Written by: Aiying Compliance
On June 30, 2025, Robinhood's stock price surged more than 12% during the intraday session, reaching an all-time high. The market frenzy was not only due to a dazzling financial report but also stemmed from a series of significant announcements made at the Cannes event in France: the launch of stock tokenization products, the establishment of a Layer 2 blockchain based on Arbitrum, and the provision of perpetual contracts for EU users... This series of actions marks a fundamental shift in the market's perception of Robinhood—it is no longer merely a 'retail trading app' serving young people but is attempting to become a potential 'disruptor of financial infrastructure.'
The Aiying team members are a compliance consulting team with practical experience in legal methods and operations, well-versed in the balance between industry regulatory compliance and actual business models. This article mainly studies how Robinhood's business model has evolved? How will its current strategic core—especially its deep layout regarding RWA (Real World Assets) and crypto technology—reshape its own value and what profound impacts will it bring to traditional financial markets and the crypto industry? This article will analyze the evolution of its business model, the logic of its core strategy, and predict its future influence on the industry market from the three dimensions of Robinhood's 'yesterday, today, and tomorrow.'
1. Yesterday: The wild growth and transformation from 'zero commission' to 'diversification.'
This section aims to quickly review Robinhood's rise and the initial construction of its business model, providing context for understanding its current strategic transformation.
1. Entrepreneurial intention and user positioning
The story of Robinhood began with two founders from Stanford University with backgrounds in physics and mathematics—Baiju Bhatt and Vladimir Tenev. Their experience developing low-latency trading systems for hedge funds made them realize that the technology serving institutions could also serve retail investors. Just as the company's name 'Robinhood' symbolizes, their original intention is 'financial democratization,' aimed at providing ordinary people with the same investment opportunities as institutions. This idea resonated precisely with the millennial generation's distrust of big banks after the 2008 financial crisis.
They seized the wave of mobile internet and launched a mobile-designed app in 2014. Its two disruptive innovations are:
Zero-commission trading: Completely breaking the fee model of traditional brokerages, greatly lowering the investment threshold.
An exceptional user experience: A simple and even 'addictive' interface design, such as the confetti animation after a trade is completed, gamifies complex financial transactions, attracting a large number of inexperienced young investors.
With this precise positioning, Robinhood, when it officially launched in 2015, already had 800,000 users on its waitlist, rapidly achieving viral growth and creating an era for young investors.
2. Establishment and controversy of the core business model.
'Zero commission' is not a free lunch; behind it is Robinhood's carefully constructed diversified revenue model, the most representative and controversial of which is PFOF.
PFOF (Payment for Order Flow)
PFOF is the cornerstone of Robinhood's achievement of 'zero commission.' In short, Robinhood does not send users' orders directly to exchanges but bundles and sells them to high-frequency trading market makers like Citadel Securities. Market makers earn small profits from the bid-ask spread and pay a portion to Robinhood as compensation. According to research report data, in the second quarter of 2024, Robinhood occupied about 20% of the stock PFOF market and had an absolute advantage of 35% in the options PFOF market. This model has brought substantial revenue but has also sparked long-term regulatory controversy, primarily concerning whether it sacrifices users' best execution prices for its own interests.
Exploration of business diversification
Based on PFOF, Robinhood has continuously expanded its business landscape, constructing three major revenue pillars:
Trading business: Quickly expanding from initial stock trading to options (2017) and cryptocurrency (2018). Data shows that these two high-volatility assets contribute far more trading revenue than stocks, reflecting the user base's preference for high-risk, high-return investments.
Interest income: By launching margin loans and cash management services, Robinhood transforms users' idle funds and leverage needs into stable interest income in a high-interest-rate environment, becoming its second-largest source of revenue.
Subscription services: Launched in 2016, Robinhood Gold subscription service offers instant deposits, pre-market and after-hours trading, and other value-added features. By the first quarter of 2025, Gold users exceeded 3.2 million. This marks Robinhood's preliminary transition from a purely trading platform to a 'financial SaaS' model that enhances user stickiness and revenue stability.
3. Growing pains: Crises and reflections
Wild growth inevitably comes with growing pains. Robinhood's development history has been filled with various crisis events:
Technology and risk control crisis: In March 2020, on a historic day of soaring U.S. stocks, the Robinhood platform crashed all day, triggering a class-action lawsuit from users. In the same year, a 20-year-old user committed suicide due to misunderstanding the options account balance, exposing serious shortcomings in user education and risk warnings behind its 'gamified' interface.
GME incident and trust crisis: The GameStop incident in early 2021 marked a turning point for its reputation. At the climax of the retail battle against Wall Street, Robinhood suddenly restricted users from buying GME and other popular stocks, being accused of 'pulling the plug' and betraying retail investors. Although the official explanation was to meet the margin requirements of clearinghouses, the label of 'stealing from the poor to give to the rich' has deeply engraved its brand, shaking its original intention of 'financial democratization.'
Ongoing regulatory pressure: From FINRA's fines for PFOF issues to the SEC's investigation into its crypto business, regulation has always been a Damocles' sword hanging over Robinhood.
