Robinhood Chain's Success Proves Ethereum Is Not Dead

Original article by Ryan Berckmans

Translation / Odaily Golem (@web3_golem)

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

Travis Kling posed a question this week: "Isn't it now obvious that real companies are not interested in L1/L2s?" Robinhood was the first example he gave. 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—and then 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, the model is running as expected on Robinhood.

The 'buyers' choosing Ethereum have changed. Past crypto projects chose public chains and technologies to sell their 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 even more apparent.

The Old Crypto Economy Was Token-Centric

By "real businesses serving real users," I mean a traditional corporate model: build a product customers need, earn profit by serving them, and enhance the equity value of these profits.

Here, "real users" refers to consumer demand arising from ordinary economic needs, not speculative demand mainly driven by new token emissions. Crypto-native users are clearly real users. This is not a moral judgment on whether a protocol is useful or its developers are sincere, but merely a distinction regarding the goal of operating a real-world economy.

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

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

The 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, and few other assets have managed to do so.

Looking back, since the rise of programmable cryptocurrency, the vast majority of industry participants have been ordinary cash-flow enterprises. Their economic goal was typically to sell a token whose value relied mainly on utility, an anticipated monetary premium, or promises of distant future cash.

Sometimes, their plan was straightforward—launch a protocol and sell its token; other times, it was more indirect—get funding from a token-funded ecosystem and then cash out the received tokens. Sometimes, a project did anticipate future profitability, but because the token's valuation was disconnected from any possible future cash, the actual business model remained faith in the token itself.

This became the norm because almost every project did similar things, though there were some exceptions.

Centralized exchanges are inherently cash-flow businesses and are natively multi-chain; connecting to another chain is like adding another deposit/withdrawal channel. Some stablecoin issuers are also cash-flow businesses, initially serving crypto-native customers and now rapidly expanding into the broader economy.

But these exceptions prove the point: enterprises aiming for ordinary cash-flow businesses will choose infrastructure that maximizes the business, not the token value.

Different Enterprise Goals Build Different Projects

A company's ultimate goal determines its technology choice.

If the goal is a cash-flow business, then the blockchain is infrastructure, chosen to reduce risk, improve products, reach customers, and secure profits; if the goal is token monetization, then the choice of blockchain has much more freedom. After receiving funding from a public chain, a project can choose to develop on the chain that funded it.

For example, if a protocol succeeds on Chain A, you can launch a similar protocol on Chain B so 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 problem isn't 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 verification, liquidity base, and monetary asset), regardless of whether the underlying product is independent.

As the industry now transitions towards cash-flow businesses, these experiments continue, but they will increasingly be built on common infrastructure. Enterprises will specialize at the application layer or L2, while relying on the Ethereum L1 layer for settlement, security verification, liquidity maintenance, and monetary asset management. The result isn't less innovation, but a balance: more diversity at the edge, more concentration at the base.

The old crypto economy typically chose its architecture around the token it wanted to sell; the emerging on-chain economy will choose its architecture around the product it wants customers to buy.

The Buyer Is Changing

The future of crypto will be radically different from its past because the "buyer" has changed.

The previous US administration heavily suppressed on-chain activity, but 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 fully applicable. Brokerages, payment companies, banks, asset managers, and governments around the world 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 experiments.

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

When we emerge from this phase, the crypto industry and traditional finance will no longer be distinct categories. Property, money, transactions, finance, identity, and trust will all be coordinated through networks of on-chain and off-chain systems. Ultimately, 'Web 3' will fade away like 'Web 2', and everything will just become the internet.

As this progresses, a larger proportion of crypto market participants will be real-world enterprises serving ordinary consumers in the broader economy. This proportion won't just be in the number of companies; it will also be reflected in capital scale, user numbers, asset sizes, and institutional influence.

These companies are no longer crypto projects seeking a business rationale for their tokens, but enterprises using crypto technology to optimize existing or new cash-flow businesses. This dictates their technology choices; infrastructure choices suited for a token economy are poor guides for infrastructure choices suited for a cash economy.

Real Enterprises Don't Build Infrastructure from Scratch

Typically, real enterprises have limited budgets for risky infrastructure development. They don't want consensus mechanisms, cross-chain bridges, validator economies, gas, governance tokens, and liquidity bootstrapping to become 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 wide distribution. Even then, "multi-chain" rarely means every chain is equally important. Different chains usually have their own domains of dominance in terms of liquidity, issuance, settlement, product status, or deeper integration.

