Robinhood Builds Ethereum Layer 2 on Arbitrum, Expands Tokenized Stocks to Over 2,000 Assets
Robinhood Builds Ethereum Layer 2 on Arbitrum, Expanding Tokenized Stock Offering Beyond 2,000 Assets
Robinhood is deepening its push into blockchain-based finance by building its own Ethereum Layer 2 network on Arbitrum, a move the company says is designed to prioritize security, decentralization, and liquidity rather than reinventing core blockchain infrastructure.
The decision was confirmed by Johann Kerbrat, head of crypto at Robinhood, who said the firm deliberately chose not to launch a standalone Layer 1 blockchain. Instead, Robinhood opted to leverage the existing strengths of Ethereum by building a Layer 2 solution on Arbitrum.
The move marks a significant step in Robinhood’s broader strategy to integrate traditional financial products with decentralized infrastructure, particularly as tokenized real-world assets gain traction across global markets.
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| Source: XPost |
Why Robinhood Chose Ethereum and Arbitrum
According to Kerbrat, the decision to build on Ethereum rather than launching a new Layer 1 blockchain was driven by practical considerations rather than branding or technical ambition. Ethereum’s established security model, decentralized validator set, and deep liquidity across the Ethereum Virtual Machine ecosystem were seen as critical advantages.
Launching a new Layer 1 would have required bootstrapping validators, liquidity, developer tools, and user trust from scratch. By contrast, building a Layer 2 on Arbitrum allows Robinhood to inherit Ethereum’s security guarantees while benefiting from lower transaction costs and faster settlement.
Arbitrum, one of the largest Ethereum scaling networks by total value locked, offers compatibility with existing Ethereum applications and infrastructure. This compatibility enables seamless interaction with wallets, smart contracts, and decentralized finance protocols already active within the ecosystem.
Kerbrat emphasized that Robinhood’s approach reflects a broader industry shift away from isolated blockchains toward modular architectures that build on established networks.
Private Testnet and Roadmap to Launch
Robinhood’s Layer 2 network is currently operating on a private testnet, according to information cited by hokanews and attributed to reporting shared by Wu Blockchain on X. The private testnet phase allows the company to test infrastructure, compliance processes, and performance before opening the network to broader usage.
At launch, Robinhood plans to migrate its tokenized equity products seamlessly from Arbitrum One to its own Layer 2 network. The company says users will not need to take any manual action during the transition, a design choice aimed at minimizing friction for retail investors.
While a public launch date has not yet been announced, the confirmation of a private testnet suggests the project is moving beyond conceptual planning into execution.
Rapid Expansion of Tokenized Stocks
One of the most notable developments alongside the Layer 2 announcement is the rapid growth of Robinhood’s tokenized equity lineup. The offering has expanded from approximately 200 tokenized stocks to more than 2,000 assets, representing a wide range of U.S.-listed equities.
Tokenized stocks are blockchain-based representations of traditional shares, designed to offer features such as fractional ownership, extended trading hours, and faster settlement. While regulatory frameworks vary by jurisdiction, proponents argue that tokenization can significantly improve market accessibility and efficiency.
Robinhood’s expansion into tokenized equities reflects growing interest from both retail and institutional players in bringing traditional financial instruments onto blockchain rails.
Bridging Traditional Finance and Blockchain
Robinhood has long positioned itself as a bridge between traditional finance and new technology. Its move into crypto trading brought digital assets to millions of retail users, and its latest blockchain initiative appears aimed at extending that role into tokenized capital markets.
By building on Ethereum, Robinhood aligns itself with the most widely used smart contract platform, one that already hosts a vast ecosystem of decentralized finance applications, stablecoins, and tokenized assets.
Analysts cited by hokanews note that this strategy reduces fragmentation while increasing interoperability. Rather than creating a closed system, Robinhood’s Layer 2 could integrate with existing Ethereum-based tools and services, potentially expanding its reach beyond its own user base.
Regulatory and Compliance Considerations
Tokenized stocks remain a complex regulatory topic, particularly in the United States. Robinhood has emphasized that its tokenized equity offerings are designed with compliance in mind, operating within applicable legal frameworks.
By choosing a Layer 2 architecture on Ethereum, the company may also benefit from clearer separation between infrastructure and regulated products. The blockchain serves as a settlement layer, while regulatory compliance is handled at the application level.
This approach mirrors strategies adopted by other financial institutions exploring blockchain-based assets, where decentralized networks are used as infrastructure rather than as substitutes for regulation.
Competition in Tokenized Finance
Robinhood is not alone in exploring tokenized equities. Several fintech firms, crypto exchanges, and traditional financial institutions are experimenting with similar offerings. However, Robinhood’s scale and existing retail user base give it a significant advantage.
The expansion from 200 to over 2,000 tokenized stocks suggests strong internal confidence in demand, even as regulatory clarity continues to evolve. Industry observers say this growth could pressure competitors to accelerate their own tokenization efforts.
The decision to build on Arbitrum also positions Robinhood within one of the most active Layer 2 ecosystems, potentially benefiting from network effects as Ethereum scaling solutions continue to mature.
Broader Implications for Ethereum Layer 2s
Robinhood’s move underscores the growing role of Layer 2 networks in onboarding mainstream financial products. As congestion and fees on Ethereum’s main network remain concerns, Layer 2 solutions have become essential for scaling.
High-profile corporate adoption could further legitimize Layer 2s as institutional-grade infrastructure. If Robinhood’s network proves successful, it may encourage other fintech firms to follow a similar path rather than launching proprietary blockchains.
From Ethereum’s perspective, such developments strengthen its position as the settlement layer for a wide range of financial activity, from decentralized finance to tokenized real-world assets.
Looking Ahead
As Robinhood prepares for the public launch of its Ethereum Layer 2, industry attention will focus on execution, regulatory alignment, and user adoption. The seamless migration of tokenized stocks from Arbitrum One will be a critical test of the company’s technical and operational capabilities.
While challenges remain, including regulatory uncertainty and market volatility, the strategy signals a long-term commitment to blockchain-based finance.
According to hokanews, the confirmation of Robinhood’s plans, as reported by Wu Blockchain, highlights how major fintech firms are increasingly choosing integration over isolation when it comes to blockchain infrastructure.
If successful, Robinhood’s Layer 2 could serve as a model for how traditional financial platforms adopt decentralized technology without abandoning regulatory and consumer protections.
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Writer @Ethan
Ethan Collins is a passionate crypto journalist and blockchain enthusiast, always on the hunt for the latest trends shaking up the digital finance world. With a knack for turning complex blockchain developments into engaging, easy-to-understand stories, he keeps readers ahead of the curve in the fast-paced crypto universe. Whether it’s Bitcoin, Ethereum, or emerging altcoins, Ethan dives deep into the markets to uncover insights, rumors, and opportunities that matter to crypto fans everywhere.
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