Robinhood's Ethereum Layer 2: Transforming Stock Trading with Blockchain
What if you could trade Apple stock at 3 AM on a Sunday, settle the transaction in seconds instead of days, and hold it in a wallet you actually control? That future is no longer hypothetical. Robinhood, the trading platform that sparked the retail investing revolution, is building its own Ethereum Layer 2 blockchain on Arbitrum — and it could fundamentally change how the world trades securities.
The company has already tokenized nearly 2,000 U.S. stocks and ETFs worth approximately $17 million, with plans to expand to private equity giants like OpenAI and SpaceX. This isn't just another crypto project; it's a brokerage with 24 million users betting that blockchain will replace the antiquated plumbing of traditional finance.
From Brokerage to Blockchain: Why Robinhood Built Its Own L2
When Johann Kerbrat, Robinhood's crypto chief, announced the Layer 2 blockchain at EthCC in Cannes, he revealed the strategic calculus behind the decision: "The main discussion for us at this point was, really, should we do an L1 or should we do an L2, and the reason why we decided to do an L2 was we wanted to get the security from Ethereum, the decentralization from Ethereum, and also the liquidity that is part of the EVM space."
Launching a new Layer 1 would have required bootstrapping validators, liquidity, developer tools, and user trust from scratch. By building on Arbitrum's Orbit framework, Robinhood inherits Ethereum's battle-tested security while gaining the customization options needed for regulated financial products.
The Robinhood Chain is designed for tokenized real-world assets, with native support for:
- 24/7 trading — no more waiting for markets to open
- Seamless bridging — moving assets between chains without friction
- Self-custody — users can hold assets in their own wallets
- Custom gas tokens — potentially using HOOD or a stablecoin for fees
- Enterprise governance — meeting regulatory requirements while maintaining decentralization
The chain is currently on a private testnet, with a public launch expected in 2026. In the meantime, Robinhood's tokenized stocks are already live on Arbitrum One, Ethereum's largest rollup by activity.
2,000 Tokenized Stocks: What's Actually Trading On-Chain
Robinhood's tokenized equity lineup has expanded from roughly 200 assets at launch to over 2,000 U.S.-listed stocks and ETFs. According to Entropy Advisors data on Dune Analytics, the total value of these tokens sits just under $17 million — modest by crypto standards, but significant as a proof of concept for regulated securities on public blockchains.
These tokens mirror the economic rights of their underlying assets, including dividend distributions. When Apple pays its quarterly dividend, tokenized AAPL holders receive their proportional share. Settlement happens entirely on-chain via Arbitrum, bypassing the traditional T+1 (and formerly T+2) clearinghouse system that has governed stock trading for decades.
European customers currently have access to 24/5 trading — meaning the market is open around the clock during weekdays. Full 24/7 trading is on the roadmap once the Robinhood Chain launches.
Perhaps most notably, Robinhood has also made tokenized shares of pre-IPO companies like OpenAI and SpaceX available, providing retail access to typically illiquid private markets that have historically been reserved for accredited investors.
The Settlement Problem Robinhood Wants to Solve
Five years after Robinhood stunned users by halting buys on GameStop and other meme stocks during the 2021 trading frenzy, CEO Vlad Tenev has been vocal about how blockchain could prevent such scenarios from recurring.
The core issue was settlement risk. When trades take one or more days to settle, clearinghouses must hold collateral against potential failures. During periods of extreme volatility, those collateral requirements can spike dramatically — as they did during the meme stock mania, forcing Robinhood to restrict trading on certain securities.
"In a world of 24-hour news cycles and real-time market reactions, T+1 is still far too long," Tenev wrote in a recent op-ed. "Friday trades can still take days to settle."
Tokenized securities solve this by enabling near-instant settlement. When you buy a tokenized stock, the transaction finalizes in seconds or minutes rather than days. "No lengthy settlement period means much less risk to the system and less pressure on both clearinghouses and brokerages," Tenev explained, "so customers can freely trade how they want, when they want."
He believes the transformation is inevitable: "Imagine explaining to someone in 2035 that markets once closed on weekends."
Enterprise Rollups: A New Paradigm for Institutional Blockchain
Robinhood isn't alone in pursuing this strategy. 2025 marked the rise of what analysts call "enterprise rollups" — major institutions launching their own Layer 2 infrastructure rather than building on existing public chains.
The trend accelerated rapidly:
- Kraken launched INK, its own L2 using the OP Stack
- Uniswap shipped UniChain for optimized DeFi trading
- Sony launched Soneium for gaming and entertainment applications
- Coinbase continues expanding Base, now the second-largest L2 by daily transactions
- Robinhood chose Arbitrum Orbit for maximum customization around RWA tokenization
The strategic insight is becoming clear: L2s win by distributing their infrastructure outward and partnering with large platforms rather than operating in isolation. A chain with 24 million existing users (Robinhood's customer base) or 56 million verified users (Coinbase's Base potential) starts with distribution advantages that pure-play crypto chains can't match.
Layer 2 Total Value Locked has grown from roughly $4 billion in 2023 to approximately $47 billion by late 2025 — a nearly 12x increase. Daily L2 transactions have exceeded 1.9 million, eclipsing Ethereum mainnet activity.
Why Arbitrum Orbit? The Technical Foundation
Robinhood specifically chose Arbitrum Orbit rather than alternatives like the OP Stack or building a ZK-rollup. Orbit allows the creation of highly customizable chains while inheriting Arbitrum's security model.
