← Bankless
Bankless
Robinhood Announces Tokenized Stocks! LIVE with CEO Vlad Tenev, Johann Kerbrat, and AJ Warner
Loading summary
Transcript124 lines
- [00:04]
A
I'm here with Vlad, the CEO of Robinhood, right at the end of their Takecha Token Summit. Vlad, you guys launched so many things today. As this wraps up, share a little bit of your sentiment. How are you feeling?
- [00:16]
B
I'm feeling really good. I mean, I think that there was one technical glitch which you probably noticed.
- [00:22]
A
Oh, the slow connectivity, I thought that was easily overcomeable.
- [00:26]
B
Yeah, yeah. So what turned out what happened was so many people were downloading the app and trying to get the stock tokens that had brought down the network. So. Yeah. But it turned out everything worked. I thought the team did a nice job and it was a lot of fun. You know, we put so much work into these products. The engineers are building them, they've been working for a long time that I think the least we can do is put. Put on a nice event so that we can communicate the value as nicely as possible. So I think it was a lot of fun. It was. Hopefully the crowd enjoyed it too.
- [00:57]
A
You guys did a great job. Now, I had the embargo, you guys gave us the embargo, so I knew it was coming.
- [01:01]
B
Yeah.
- [01:02]
A
Except for the private tokenized companies of SpaceX and OpenAI, which I think kind of stole the show for what everyone was excited about. And that's really something. That is something that Robinhood is really tapping into. What feels like just the financial zeitgeist of our times. You know, with so much VC capital out there, companies are able to stay private later and later. This is something that we talked about last time you were on the show. Was this something that. Because after you built out the tokenized stocks product offering, you were like, oh, we could easily just extend this to private companies or what was the thought process behind that?
- [01:35]
B
Yeah, so the thought process was twofold. I don't know if you've caught the op ed that I wrote in the Washington Post earlier this year. And really I've been thinking about tokenization for many, many years. And the benefits of tokenization is very, very clear that it's the future and it's very useful for Europeans and folks outside the US and then when you communicate the value of the technology inside the US it's sort of like talking about high speed rail when you already have medium speed rail. And by that I mean in the US we already have pretty robust financial infrastructure. It's not amazing, but, you know, we don't have 24, seven, we have 24, five trading of stocks. It's pretty good. It's pretty easy to use. Robinhood, I think has played a role in democratizing it and making it accessible to tens of millions of customers. So the delta between tokenization and the existing infrastructure for public stocks is there. I think it will happen, but it's perhaps a little bit less severe than outside the us. But one benefit that I think is very, very strong is the ability to make all kinds of assets tradable, even those that aren't on liquid exchanges. And private stocks are this thing that it's frankly a big problem. You have companies like SpaceX and OpenAI that are worth hundreds of billions. They're essentially able to raise unlimited amounts of capital while staying private. And if you're a retail investor, you're shut out from all of that appreciation. Even a high net worth investor has difficulty getting into some of these companies.
- [03:16]
A
And interestingly enough, they're also the coolest companies that everyone wants access to.
- [03:20]
B
Yeah, it's actually, it concerns me quite a bit. That AI I believe is going to be an incredibly transformative platform shift. Probably bigger than we've had before, bigger than mobile, maybe even bigger than the Internet on relative terms. And yet it's not like the Internet where you had the dot coms and you could have exposure to all of these assets in the private markets. By and large, a lot of the innovation is in private companies that shut out retail. So if we can democratize it, make it available, you know, outside the US where there's clarity, but over time bring this technology which truly will allow 24, 7 real time trading of private companies to the US as well. I think that could, I mean, I think that could resolve one of the greatest long standing inequities in capital markets today.
- [04:11]
A
So I'm imagining this rollout to Robinhood Retail. There can only be so many shares of OpenAI and SpaceX on the market. It is a private company. There are shares that do float, that do trade. Correct. There can't be that many. I could imagine the hype behind this growing quite large and then all of a sudden they're being a supply shortage of OpenAI or SpaceX shares to create a pretty premium, a premium on the shares. Do you have enough of those shares to actually supply to the market that has the demand for them?
- [04:41]
B
Well, this is just the beginning and as I mentioned on the presentation, the OpenAI and the SpaceX shares right now are a gift to, to these users. So we had, I want to say a million OpenAI, half a million of Space X. So you're right, right. The focus now is on making sure we can get them tradable 24 7. I think that'll be a unlock and we believe we have a path to do that. And then over the long run, we're going to open this up much bigger. So I think you should be able to, on a secondary basis, transact a huge number of private companies, large number of private thousands. And then I think this could actually grow to a primary source of capital as well. So if you think about OpenAI SpaceX, companies of that nature, they have raised tens of billions in funding, maybe hundreds of billions. And so if retail can become a mechanism and a vector, not just for secondary transactions, but for entrepreneurs when they want to raise primary capital, even at early stages, I think that's super transformative for entrepreneurship. And people don't talk about that enough. I think that could lead to more startups and more entrepreneurship in the world by a very, very wide margin.
- [05:58]
A
Yeah, certainly there's something that the NASDAQ and the New York Stock Exchange should really be taking a look at, which is that there's a possibility that OpenAI SpaceX, say, say this tokenization vertical out of Robinhood really gets a lot of traction. The traction that I'm sure you wanted to. If there is dominant liquidity for these assets that happen on chain and inside of crypto venues, and they can, all the companies can also raise money from retail investors or just from the private market world. Even though it's trading publicly. There's perhaps just never a need for these private companies to actually do the traditional IPO and go on the public traditional markets where they can go on the public blockchain markets. Is that a world that you're trying to foster?
- [06:38]
B
Well, I think a lot of people ask about, you know, alternatives to the traditional IPO process. I think we've already seen an alternative to the traditional IPO process, which is companies just staying private essentially forever. I mean, these companies have an alternative. They could just keep raising unlimited amounts of capital in the private markets and in doing so shut out retail potentially forever. I mean, you've had some founders say that they're not. They never plan to go public.
