Author: Deep Tide TechFlow
As U.S. dollar stablecoins gradually attract market attention, companies inside and outside the crypto sphere have begun to view U.S. stocks as the next target.
At the end of May, the U.S. cryptocurrency exchange Kraken announced that it would offer tokenized popular U.S. stocks to non-U.S. customers; on June 18, Coinbase's chief legal officer, Paul Grewal, revealed that the company is seeking SEC approval to launch its 'tokenized stock' service.
Tokenization of U.S. stocks is gradually becoming an obvious business.
Now, this business may welcome a new player - the well-known American internet brokerage, the 'retail investor's militia', a key force in the Wall Street movement - Robinhood.
Previously, two insiders from Robinhood revealed to Bloomberg that they were developing a blockchain-based platform to allow retail investors in Europe to trade U.S. stocks.
According to insiders, the platform's technology selection may be Arbitrum or Solana, and the specific partner choice is still in discussion, with the agreement not yet finalized.
This news can at least be interpreted in two layers.
First, Robinhood integrates Arbitrum L2 directly into this new platform allowing European users to trade U.S. stocks as its foundational layer for blockchain trading.
Secondly, a more likely scenario is that Robinhood plans to utilize Arbitrum's Arbitrum Chains feature to develop its own dedicated L2 chain based on Arbitrum's tech stack (Rollup protocol, EVM compatibility, etc.).
Regardless of the final situation, market sentiment has already been stirred.
This means that Robinhood may need to create its own dedicated L2 for the U.S. stock tokenization business, which would be more conducive to on-chain settlement and specialization.
At the upcoming EthCC in Cannes, France, on the 30th, Robinhood will announce an important declaration at 17:00 local time (23:00 Beijing time), raising speculation about its L2 and U.S. stock tokenization business.
At the same time, A.J. Warner, Chief Strategy Officer of Offchain Labs, the company behind Arbitrum, will also attend the conference, providing more imaginative space for simultaneous announcements.
Recently, ARB, which had shown a somewhat dull price, saw a 24-hour increase that once broke 20%, ranking among the top in cryptocurrency gains.
More suggestively, Robinhood's European X account commented 'Stay tuned' under a discussion thread about the agenda, combined with Bloomberg's report on the provision of U.S. stock trading in Europe, making the possibility of officially announcing this feature higher.
Everything has traces to follow.
Robinhood's concept of U.S. stock tokenization is not a sudden idea.
Earlier this January, CEO Vlad Tenev criticized the current U.S. regulations, believing that the U.S. has not provided a clear framework and rules for the registration of security tokens, hindering the promotion of tokenized products.
In a podcast in March, Tenev stated quite directly: 'Now if you are overseas, it is very difficult to invest in an American company.'
This also addresses the pain points of many investors who are keenly interested in U.S. stock movements but are not physically in the U.S.; they urgently need a smoother way to trade U.S. stocks.
At the same time, Tenev also stated that he was considering tokenizing securities, indicating that this would be part of a broader push to integrate digital assets into the financial system.
Looking back now, there are signs that the groundwork has been laid.
Currently, Robinhood's customers in the EU can only trade cryptocurrencies, and the company obtained a brokerage license in Lithuania last month, allowing it to offer stock trading and other investment services in the EU.
In addition, Robinhood also signed an agreement last June to acquire the cryptocurrency exchange Bitstamp, and after the transaction is completed, Robinhood will be able to use Bitstamp's MiFID multilateral trading facility (MiFID) license to offer crypto-related derivatives.
The license has been obtained, regulations complied with, so it is time to consider which chain to implement.
Why could it be Arbitrum?
From a technical perspective, Arbitrum is a fully EVM-compatible L2 solution, meaning Robinhood can seamlessly migrate its existing Ethereum smart contracts and development tools without significantly altering its tech stack.
The compatibility with EVM can be said to be the key for large fintech companies like Robinhood to quickly move on-chain. Who would set it aside if they could leverage Ethereum's extensive developer community and existing infrastructure?
Further, Arbitrum's Optimistic Rollup technology also strikes a balance between transaction confirmation time and cost; in comparison, ZK Rollup has higher cost overhead and relatively slower transaction confirmation times; Robinhood, as a platform needing to handle large-scale user transactions, is more likely to prioritize Arbitrum's mature technology and lower development threshold.
On the other hand, from a business perspective, this choice also avoids Coinbase.
Base is an L2 launched by Coinbase, using the OP tech stack, but clearly, since Robinhood competes directly with Coinbase in its main business, it is unlikely to run U.S. stock tokenization on Base.
Arbitrum offers the option of custom L2 chains (Arbitrum Chains), which allows Robinhood to distinguish itself from Base.
One piece of information you might overlook is that Robinhood and Arbitrum actually have collaborative experience.
As early as ETHDenver 2024, Robinhood announced a partnership with Arbitrum to simplify user access to Arbitrum through the Robinhood Wallet.
This indicates that both parties already have a foundation for technical integration and strategic alliance, and Robinhood may choose to continue this collaboration, leveraging Arbitrum's existing technical support and brand effect to further expand its business.
Imitating Base, differentiating from Base.
Although the news of Robinhood building its own L2 on Arbitrum has not been officially confirmed, it has already sparked widespread discussion in the crypto community.
The sharpest voices argue that this approach is simply a mimicry of Base.
Base launched by Coinbase adopts an open strategy, inviting external developers to build DApps, thereby expanding the ecosystem and attracting users and assets. The success of Base is partly attributed to this open ecosystem (e.g., projects like Aerodrome, Uniswap migrating or building on it).
If Robinhood also builds an L2 based on Arbitrum, opening it to external developers to expand the ecosystem and create more real asset on-chain use cases, despite the different tech stacks, it would be highly similar to Base's business strategy.
The key to creating this 'imitation' impression is the latency.
Don't forget that Coinbase launched Base as early as the end of 2023, while Robinhood only announced its Arbitrum L2 plan now. This time lag makes Robinhood's actions appear to be a 'follow-up' reaction to Base's success rather than an original strategy.
In traditional business, fintech companies tend to replicate proven models, which is indeed a safer strategy; however, imitating Base means that Robinhood will compete directly with Coinbase, which has established a first-mover advantage through Base. If Robinhood wants to overtake, it will need to invest more resources and effort.
The well-known data platform Token Terminal has also pointed Robinhood a 'bright path', focusing on amplifying its advantages as an internet brokerage and taking a 'closed ecosystem' route opposite to Base:
Avoid inviting external application developers to join its L2, migrating all of Robinhood's existing financial products (such as trading or investment tools), assets, and users onto the chain, allowing users to operate directly on-chain without relying on traditional centralized systems.
This idea is more Crypto Native, combining Robinhood's existing customer base with pure on-chain gameplay, but a more aggressive approach also means greater resistance, so Robinhood may not follow this path.
However, if we look beyond Robinhood at the entire Ethereum ecosystem, some voices believe that this will exacerbate the division of Ethereum L2s.
Ethereum L1 has already lost a lot of initiative in the current ecosystem of numerous L2s; performance is secondary; more importantly, it has been thoroughly marginalized and pipelined. Creating a dedicated L2 is easy, but revitalizing Ethereum's glory is difficult.
Ultimately, how Robinhood will choose remains to be seen, and we may get answers after today's ETHcc.