Key technical advantages include:
EVM Compatibility: Orbit chains are 100% compatible with the Ethereum Virtual Machine, meaning every smart contract that works on Ethereum works on the Robinhood Chain without modification. This opens the door to DeFi integrations — lending against tokenized stock positions, using stocks as collateral, or creating structured products.
Custom Gas Tokens: Orbit chains can use select ERC-20 tokens for gas fees instead of ETH. Robinhood could theoretically denominate transaction costs in USDC or even its own HOOD token, improving user experience for customers who don't want to hold ETH.
Configurable Governance: Unlike Arbitrum One and Nova, which are governed by the Arbitrum DAO, Orbit chains allow builders to determine their own governance structures. For a regulated brokerage, this means meeting compliance requirements around validator selection and network operation.
Data Availability Options: Orbit supports both full rollup mode (posting all data to Ethereum) and AnyTrust mode (using a data availability committee for lower fees). Robinhood can optimize for cost versus decentralization based on the asset class being traded.
Arbitrum Orbit launched in March 2023 and has since become the foundation for numerous enterprise blockchain deployments. The framework's flexibility makes it particularly suited for regulated entities that need to customize network parameters while maintaining Ethereum security.
The $18.9 Trillion Opportunity
Robinhood is positioning itself at the intersection of two massive trends: the $18.9 trillion tokenized asset opportunity and the continued growth of retail crypto adoption.
According to a joint report from Ripple and Boston Consulting Group, the tokenized asset market will grow from $0.6 trillion today to $18.9 trillion by 2033, representing a compound annual growth rate of 53%. In an optimistic scenario, the figure could reach $23.4 trillion.
The growth is already visible. Tokenized assets expanded from just $85 million in 2020 to over $21 billion by April 2025 — a 245-fold increase. Non-stablecoin tokenized RWAs grew from roughly $5 billion in 2022 to about $24 billion by mid-2025, up 380% in just a few years.
BCG projects that the banking sector will account for over a third of all tokenized assets by the end of the decade, with this share surging to over 50% by 2033. Real estate, funds, and stablecoins are expected to lead the growth.
Tibor Merey, Managing Director at BCG, noted: "Tokenization is transforming financial assets into programmable and interoperable instruments, recorded on shared digital ledgers. This enables 24/7 transactions, fractional ownership, and automated compliance."
Robinhood's early mover advantage in tokenized equities could position it to capture significant share of this market — especially given its existing distribution to retail investors who already trust the platform with their traditional investments.
Regulatory Tailwinds and Headwinds
The path forward isn't without obstacles. Tokenized securities exist in a regulatory gray zone in the United States, where the SEC has historically taken an enforcement-heavy approach to crypto assets.
Tenev has publicly urged lawmakers to pass the CLARITY Act, which would push the SEC to write clear rules for tokenized equities. Without regulatory clarity, the full potential of tokenized securities may remain limited to European and other international markets.
Currently, Robinhood's tokenized stock offerings are available to EU customers but not U.S. users. The company is expanding to over 400 million people across 30 EU and EEA countries, where MiCA regulations provide clearer frameworks for digital asset services.
However, the regulatory environment may be shifting. The SEC has seen leadership changes, and bipartisan crypto legislation is moving through Congress. Robinhood's bet appears to be that regulatory clarity will arrive before the Robinhood Chain's public launch — or that international adoption will generate sufficient momentum to force domestic progress.
What This Means for Blockchain Infrastructure
Robinhood's L2 represents a paradigm shift for blockchain infrastructure. Previously, crypto projects hoped to onboard institutions and retail users onto existing chains. Now, institutions are building their own chains to bring crypto capabilities to existing user bases.
This has profound implications:
For Ethereum: Enterprise rollups validate Ethereum's position as the premier settlement layer for regulated assets. Every enterprise L2 increases demand for ETH as a security budget and settlement token, even if users never directly interact with mainnet.
For Arbitrum: Each Orbit deployment expands Arbitrum's ecosystem and demonstrates the viability of its technology stack. Robinhood's success would be a major endorsement of Arbitrum's enterprise readiness.
For DeFi: Tokenized stocks on EVM-compatible chains can eventually integrate with existing DeFi protocols. Imagine borrowing against your Apple stock position on Aave, or using Tesla shares as collateral for a stablecoin loan. The composability of blockchain assets could unlock entirely new financial products.
For Traditional Finance: Every major brokerage is now evaluating its blockchain strategy. Schwab, Fidelity, and Interactive Brokers will face pressure to offer similar capabilities or risk losing customers to platforms that do.
The Road Ahead
Robinhood's Layer 2 blockchain is still on a private testnet with no public launch date confirmed. But the company's moves signal a clear direction: blockchain rails for traditional assets, starting with stocks and expanding to private equity, real estate, and beyond.
When Tenev says "tokenization will unlock 24/7 markets, and once people experience it, they'll never go back," he's not making a prediction — he's describing a strategy. Robinhood is building the infrastructure to make that future inevitable.
The question isn't whether tokenized securities will become mainstream, but who will control the infrastructure when they do. With 24 million users, regulatory relationships, and now its own blockchain, Robinhood is making a serious bid to be that platform.
Within five to ten years, the concept of market hours may seem as archaic as paper stock certificates. And when that day comes, Robinhood's bet on Ethereum Layer 2 will look less like a gamble and more like the obvious move that everyone else was too slow to make.
For developers and institutions building on blockchain infrastructure, the Robinhood Chain's architecture choices offer valuable lessons in balancing decentralization with regulatory compliance. BlockEden.xyz provides enterprise-grade RPC services and infrastructure tools for teams building on Arbitrum and other EVM-compatible chains. Explore our API marketplace to see how we can support your RWA tokenization initiatives.