- [07:11]
A
It's a burden.
- [07:12]
B
Yeah. So I think, I think the solution for that case is, I mean, I'm generally pro the IPO as a process. Of course, it's gotten very burdensome. But Robinhood became a public company in 2021. I think some people in the environment will just choose to not go public. And for that we need to figure out how to unlock the private shares and make them available to retail as well.
- [07:38]
A
Certainly now There's a notion that capital begets capital, liquidity begets liquidity. And again, if these private companies start trading on crypto venues, you can see the dominant price discovery of these assets. The liquidity of these assets happen on chain or on bitstamp for when it's weekends and amongst other, those other things. And one of the big features of this is the 24 7, 365 markets that tokenization really enables for you. There have been some promises that the crypto industry checks that we wrote as an industry back in 2011, 2013, everything is going to come on chain. We're going to tokenize the world. 24 7, 365 trading include retail earlier and earlier in the process. And just there's a couple announcements here. The tokenized stocks, tokenized private companies and 24 7, 365 trading of traditional assets all happening in this announcement. And so I'm getting the, the, this idea that, well, there's a few instances of Robinhood actually cashing that check that the crypto industry conceptually wrote in 2013. So it gets me excited. There's no real question here.
- [08:41]
B
Yeah.
- [08:42]
A
But there's a full circle coming here at this, at this event.
- [08:45]
B
Yeah, I think that it's really interesting. So there has been a lot of talk and legitimately not a ton of action in the form of usable products that are compliant in like real jurisdictions. And I think the problem, the reason it's taken this long is you need to be incredibly strong at two things that are very, very different. One is there needs to be a certain amount of like regulatory know how, working with regulators, Tradfi muscle I'll call that. We've kind of, you know, refined over 10 plus years of being regulated very, very, very heavily across multiple jurisdictions. We also have to understand these assets and these traditional assets that we have to tokenize. And we've built up a very, very scaled traditional financial services business while simultaneously becoming one of the largest players in retail crypto in the US but now expanding outside. And so I don't think too many companies can bridge that gap of being very, very strong in tradfi and crypto. And I think that's what's needed to merge the two. And also just being sort of like more muscular from a regulatory standpoint where we've worked hard over the past 10 years. And a lot of the policymakers and regulators that have helped make this happen are actually at this event tonight.
- [10:11]
A
Certainly. Yeah. So one of the announcements that you guys had is Perps Futures Perps for crypto assets. But once you have a tokenized stock that also becomes a crypto asset. So down the line is there on the roadmap perps, perp futures as you announced for crypto but for tokenized stocks?
- [10:28]
B
That's a good question. I think the intent is the technology that we've built here is incredibly general and it can be used token power and tokenize pretty much anything. And actually private stocks and public stocks are quite different mechanically as assets. So we'll take customer demand, we'll probably have futures versions of crypto assets. I mean we've listed a bunch of those in the US already with the Micro XRP and Ethan and Solana futures which are sort of like tradfi instruments of crypto products. And then with tokenization it's crypto instruments that reflect tradfi products and we'll just offer wherever the direction that customers want in a safe and compliant manner. That's the goal.
- [11:24]
A
The crypto idea is that perps are better than options. And so the crypto believer will say like oh well if it's a head to head competition between perps and options, people are going to use perps every single time. It's more intuitive, it's more easy to think about. And so I would hope that as perps becomes more understood by the audience, the consumer base that perps as a financial instrument would proliferate, you know, alongside the rise of tokenized equities, tokenized stocks. That's my, that's my attitude. I don't know if you have a comment on that or just, or anything at all.
- [11:53]
B
You know, I don't want to upset my, my options, your options for my, I think they have their, their unique use cases. I mean there's certain scenarios where an options trade might make sense and you could put together a multi leg strategy and benefit from sideways markets perhaps a little bit more easily than you could with a straight up perpetual future. You could have iron condors or butterflies. These are things that are active traders are really experts in many cases. So you know, if, if there's a demand for those products we have the capability of adding them as well.
- [12:32]
A
And with the access for the United States markets which I'm sure, you know, plenty of United States viewers watching this and also watching the announcement, I'm sure just chomping at the bit to get their hands on perps on side of Robinhood or tokenized stocks inside of Robinhood. I know you guys are barred by the cftc. You guys need the CFTC to give yourselves a Thumbs up. Coinbase, I'm sure, is also waiting for that same regulatory green light to launch these tokenized stocks for their retail base. Are you in conversations with the cftc? Are we at the beginning of this conversation? Kind of. Where are we for US Citizens getting their hands on these things?
- [13:03]
B
Yeah, I mean, it's our belief that tokenized stocks in the US will end up being governed by the. The SEC regulators.
- [13:12]
A
That was the perpetuals conversation. Pardon me?
- [13:14]
B
Yeah, the perpetuals. The perpetuals would, would be governed by the cftc. And when it comes to stocks, I think there's openness from the sec, the crypto task force, who we have been having meetings with. You know, Johan, our crypto gm, was in Washington a couple of weeks ago on the tokenization roundtable, which was hosted by the crypto task force. And yeah, it's our belief actually that this can be done by the SEC alone without the need for additional rulemaking by Congress. And they seem open to it. I think in the US in particular, we want to make sure any product we roll out is fully compliant and the regulators are on board every step along the way. In particular, because our offerings in the US are so good already. I mean, we've got 24, 5 trading of a huge universe of stocks. It's very easy to use with Robinhood, so I mean, you would get weekends and holidays, which are nice, but we want to make sure that it's very, very good and an amazingly compliant product. And we think we can get there. We have the technology, we think we can get there relatively soon, certainly.