These crises collectively expose Robinhood's vulnerabilities: unstable technology platform, flaws in risk control mechanisms, and the potential conflicts between business models and user interests. It is these profound growing pains that force Robinhood to seek new growth stories and strategic directions to shed the label of 'Meme stock paradise' and rebuild market trust.
2. Today: All in Crypto—Robinhood's strategic ambitions and business logic.
This section is the core of the entire text, which will deeply analyze Robinhood's current strategic layout centered around RWA and crypto technology, dissecting the business logic and competitive advantages behind it.
1. The core of the strategic shift: Why RWA and stock tokenization?
Robinhood's future bets on RWA and crypto technology are not a momentary whim but are based on profound financial drives and strategic considerations.
'We have the opportunity to prove to the world what we have always believed, that cryptocurrency is far more than a speculative asset. It has the potential to become a backbone of the global financial world.' — Vladimir Tenev, Robinhood CEO
Financial drive: The core engine of profit.
According to financial report data, the crypto business has become Robinhood's highest-margin business. In the first quarter of 2025, crypto trading contributed $252 million in revenue, accounting for 43% of total trading revenue, surpassing options as the largest source of trading income for the first time. More importantly, its astonishing profit margin: analysis shows that the market making rebate rate for crypto order flow is 45 times that of stocks and 4.5 times that of options. Driven by growth and profitability, All in Crypto has become an inevitable choice.
Narrative upgrade: From brokerage to 'bridge.'
This move helps Robinhood evolve from a controversial 'retail brokerage' into a 'bridge connecting traditional finance (TradFi) with the on-chain world.' This not only effectively sheds the regulatory shadow of PFOF and the periodic label of 'Meme stocks,' but also aims to penetrate a trillion-dollar market far larger than its existing business—digitizing and tokenizing vast real-world assets.
Core goal: Disrupting traditional financial infrastructure.
In a letter submitted to the U.S. Securities and Exchange Commission (SEC), Robinhood clearly articulated its vision for RWA tokenization. They believe that leveraging blockchain technology can achieve: this vision aims to fundamentally disrupt the inefficiencies, high costs, and entry barriers of the existing securities trading system.
24/7 All-day Trading: Breaking the time barriers of traditional exchanges.
Near-instant settlement: From T+2 to T+0, significantly reducing counterparty risk and operational costs.
Infinite ownership fragmentation: Allowing high-value assets (such as real estate and art) to be fragmented, lowering the investment threshold.
Enhancing liquidity: Creating broader markets for traditionally illiquid assets (such as private equity).
Automated compliance: Embedding regulatory rules through smart contracts, reducing compliance costs.
2. The 'trinity' strategic combination: How to achieve the goal?
To achieve this grand goal, Robinhood has launched a 'trinity' strategic combination, descending from the application layer to the infrastructure layer.
Stock Tokenization
This is the 'stepping stone' for its RWA strategy. By launching U.S. stock tokens in the EU market, allowing users to trade 24/5 and receive dividend support, Robinhood is conducting a massive market education and technical validation. This move aims to bridge the traditional asset world with the on-chain world, enabling users accustomed to traditional investment to 'smoothly' enter the crypto ecosystem.
Self-built L2 public chain (Robinhood Chain)
This is its most strategically ambitious step. By building its own Layer 2 public chain optimized for RWA based on the Arbitrum Orbit technology stack, Robinhood is transitioning from an 'application' to an 'infrastructure provider.' Owning its own public chain means having control over rule-making and dominating the ecosystem. In the future, the issuance, trading, and settlement of all tokenized assets will be completed in this closed-loop ecosystem, thereby building a strong technological and commercial moat.
Platformization (Broker-as-a-Platform)
Through a series of acquisitions (such as Bitstamp, WonderFi) and product releases (such as perpetual contracts, staking services, AI investment advisor Cortex, and credit card cashback purchases), Robinhood is building a 'crypto-driven all-in-one investment platform.' This platform integrates trading, payment, asset management, and infrastructure, covering the entire lifecycle of users from funding, trading to asset appreciation, aiming to maximize the lifetime value (LTV) of a single user.
3. Comparative analysis: Robinhood vs. Coinbase & traditional brokerages.
Robinhood's strategic positioning places it in a unique position in the competitive landscape.
vs. Coinbase
Path differences: Coinbase is a 'chain-based exchange,' whose core is to serve crypto-native assets and gain institutional trust through compliance paths. Robinhood, on the other hand, is a 'chain-enabled brokerage,' aiming to 'chain-reform the old world' and bring massive traditional assets on-chain.
Advantage comparison: Coinbase's strengths lie in its deep roots in the crypto industry, compliance depth, and institutional client base. Robinhood's strengths lie in its vast retail user base, exceptional product experience, and a more aggressive and focused RWA strategy.
vs. Traditional Brokerages (Schwab, IBKR)
Model differences: Traditional brokerages like Schwab and Interactive Brokers (IBKR) primarily serve high-net-worth and institutional clients, with revenue more dependent on interest and advisory services. Robinhood serves a younger, more active retail trading demographic, with revenue more reliant on trading commissions (especially in cryptocurrency).
