Why Robinhood chooses Ethereum Layer-2: security and scalability

Robinhood strengthens its position in the crypto world by heavily investing in Ethereum Layer-2 technology. The company recently revealed why it chose a scaling solution on top of Ethereum rather than an independent blockchain network, a decision that surprised the crypto industry.

The strategic choice: why Layer-2 for Ethereum?

Johann Kerbrat, head of Robinhood’s crypto division, explained how the consideration between layer-1 and layer-2 stemmed from a clear strategic insight. “The core decision was actually very simple: we wanted to maintain the security of Ethereum, its decentralization, and at the same time leverage the existing liquidity in the EVM ecosystem,” said Kerbrat.

By anchoring itself to Ethereum, Robinhood can focus on what it does best: developing innovative products and services, rather than reinventing fundamental blockchain primitives. This means that security and decentralization come “virtually for free” via Ethereum, outsourcing essential technical challenges.

Robinhood’s own layer-2 network is currently still in a private testing phase. The first phase of implementation runs on Arbitrum One, the most active rollup in the Ethereum ecosystem. This choice ensures that a later migration to Robinhood’s own layer-2 network will proceed seamlessly: all assets and liquidity can be transferred without interruptions.

Tokenization of stocks: exponential growth

Robinhood’s tokenization program grew explosively. When the company started in June, about 200 stocks were available as tokens. Now, the platform already has over 2,000 tokenized stocks. This rapid expansion reflects customer demand for greater diversity.

“For our users, making the full portfolio available is crucial,” Kerbrat said. This approach transforms the way traditional securities are made accessible via blockchain. Robinhood sees this as just the beginning of a much broader transformation scenario in which not only public stocks but also private equity, real estate, and art can be tokenized.

Staking and crypto products for traditional investors

In addition to tokenization, Robinhood invested heavily in staking functionalities, a service that for a long time faced regulatory uncertainty in the US. “Staking was among the most desired features of our users,” Kerbrat said.

The company first launched in Europe, where it saw strong adoption. After regulatory clarification by the SEC, the staking product was launched in almost all US states from June, with the exception of five states.

The future vision: fragmentation and harmonization

Kerbrat predicts that tokenized assets and new lending protocols will fundamentally change how returns are generated in both crypto and traditional finance. “With more stocks, private equity, and real estate on-chain, entirely new financial structures will emerge,” he said.

Although blockchain infrastructure is becoming increasingly fragmented, Kerbrat believes that new coordination layers will emerge to connect everything. “This technology is already beginning to replace fundamental aspects of traditional finance,” he concluded.

For Robinhood, the focus remains unchanged: making new stocks and real assets accessible on the blockchain via Ethereum Layer-2 solutions, with the goal of transforming traditional finance forever.