- [14:28]
A
So Robinhood has become a leading crypto platform for its retail user base, largely because you guys have so much distribution. Your crypto products previously have lagged other competitors, whereas like Coinbase has more assets on their platform. They had their wallet before Robinhood had the wallet. And so when Robinhood would release a product, it would generally be somewhere between six to 12 months behind a Coinbase product. Because Coinbase is crypto specific, it's crypto native Robinhood. You have plenty of tradfi activity that you also need to maintain. But on this, what the announcements here today, some of them are products that Coinbase just announced just a few weeks ago. And with many of the on chain stocks that's actually leapfrogging. Coinbase kind of beat them to a punch on a number of the things. So is this Robinhood becoming a leading crypto native company? I know 30% of your revenue already comes from crypto, and so where do you think your relationship with crypto grows Are you investing even further into this industry? Are you guys trying to go and take down Coinbase? What do you think?
- [15:25]
B
Yeah, it's an interesting question. I'd say traditionally you're right. Our approach to building products and rolling out features has sometimes been described as Apple, like in the sense that Apple really use it. It's usually not the first to market, not like the bleeding edge innovator, but they sort of like focus on the, on the user experience and the design and the product quality and make it very, very accessible. And I think that's been a good analogy. I mean we, I think when you bring up the wallet as an example, like our wallet wasn't the first to market, but I think it was the first to market in an intuitive way that rolled out features like gasless swapping, which I think if you're a retail user and you expect this technology to go mass market, like thinking through the gas and the fees and a different currency is just very, very confusing. So we felt like gasless swapping was important and I think we were actually one of the first to enable that. But you're also right that now we're kind of pushing the frontier. And I think we are the first big platform, or at least among the first to roll out these tokenized offerings. And with the private company stock tokens definitely on the bleeding edge. So it's a new place for us to be in where we're usually used to, you know, coming in later into a market, taking share through just like price, competition, efficiency, sort of a war of attrition and now being first, but bringing that capability of lower pricing, great technology, it's, it's fun. So we'll see how it goes.
- [17:01]
A
Last question. Vlad and I know you have to hop to another interview. The Layer two, the Robinhood chain.
- [17:06]
B
Yeah.
- [17:06]
A
Talk to me about what the long term relationship is between the Robinhood app and the Robinhood chain. And I think, you know, listeners and myself, our frames of knowledge are going to come from the relationship between Coinbase and Base, where Base is actually a pretty big universe in of itself. And then Coinbase also uses Base to get Bitcoin back to loans and they offer that straight through the front end. Is this kind of something that you're trying to do similarly with Robinhood where you have. It's a developer ecosystem developers can build permissionlessly on the Robinhood chain Or are you more using it just to settle back end logic for your own needs and your own simplicity? How do you think about the long term relationship between Robinhood and Its own layer two.
- [17:43]
B
Yeah. And by the way, I think the team over at base, it's a good team. I think they've done a very, very nice job and they're pushing these sort of like base is for everyone campaign which I think has been relatively effective. I think our niche in this space is it's maybe not going to be useful for everyone and every use case. But what we intend to do is make it the best chain for real world assets. I think real world assets have very specific needs and qualities and making this the best chain for real world assets. Starting with stocks going into private company shares. You know, we mentioned real estate and art and those things are very, very interesting to me as well. And combining that with the lowest possible fees and really I like to call it, you know, we're trying to build like military grade robustness. I think that's going to be exciting and I do think that that's going to be an interesting proposition that should attract some developers. We talk to a lot of folks building chains and the value prop that I hear a lot of is, you know, this is the number one chain for degens.
- [18:52]
A
Sure. Yeah.
- [18:52]
B
I probably, I probably met like 7 or 8 degen chain builders and we're, we're trying to go in the opposite direction. We wanted to be the number one chain for real world assets and for it to sort of confer fundamental utility to, to all participants.
- [19:09]
A
Cool. Well, Vlad, I can say I'm, I'm excited for what you guys have announced. I'm pretty optimistic for what you guys can do and it's help, it's nice to see another big company helping the world move on chain. So we appreciate it.
- [19:19]
B
Thank you. Yeah, thank you for joining us here and helping be part of the journey.
- [19:24]
A
I do have to ask, last time we had you on the show we talked about tokenization of expertise and you talked about the private markets and all that. And I wrote this article on Bankless the next day saying Vlad wants to tokenize SpaceX and OpenAI. So these plans have been in the works for a while or when did that idea come about?
- [19:43]
B
Let's see. Well, I talked about SpaceX and OpenAI in the OP ed and what I found is if you write about stuff often enough, sometimes it ends up happening.
- [19:55]
A
So you manifested it?
- [19:56]
B
Yeah, I'd like to think so. And of course it's really nice to see that a lot of competitors have been like jumping on and trying to do this stuff too, which I think would be good. I think I'm here for the future when everything is on chain and we move beyond Bitcoin and meme coins into a a place where crypto is actually very, very useful and it confers fundamental utility to participants and I think that's going to be exciting. And the time has come. I think. I think it's this year.
- [20:26]
A
Vlad, congrats and thanks for coming on the show.
- [20:27]
B
Thank you so much.
- [20:28]
A
Cheers.
- [20:29]
C
In the Wild west of Defi, stability and innovation are everything.
- [20:32]
A
Which is why you should check out.