Data comparison: According to third-party statistics, Robinhood has surpassed Schwab with over two-thirds of account numbers, but the average account value (AUC) is only about 2% of the latter. This is both its shortcoming and its future growth potential. Its current offerings of IRA retirement accounts, credit cards, and other products aim to increase user asset scale and stickiness, attacking the territory of traditional brokerages. In terms of trading revenue, especially from cryptocurrency trading, Robinhood has far surpassed traditional brokerages.
Tomorrow: The 'first entry point' for reshaping the financial order? Opportunities and risks coexist.
Based on the analysis above, Aiying predicts Robinhood's future, assessing the potential market impact it may bring and the challenges it faces.
1. Potential impact on the financial market landscape
Squeezing liquidity for altcoins: As investors can trade blue-chip tokenized stocks (like OpenAI, SpaceX) on a compliant and convenient platform with real value support, demand for high-risk, fundamentally weak altcoins and Meme coins may be significantly diverted. The future crypto market may further differentiate into 'mainstream coins via ETFs' and 'infrastructure coins capable of linking traditional finance,' with many altcoins potentially losing substantial presence.
Reshaping stock trading rules: 24/7 trading will completely break the pre-market and after-market restrictions of traditional exchanges, profoundly impacting global liquidity allocation, price discovery mechanisms, and market maker strategies. In the future, 'Should we look at Nasdaq before the market opens or Robinhood?' may transition from a joke to a real question.
Accelerating the entry of TradFi giants: Robinhood's aggressive layout will become a 'catfish,' stirring the entire traditional finance industry. Its exploration will force traditional giants like JPMorgan and Goldman Sachs to accelerate their layouts in the asset tokenization field, triggering a new round of fintech arms race.
2. Robinhood's own opportunities and valuation reconstruction.
If the strategy succeeds, Robinhood will face tremendous development opportunities.
Becoming the 'first entry point' for RWA: With its large user base and leading product experience, Robinhood has the potential to become the core hub connecting trillions of dollars of real-world assets with the crypto ecosystem. It will simultaneously capture the dual-era dividends of 'intergenerational wealth transfer' ($84 trillion in assets will be transferred from the Baby Boomer generation to the millennial generation) and 'Crypto Adoption' (the popularization of crypto technology).
Valuation anchor point shift: Its valuation logic is undergoing a qualitative change. It is no longer a purely cyclical brokerage influenced solely by trading volume and interest rates, but a composite company with attributes of SaaS (Gold subscription), fintech (platform effect), and infrastructure (public chain value). This multidimensional business model will greatly expand its growth ceiling, and the market will adopt a new valuation model for it.
3. The inescapable risks and challenges.
Robinhood's grand blueprint is not a smooth path; it still faces three core challenges:
Regulatory uncertainty: This is the biggest bottleneck for its strategic implementation. In its letter to the SEC, it clearly pointed out many obstacles under the current regulatory framework, such as: how to define the legal attributes of RWA tokens? How do brokerages comply with digital asset custody rules (like Rule 15c3-3)? How to calculate capital requirements for digital assets (Rule 15c3-1)? Although the current political climate in the U.S. seems more favorable to the crypto industry, any changes in regulatory policies could pose a fatal blow to its business.
Execution and competition risks: Plans for building an L2 public chain, integrating Bitstamp, and achieving global expansion are testing Robinhood's strong project management and execution capabilities at every step. Meanwhile, competition from crypto-native rivals like Coinbase and Kraken, as well as awakened traditional financial giants like Goldman Sachs and JPMorgan, will be exceptionally fierce. 'Who is executing is the key to life and death,' Robinhood must prove that it not only has good ideas but also the ability to realize those ideas.
Intrinsic vulnerability of the business model: Although the business is increasingly diversified, its revenue structure will still heavily rely on high-volatility trading activities, especially in cryptocurrency, in the short term. This means that its performance will still be significantly influenced by market cycles. How to establish a more robust and predictable revenue source while pursuing disruptive innovation is key to achieving long-term healthy development.
Summary: A new and old financial derivative blueprint is being drawn.
Reflecting on Robinhood's history, it is no longer the 'retail toy' that merely attracts attention through 'zero commission' and 'gamification.' It is attempting to transition from the periphery of the financial system to the center through a gamble centered on RWA and crypto technology, becoming a 'designer of institutions' and 'infrastructure provider' at the intersection of the new and old financial orders.
What it aims at is no longer just surface-level features like 24-hour trading and instant settlement, but the underlying reconstruction of the entire asset issuance, trading, and settlement system—transforming the closed, expensive, and inefficient rules of traditional finance into an open, programmable, and composable new financial logic.
The success or failure of this transformation will not only determine Robinhood's fate but will also significantly influence the evolution path of the global financial market in the next decade. For investors and market observers, Robinhood is no longer just a stock code but a 'derivative blueprint' for observing the future of finance, full of infinite possibilities. Volatility will continue to exist, and the space for institutional arbitrage has just opened.
