietary gas token, it would add issues related to distribution, liquidity, pricing, and legal matters, and launching a token wouldn't improve Robinhood's core product.

Robinhood's success will depend on its application layer and the off-chain business supported by that application layer, not on its efficiency in creating a new monetary asset. Therefore, it is inaccurate when someone says Robinhood built its own blockchain and rejected existing L1s and L2s.

Robinhood merely rejected sharing its dedicated execution environment with other projects; it did not reject Ethereum. On the contrary, it chose Ethereum as the parent chain for its proprietary blockchain.

Previously, Coinbase made a similar decision, launching Base. Coinbase is not a champion of Ethereum, and it is well-known that Brian Armstrong has publicly stated his passion for Bitcoin far exceeds that for Ethereum. Yet, when Coinbase chose infrastructure for its on-chain business, it chose to become an Ethereum L2.

Base is arguably the strongest evidence that the Ethereum L1+L2 model is not theoretical. Coinbase's decision was driven by business considerations, not ideology.

When companies build cash-flow businesses instead of conducting token sales, they make business decisions. These decisions lead them to choose the Ethereum L1+L2 model as their infrastructure.

What Does This Mean for Ethereum and ETH?

This change in participant composition is extremely bullish for Ethereum.

Historically, the competitive landscape of blockchains was dominated by teams whose incentives were aligned with token creation, ecosystem grants, and token valuation. Looking forward, the competitive landscape will increasingly be dominated by companies optimizing for security, customers, control, distribution, liquidity, and interoperability – all in service of cash-flow businesses.

This shifts demand towards Ethereum's "barbell" structure: L1 for minimizing risk and maximizing liquidity; L2 for scalability, customization, and operator control.

Ethereum is becoming a global universal platform not by forcing all companies into a single shared execution environment but by becoming the common underlying layer of settlement, security, liquidity, and assets for many environments.

This is also good news for ETH. ETH's success lies in building a monetary network and global trust. ETH is an excellent staking asset and the native asset of Ethereum's global settlement layer. Across the ecosystem, it serves as collateral, a liquidity asset, a treasury asset, a productive asset, and is evolving into a terminal asset.

As more real-world businesses build applications on Ethereum, they will distribute ETH to more users, integrate it into more products, and make it useful in more domains. This strengthens ETH's liquidity and investor confidence, thereby reinforcing its monetary premium, which ultimately evolves into a greater network effect.

Robinhood is not an exception; it is a lighthouse.

Real businesses will use Ethereum L1 when they need the most globally neutral, lowest-risk, and most liquid shared environment. They will build their own Ethereum L2 when they need control, customization, and high performance. And when their business doesn't yet justify building their own blockchain, they will deploy on mature blockchains, typically Ethereum L2s.

This is not because they are Ethereum fans, but because they make rational business decisions.