- [20:34]
C
FRAX Finance, the protocol revolutionizing stablecoins, DeFi and Rolex. The core of FRAX finance is Frax USD, which is backed by BlackRock Institutional Biddle Fund. Frax designed Frax USD for best in class yields across Defi T bills and carry trade returns all in one. Just head to frax.com, then stake it to earn some of the best yields in Defi. Want even more? Bridge your Frax USD over to the fractal layer 2 for the same yield plus fractal points and explore fractals diverse layer 2 ecosystem with protocols like Curve Convex and more. All rewarding early adopters. FRAX isn't just a protocol, it's a digital nation powered by the FXS token and governed by its global community. Acquire FXS through frax.com or your Go to Dex Stake it and help shape Frax Nation's future. Ready to join the forefront of DeFi? Visit frax.com now to start earning with Frax USD and staked Frax USD and for Bankless listeners, you can use frax.comrbankless when bridging to Fraxel for exclusive Fraxel perks and boosted rewards. Imagine if your checking account and Defi wallet finally spoke the same language. That's Mantle Banking, an all in one fiat and crypto account. It lets you save, spend and invest all from one dashboard swipe for coffee, stake me three yield or even use virtual cards for payments through Apple Pay So it feels web 2 simple yet stays web 3 sovereign for allocators. Meet mantle index 4 the S&P 500 of crypto a tokenized institutional grade fund seeded with $400 million from the mantle treasury and balance across Bitcoin, Ether, Sol and Yield enhanced stables. One asset broad exposure, pure Defi composability. The momentum is real me faults, FBTC bridges and a $2.4 billion community treasury are all powering the next phase of on chain finance. Mantle brings real world access, yield and utility to digital assets. Ready for the next era of on chain finance that actually belongs in 2025, explore mantle at mantle XYZ or follow mantle underscore official mantle bridging tradfi and defi so you don't have to.
- [22:25]
A
I'm here with Johan, the GM of crypto at Robinhood. Johan, people are familiar with Vlad, the CEO.
- [22:31]
C
I think people are a little bit.
- [22:32]
A
Less familiar with Johan. Tell us a little bit about yourself. What's your role in the whole Robinhood universe?
- [22:38]
D
Yeah, so I lead the crypto business at Robinhood. So everything that is related to crypto usually goes around my team, you know, we are really excited to have launched all these products today. I initially joined Robinhood a bit more than four years ago as a CTO for the crypto group and I've been running the business for a few years now.
- [22:54]
A
And so all of the big decisions that happen in the crypto universe of Robinhood, the bitstamp acquisition, the Robinhood Wallet, all of this is over under your oversight?
- [23:03]
D
Yes, that would be right. So my team and I, you know, we work very hard on all this announcement and this project and this acquisition. And so we are, we're really excited to see, you know, the enthusiasm from, from people here.
- [23:14]
A
So the acquisition of bitstamp was a pretty big deal. Before that there was the Robinhood Wallet. Before that there was just, you know, you could buy select crypto assets on Robinhood. There's been certainly a crescendoing of activity on the crypto side of things from Robinhood. Just talk a little bit about Robinhood's long arc with crypto. It seems to be growing. It seems to be like crescendoing in excitement. Talk about that arc and where we are today.
- [23:38]
D
Yeah, so, you know, we launched crypto in 2018, to your point, with just a few assets. And then we started to add more assets. We started to add functionality like transferring the Robin Wallet, which was our self custody wallet. And slowly we, you know, really built on this vision that crypto and blockchain technology can be the backbone of the financial system of tomorrow. And really what this event is about is how will we rebuild Robinhood using blockchain technology? And you know, in the eu, we're actually almost all in blockchain technology. So now EU customers can actually trade crypto, stake, crypto, but they can also do perpetual on two assets and they can also do stock tokens to get exposure to US stocks and etf. And so I think that's what's really exciting for me. You know, I joined Robinhood because I wanted to bring this mass adoption and stop talking just about the technical and the protocols and actually giving tools that people can use every day and use blockchain.
- [24:31]
A
So Perps is one of the big announcements that you guys had this today. And Perps is financial instrument that was created in the crypto universe but isn't inherently crypto by any means. It's just a neutral financial instrument. In theory that could have gone into the regular Robinhood app for regular tokenized or non tokenized assets, normal equities, but instead it is first being primarily introduced in the crypto context of which it's native. So that's under your domain. Talk about that choice to keep it inside of the crypto context when it could have also been applied to like more normal financial instruments in the rest of Robinhood.
- [25:04]
D
Yeah, I mean, I think, you know, there is a few issues on you know, the CFTC side and for example, perps are not necessarily something that exists in the US today. You can do like long dated contracts, but it's, it's not something that really is a perpetual, that roll over indefinitely. And so in the, in the EU we received our license, our MiFID license and our MICA license, so we are able to actually bring perpetuals. And it's something that is really exciting because you know, a lot of what we were saying on stage was about how complicated it is to, to use perps on different platform and you can very hardly do it on a phone. You know, you, you always have to update your, your take profit, your stop loss. You want to make sure that you know you're not going to lose too much money or take too much risk. And so you're always having to kind of stay at a desktop to, to use it. And so what we wanted to build on, on Robinhood was really an interface that you can use on a, on a on to go basis basically and just with a swipe of a finger being able to update your position and your strategy and make sure that you don't take too many risks.
- [26:03]
A
Do you see the Perps instrument spreading further and more integrated into the rest of Robinhood or is it kind of. You'll follow the demand, we'll see how it is adopted. How do you see it expanding?
- [26:14]
D
Yeah, I think, you know, there's two aspects of the Perps. There is the retail, there is also the institutional aspect. So the backend that we're using for purposes, bitstamp and that exchange is actually open to institutions. So we expect to see institution also coming to that. But we also announced stock tokens today. That are like token that gives you exposure to US stocks, US etf. In a world where you have crypto tokens and perps combined together, you could see a world where you can have perps on tokenized asset, basically.
- [26:44]
A
Let's talk about the chain because I think that's a very. That's one of the most exciting announcements that we've seen out of today. But there was also a choice that was made. I believe I'm fuzzy on the details, but I understand that there was also a potential deal, some sort of deal with Solana about some interest in working with Solana. Maybe that deal is still open, I don't know. But in the what we heard from today out of Robinhood was the launch of a layer two on the Arbitrum Orbit tech stack. So talk to us about that choice, that strategy. Why was that the right strategy for Robinhood?