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

• When an on-chain business needs maximum decentralization, credible neutrality, minimized risk, or liquidity, they use the Ethereum L1. L1 execution costs more because it carries the most robust shared environment;
• When an enterprise needs control, customization, compliance, predictable unit economics, low latency, or high throughput, they build their own Ethereum L2. They get a dedicated chain tailored to their needs while maintaining a direct link to Ethereum;
• When an enterprise doesn't need the L1, and building their own L2 isn't necessary, they typically use one or more mature shared L2s. Base, Arbitrum One, Robinhood, and other established Ethereum L2s have become common deployment platforms.

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

Why Does the Ethereum L1+L2 Model Still Work?

Ethereum separates the two major elements that large enterprises need.

The L1 provides a highly decentralized, credibly neutral, and highly liquid global hub. The L2 provides a market for fast, cheap, specialized, controllable, and customizable execution environments.

The L1 remains neutral, while the L2s on 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 asking 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 worthwhile for a project, but achieving it doesn't come cheap.

A new L1 must create and maintain its own security system, validator or operator set, cross-chain bridges, liquidity, tools, integrations, and reputation. It creates a new security and liquidity silo, increasing the cost and friction of interoperability with the 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 customized Ethereum L2 can capture most of the business advantages an enterprise seeks from an independent L1: high TPS, control over execution, upgrades, fees, sequencing, latency, access rules, and product-specific features.

Furthermore, L2s offer advantages that independent L1s inherently lack: Ethereum for settlement and data availability, a standard L1 bridge, proximity to Ethereum's assets and capital, and a path towards trust-minimized interoperability.

L2 design is still crucial. Admin keys, upgrade keys, proof systems, and withdrawal guarantees determine how much security users have at any moment. But even an L2 with a small set of operator control provides users with a solid settlement foundation on the Ethereum L1. A company doesn't need to run and maintain its own L1 layer just 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 leveraging Ethereum for settlement, data availability, and interoperability management.

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

Robinhood Made This Business Decision

Robinhood's development path is highly instructive.

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

This is likely to become a standard strategy for real enterprises: first build on an existing blockchain, then upgrade to a dedicated L2 once scale, product requirements, and unit economics reach a certain level.

Robinhood Chain is tailored for the financial services industry. It uses Arbitrum technology, offering 100ms latency, predictable transaction pricing, high throughput, and infrastructure customized for 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 enterprise builds a genuine on-chain product.

Robinhood doesn'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 in ETH. ETH is highly liquid, widely used, and is the system's native token. If Robinhood used a proprietary gas token, it would add distribution, liquidity, pricing, and legal issues, 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 it supports, not its efficiency in creating new monetary assets. Therefore, it's inaccurate when people say Robinhood built its own blockchain and rejected existing L1 and L2 services.

Robinhood merely rejected sharing its dedicated execution environment with other projects; it didn't reject Ethereum. On the contrary, it chose Ethereum as the mother chain for its proprietary blockchain.

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

Base is precisely the strongest evidence that the Ethereum L1+L2 model is not just theory; 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, and these decisions lead them to choose infrastructure based on the Ethereum L1+L2 model.

What Does This Mean for Ethereum and ETH?

This change in participant composition is extremely positive for Ethereum.

Historically, the competitive landscape of blockchains was dominated by teams whose incentives were focused on token creation, ecosystem funding, and token valuation. Looking ahead, the competitive landscape will increasingly be dominated by companies optimizing for security, customers, control, distribution, liquidity, and interoperability—all to serve cash-flow businesses.

This shifts demand towards Ethereum's "barbell" structure: L1 for minimizing risk and maximizing liquidity; L2 for scaling, 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 settlement, security, liquidity, and asset layer underlying a multitude of environments.

This is also good news for ETH. ETH's success lies in building a monetary network and global trust. ETH is an excellent proof-of-stake asset and the native asset of Ethereum's global settlement layer. Across the entire ecosystem, it functions as collateral, a liquidity asset, a treasury asset, a productive asset, and is increasingly becoming a terminal asset.

As more real enterprises build applications on Ethereum, they will distribute ETH to more users, integrate it into more products, and make it useful in more areas. This strengthens ETH's liquidity and investor confidence, which in turn reinforces its monetary premium, which ultimately evolves into an even greater network effect.

Robinhood is not an anomaly; it is a beacon.

Real enterprises will use the Ethereum L1 when they need the world's most 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 a standalone blockchain, they will deploy on mature existing chains, typically an Ethereum L2.

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