- [27:13]
D
Well, you know, there was a few things. We talked to a lot of chains. So you know, when the Rimmer started it was just about the fact that we were talking to chains and for us we wanted to understand like do we want to use an existing permissionless chain or do we want to build something that is custom for us. And really when we started to look at the complexity of what we are trying to build and all the ambition that we have around stock tokens and bringing the financial system on chain, we felt like having our chain was giving us a lot more optionality. We are able to build the right regulatory requirements on the chain and also making sure that, you know, it can scale with us. And why Arbitrum? You know, for us there was a few things we really like the fact that the way that you can use Stylus, which is a system that basically allows you to use any kind of code so you don't have to be stuck with one type of code, but you can actually bring like Rust C whatever you want. And so that's very helpful if you're thinking about the long term and the type of products that we want to build. The second thing that we liked was a priority queue system that is non predatory. And also, you know, we have been good partner with Arbitrum for a long time. We've partnered a few times on the Wallet and we overall expect to be a good partner with every chain. So you mentioned Solana. We, you know, we offer like for example, no fees on the wallet on Solana if you're a gold customer. We also offer staking on Solana on multiple platforms. So we want to be good partners with everybody.
- [28:34]
A
Okay. So just to trace over what I heard you say, the main reason why the arbitrum layer two was selected was one, the customizability and also two, the reading between the lines. The MeV control, as in if you guys run the sequencer, you know, MEV is a very legally dubious topic and if you outsource that to external parties and all of a sudden there's a little bit, you know, outside of your control. So if you have a single sequencer, which I would imagine Robinhood is going to run, you guys just can make sure that there is no things like front running, back running, things that would otherwise be illegal in a traditional context because you guys are operating the chain. So customizability and control, is that kind of the two key features here?
- [29:11]
D
Yeah, some of the, of the feature, you know, there was also the interopolatility between multiple ecosystem, Ethereum being a big one. You know, there's many on, on evm. So we were really excited about that. But yeah, I think, I think you're right. I think the idea of having just one sequencer is not necessarily true. Like, you know, I think at some point we'll want to bring decentralization and I think using the, the Arbitron stack is helpful for that. But I think you're right. We want to make sure that we can control the products that we are going to launch at the beginning, but also build tools that are kind of the platform for everyone else to build on top of it and use the technologies that we are creating today.
- [29:49]
A
Let's lean into that interoperability word. If you say that you are interested in interoperability, right after you talk about an announcement of tokenized stocks, I get images of these tokenized stocks moving beyond Robinhood chain. Is that an explicit part of the plan? Talk about that future?
- [30:03]
D
Yeah, absolutely. You know, I think for us the idea of tokenized asset has been that we are removing them from the wall garden and so you can transfer them between broker, you can do a lot more things with it. Maybe, you know, you can use all the things that you're thinking about defi and, and assets. And so for us we know that, you know, people want to move to a different chain or they want to move to a different platform. And I think it's part of the DNA. But if we want that product to be really successful, we don't want to recreate another traditional finance system. So definitely.
- [30:34]
A
So are the stock tokens, are they whitelisted or what are the transferability conditions that are built into the token contract of The Robinhood stock tokens.
- [30:43]
D
Yeah. So right now what we announced today for the launch, we're going to just allow it within the Robinhood app and we're going to open self custody pretty soon. You saw it during the demo we tried to transfer from our self custody wallet to, to the Robin and app and so we are kind of ready to go. We just want to make sure that you know, the product is working well before we, we open the gate.
- [31:04]
A
Okay, so are there, is there a whitelist contract? As in if I say, say I'm a. I have a Robinhood account or, or excuse me, an Arbitrum wallet and I send my equity tokens to my wallet, can I send it to a friend who has another Arbitrum wallet or would they have to also be a part of the Robinhood KYC universe?
- [31:24]
D
Yeah, in the future we would want everyone to be able to transfer between each other. I think where you know, the mint and burning will be where you will need to be either a Robinhood customer or you will be have to be a customer of somebody that is compatible with our stack.
- [31:37]
A
Okay, cool. It makes sense that you guys have chosen Arbitrum. I was talking to AJ about this because Arbitrum is so inherently defi focused. So it's one thing to be able to buy and hold tokenized equities, you know, private companies especially, but it's another thing to be able to compose those into a broader Defi ecosystem, which you know, Arbitrum definitely has. And so are you envisioning a world where, you know, there's an AAVE implementation on the, on the Arbitrum layer, layer two or you know, there's a uniswap. So you can you see these tokens being interoperable with the existing Defi Arbitrum ecosystem?
- [32:11]
D
I mean that's a goal. You know, like I think we, we want in the future to be able to do all of this? I think it's going to be hard for me to tell you, like is it going to be a high, is it going to be a more full or something else. But we want to make it compatible and that's why we picked kind of an EVM based solution for layer. Otherwise we could have done our own layer one or we could have kept it on a non permissionless chain. It would have been a lot faster and easier.
- [32:36]
A
But there's also nothing inherently stopping you guys from issuing these tokens on Solana in the future, right? If there's demand there, could you also see yourselves tokenize these across Many chains.
- [32:45]
D
I think bridging is going to be part of the strategy overall. I think again we want everyone to be able to use it. And so for that I think you need to be able to give access to everybody and you won't be able to do that if you limit yourself to just one chain.
- [32:58]
A
So when I was listening to Vlad talk about with the whiteboard session, he talked about all the different components of the Robinhood world, especially as it came to issuing these tokens and then also having them trade on bitstamp when the very constrained traditional markets are only alive so many hours of the week. But now Bitstamp can trade them 24, 7. And then you also have the Robinhood Wallet as well. There's a very tightly integrated ecosystem of components that are being woven together there. Was that your mastermind? Is that your strategy?
- [33:30]
D
Well, I don't know about that. I think we have a very big team with a lot of talented people. But I think for us that was kind of the idea. The exchange when we acquired bitstamp was this idea of not being only reliant on market maker but being able to support some of the new products. We are thinking of like tokenized assets. And the Robin Wallet is also something that four years ago when we were starting to build it, the idea was really to think about the defi world and think about the fact that at some point people may not want to use centralized platform. And so it's great to see everything going together and we hope to keep going like this. And there is a lot more plans that we have shared also on the pirate stock for example, that is going to really get together nicely in this ecosystem.
- [34:13]
A
Spawning a brand new chain is, you know, a pretty big undertaking. You know, it's one thing to use your own chain to deploy your own assets and to do the backend things that Robinhood needs to do, which I mean, I think we're all very happy about. That's, that's what blockchains are for. That's one of the big bull cases. But there's also the conversation of, well, the Robinhood chain is also going to be permissionless as well for developers and users. So that means that any old developer can come and do things on Robinhood chain. Is that a specific vertical that you are trying to foster?
- [34:41]
D
Yeah, we are very excited about that. I think, you know, we, we call all the developers that want to be working on the Hoodchain that want to talk to Robin Hood about this, like it's something that we, we want to do. And we think that will happen for us. It's the, you know, the big long term vision is that everybody can use these stock tokens, everybody can build on it and you can see more type of real world assets. And so for that we'll need a lot of developers because as important Robinhood is and with a great team that we have, we can't build the entire defi world. There's so many things being innovating every day and so we think that it's all coming together.
- [35:16]
A
So Robinhood, about 30% of Robinhood revenue comes from crypto products. Which I think if you told that to the average Robinhood shareholder or just the average person in traditional finance, they might be shocked about how high that number is. Where do you see the trend of that number going? Because Robinhood also has a bunch of tradfi products. They just launched Robinhood Banking, they just launched Robinhood Strategies. So it's not like neglecting by any means its tradfi side. But also some of these announcements are pretty amazing. So where do you see this 30% crypto revenue going in Robinhood? Do you see that increasing, staying the same?
- [35:50]
D
You know, I think it's hard to say. Like if you think about last year, we had so many great products on Robinhood, not just on the crypto side, but you know, event contract futures, like so many new things. And so I think it's just the business as a whole has been growing and so that's been what's really exciting. But I think for us, what we've been mostly focused on is less about the, you know, the share internality of what is Robinhood crypto doing versus the other businesses, but more like what market share we're able to get outside of Robinhood. And you know, we've been able to grow our market share nicely in the past few quarters and I think that's really a good signal that we are building what our customers are really excited about.
- [36:26]
A
Let's fast forward 5 years, 10 years, and everything that you want about your on the crypto side of Robinhood comes true. Paint us a picture of what that looks like. You have the Robinhood app, you have the Robinhood chain, you have the bitstamp exchange, you have these tokenized equities, tokenized private companies. There's a big, there's a good number of puzzle pieces here. When all of these puzzle pieces that we know of come together and maybe some additional ones that we don't know of, what does that picture look like?
- [36:53]
D
Well, I think, you know, for us We've been not really keeping a lot of secrets. Like we want to make Robinhood available everywhere in the world. So that's one big thing. We have a wallet that is available in a lot of countries, but we also want to bring the entire Robinhood stack like stocks and futures, options, all these things. And the next thing also will be like we want a lot more of the traditional system to be on chain. So ideally for me in a, in a few years it's you use the same Robinhood as you are using today as a US customer and most of it is using on chain. It's a lot faster, it's instant, it's 247 and you don't even know it because you don't need to know all the details about the protocol.
- [37:31]
A
Do you think you guys can dethrone the NASDAQ and the New York Stock Exchange as the centerpiece of liquidity in the future?
- [37:37]
D
Well, I think it's going to be interesting to see how the market responds to these type of assets that are being tokenized. But it is going to create a lot of opportunity, like you know, during market, during weekends, off market hours, all these things. Like you will start to see a lot more people trading these assets.
- [37:54]
A
Will there be a token for the Robinhood chain?
- [37:57]
D
Currently nothing to announce there. I think, you know, right now for us the focus is to launch some of these new products and see how people are using it and then we'll share more detail on that later.
- [38:06]
A
John, you've gotten a lot of people excited today, including myself. So thank you for all the hard work that you've been putting in and I think we'll be watching Robinhood with pretty good interest.
- [38:13]
D
Thank you for having me.
- [38:14]
A
Cheers.
- [38:15]
C
Binance is the world's number one crypto exchange. Over 275 million users already trust their world class security. Binance makes starting crypto as simple as it should be. Whether it's learning about crypto on Binance Academy or browsing hundreds of assets and viewing your newly created portfolio in a clear, easy to track dashboard, Binance helps you go at your own pace. For hardcore traders, Binance Pro opens up industry leading services for trading professionals with fully bespoke trading products. Along with a suite of white glove services for VIP and institutional clients. Need support 24, 7 Customer service is on hand whenever you need it. And with some of the lowest fees and deepest liquidity in the market, it's no surprise why over 275 million users trust Binance for everything. Crypto download Binance today and get started in minutes. Binance is not available in certain countries, including the United States. Check its terms for more information. Uniswap is your gateway to a more efficient Defi experience with Uniswap. Swapping and bridging across 13 chains is simple, fast and cost effective, helping you move value wherever, whenever. Thanks to deep liquidity on the Uniswap protocol, you'll enjoy minimal price impact on every trade. And now Uniswap V4 takes it even further. Swappers benefit from gas savings on multi hop swaps and ETH trading pairs, while liquidity providers can create new pools at 99% lower costs. The best part? You don't have to do anything extra. Each trade is automatically routed through Uniswap X, V2, V3 and V4, so you get the most efficient swap without even thinking about it. Whether you're swapping, sending on, ramping off, ramping, or bridging. Uniswap's web app and wallet gives you the tools to unlock Defi's full potential potential on Ethereum base, Arbitrum, Unichain and more. Use Uniswap's web app and wallet for a more efficient way to use Defi.
- [39:51]
A
We're here with AJ from Arbitrum. It's a big day for, for Arbitrum. How do you feel?
- [39:56]
E
Yeah, it's. It's awesome. It's really exciting. I'm really excited to be partnering with Robinhood on this. I really said about their vision, particularly about sort of reconstructing their platform for their users with crypto Rails and yeah, it's an incredible day. I'm sure we'll get into it. But yeah, it feels kind of surreal in the moment.
- [40:14]
A
The Arbitrum Robinhood partnership goes back pretty far, like two plus years. I don't know what the partnership looks like way back when, when maybe, maybe it was just an initial deal, but it's certainly crescendoed over the years to where we are today, where we are seeing Robinhood do something very innovative, which is launch stocks that are not trading on Robertron with a little Arbitrum logo right there. Talk. Talk about the crescendoing of the Robinhood Arbitrum relationship.
- [40:40]
E
Yeah, no, it's been really cool. So I remember, I think it was ETH Denver 2024. We announced sort of like the beginning of our partnership together and it started with like a really simple like Robinhood's going to support Arbitrum in their crypto wallet, easy access for users to trade on dexs and sort of do other activities through that, through that wallet experience. But we sort of started like laying the building blocks for a deeper, close relationship. Our teams got close. Joe and I in particular, you know, sort of fostered a great working relationship. And our thesis with them has always been like, be good partners. You know, for us, we don't have this vision that crypto needs to be at the forefront or that Arbitrum needs to be at the forefront. We're a powerful technology that can power user experiences. And for us, Robinhood sort of, and its place in Fintech was always the best partner. So we, you know, we developed this relationship and obviously crescendoed into where we're at today. But the same elements and thematic components of these guys are the best at building user experiences. And we want our technology to be able to be flexible enough to be supportive of their vision, to make their users happy.
- [41:48]
A
So I would imagine that there is not one long standing Arbitrum Robinhood deal. There's one deal at a time. And every single new thing that you guys do together has to be done on. Is this right for both of us or do we like working together? So every single deal has to be one, right?
- [42:04]
E
Yeah, I think in many ways, like, you know, I think one of the core things that's really important for businesses that are moving as quickly as sort of both our business and their business is like flexibility to make sure that the products are right. Like, for example, today they announced like Solana Staking as well. And that's a great thing for their business. They're bringing that utility to their users. I would say tokenized stocks was always like the main prize that we were after. Right. Obviously, you know, I joined crypto in 2014 and for me it was ownership, sovereignty and democratizing access. And there's nothing that does that more than just the tokenized access to everything. And as Vlad mentioned in Phase three, the goal is for that to be, you know, self custody, do with it what you want. And like that vision is incredible. So that was always, I would say, like the north star of what we were hoping to collaborate on. And obviously that's where we're at today and we're starting with them on Arbitrum 1. So like today, for example, the demos that they did, those assets are all minting and burning on Arbitrum One and trading. Eventually they're going to be transitioning to the Robinhood chain, which the Arbitrum orbit stack is going to power. And I think that's one of the really cool things and one of the things that excited them about Arbitrum is the flexibility of what we can offer as a platform. Right. We have Arbitrum 1 as a core economic hub of crypto and financial activity. And also the ability for them to take a stack and own it, own the customizations of it, whatever they want to do with it. And our team is going to be, you know, a strong partner in product design for what is the best product for their users. And there's a lot of reasons why people talk about wanting their own chain, but the ability for them to continue to compound their users on the Robinhood chain is going to be a very powerful thing as they build their entire company again on crypto Rails. So, again, like that, flexibility of what Arbitrum can offer, I think is something that was a key component of this because the arbitrary platform offers the flexibility that they might need in order to continue to build their business on chain.
- [44:01]
A
Now, I think people are pretty familiar with the deal structure of base and the optimism collective. There's something like 15% of base sequencer fees or 2.5% of total profit. Whichever one's greater goes to the optimism collective. And that's kind of the deal of the optimism collective. Then that's kind of like, kind of set the standard for the OP stack ecosystem. If you are willing to share, what are the economics of the Robinhood chain and Arbitrum?
- [44:27]
E
Arbitrum has a similar model with a dao. It's a little bit different, but it's similar in the sense that if you want to launch an L2, which is what Robinhood is choosing to do, then you do a 10% profit share as well with the arbitram DAO. So it's a very similar model. I would say the differences in model are maybe some of the philosophical differences between Superchain and Orbit. So Superchain, you kind of opt into like a shared governance model with interoperability. With Orbit, it's, you know, just sort of contribute back into the Arbitrum DAO on the profit share through what we call the AEP and then do whatever you want with it. Right, right. We expect there to be interoperability, but it's almost like an orthogonal product question to use of the stack. And because we're not sort of locked in on Orbit into specific interoperability and governance mechanisms, we can have a lot more flexibility in design of the stack. So that's why you sometimes see Arbitrum like you see L3s, you see L2s, you see custom gas tokens, you see all these different changes because the Orbit stack provides a lot more flexibility. And that was something that was like really important to Robinhood on this journey, was to make sure that they had that flexibility with the stack to own it. So they don't have to opt into shared governance or interoperability. They can if they want to. My suspicion is they won't prefer to. But yeah, that's, that's how the Orbit stack structure works.
- [45:43]
A
Yeah. So it was pretty cool to see the Arbitrum logo right next to the OpenAI, you know, transfer 1 million shares of OpenAI in the Robinhood app that everyone's familiar with and you see the little Arbitrum logo.
- [45:53]
E
Yeah.
- [45:53]
A
As you alluded to and as they said, you know, it starts on Arbitrum 1, it'll migrate over to the Robinhood chain when that thing is, you know, up and running.
- [46:00]
E
Yeah.
- [46:00]
A
But also at the same time, Arbitrum 1 already has, you know, fantastic defi infrastructure, which the Robinhood chain will have to start from scratch on. I don't know if they're going to leave the option to do tokenized stocks on Robinhood Arbitrum 1 persistently. Will that always be an option?
- [46:16]
E
So it's a great question. It's really going to be up to them. I mean, the reason to do it is it's another environment where they can sort of integrate. They'll already have been integrated, so they don't have to like uproot some of the existing established relationships that they might have on Arbitram one. The reason not to do it is fragmentation, potentially of liquidity. So that's probably going to be a key product question that we're going to work on with their team over time. But I guess you said Arbitrary One has a really robust Defi ecosystem. I'm sure a lot of our builders are going to want to work with them on the Robinhood chain as well, which is great. And something that again, we encourage and support. I think that's probably like, we don't know yet. We'll figure that out, sort of. Remember, like on phase one, these assets aren't integrated yet into DeFi. Right. So it's still more of a, a self contained box. So today if they migrated, they wouldn't have some of these sort of liquidity fragmentation concerns. It would probably just be some sort of mint and burn mechanism, but it probably depends on how mature and engrossed or if there's demand for it.
- [47:10]
A
Sure, sure. You, you could just imagine that, like there's a ton of potential TVL up for grabs.
- [47:17]
E
Yes.
- [47:18]
A
And you know, if there's some inherent interoperability inside of the Arbitrum stack, maybe, I don't know, I can take my Robinhood tokenized stock and take it into GMX or aave onside of Arbitrum 1, but that would necessitate transferability of these tokens. Now you are not on the Robinhood team, so I don't know if you're privy to these details of the transferability of the Robinhood stock tokens. Do you know anything there?
- [47:41]
E
So yeah, I don't want to speak for them. I think what Vlad was referring to is in the later phases that that isn't very much their intention. Like they want self sovereignty. So for example, when you saw Vlad do that like live demo transfer, that was self custody, right. That was not in the contained environment. Like he linked that to arborscan, he sent it to somebody else's wallet. So the infrastructure is already there, as they clearly showed. And I think what they're gonna be planning on is I think figuring out the rollout like this is an extremely ambitious thing that they did today. I think they made more announcements today than you typically see from companies in like a two or three year timeline. Yeah, really incredible across so many different components. But I think like again, and this is sort of goes back to what I was saying about like what I really find so exciting about this, they're really focused on crypto rails for their existing user base and they're going to focus on the product that will make sense for that user experience. Like when they were talking about the perps, they said you can do this like two or three taps of the finger. And like that's why I love working with this team where instead of saying how do we get crypto users to do more stuff on chain, it's how do we get more people who are regular financial traders to be actually just using crypto Rails Again, I think Robinhood is best positioned to be able to do that and we're extremely excited to work so closely with them.
- [48:56]
A
People are digesting this news. They're just going to see the take that Robinhood has a chain now and they're going to look at the correlates between Robinhood and Coinbase and be like, oh, Robinhood has their equivalent of base. And people are also going to look towards Arbitrum as well and compare that to optimism in the op sac. It's like, oh, Arbitrum has its equivalent of base now with, with Robinhood, but maybe you could also kind of continue that conversation and get into the nuances of the difference. How is it the same and how is it different?
- [49:20]
E
Yeah, so I think it's. So I think it's the same obviously, in that like we have a huge user base that's using the stack, sort of exogenous to the sort of DAO governed chain. And the reality is, is that as we see, like World Coin, you know, Athena and Securitize are building Converge also using the Arbitrage Orbit stack. There's plenty of demand for people to have their own chains, and that's really one of Ethereum's killer features, is the flexibility and customization for that to happen. I think that there's two distinctions, I would say sort of between the Arbitrim Robinhood relationship is two is like Robinhood, they have crypto users, but their core user base is not crypto. So the overlap between maybe Arbitrum 1 users and the people who are going to be the first users of, of the Robinhood chain are definitionally probably going to be different. There's of course going to be on chain activity happening from crypto natives on the Robinhood chain as well, I'm sure, but it's an additive user base. The second difference is, you know, I think, especially with the expansion of time, like I think Coinbase and Optimus was probably a couple of years ago, Arbitrum 1 is very entrenched, as you know, I would argue the most credibly neutral liquid, L2. Obviously Coinbase and base is huge. Arbitrum 1 and Coinbase are probably neck and neck in terms of different metrics, but Arbitrum 1 has a very strong home if you're looking for a credibly neutral environment. And again, the way we've designed the Arbitrum path is if you want to launch an Arbitrum 1 and migrate to your own chain, it's seamless, right? That's what we're doing with Robinhood. That's what we're sort of pioneering. And I expect that journey to continue to happen for more people. Launch an Arbitrum one, have a great experience, expand your user base, build yourself a mandate to be able to have your own chain, your own user base, and we're going to help work with you through that migration. So that's probably a little bit of the difference, but, you know, it's maybe a little more nuanced than some people might appreciate.
- [51:07]
A
I think this is going to keep people's attention focused on what exactly Robinhood is going to do on chain. How fast will the tokenized stocks come on chain. How fast will they spin up their own chain? What does Arbitrum growth look like downstream of all of this? How does Arbitrum keep this momentum going? What do you guys have next in the chamber to fire?
- [51:25]
E
Yeah, it's a great question. It's hard to beat this one. But I think that for us, you know, we've had a very, very specific focus and thesis, which is we want to make sure our product can best serve our user base. And that user base is very broad.
- [51:39]
D
Right.
- [51:40]
E
Like if you look at Arbitram is probably most known for defi Both on Arbitrum 1 and also a lot of the chains that are launching using the stack. But also basically every gaming chain, for example, that launches uses Arbitrum1. And the reason for that is because, like, we've had really fast block times. Some might want to use Stylus because they might want to bring in traditional gaming libraries. So our goal is still like find use cases that we have conviction in. And you know, I would say the highest conviction today is probably this merge of Tradfi and Defi into what Steven, our CEO likes to just say finance. Like in 10 years we're all just going to call it finance. That's probably our strongest focus right now, both on Arbitrum 1 and also across supporting ecosystems that want to launch their own chain and just finding more use cases. Right. We're very focused on traditional RWAs lending, capital markets. I would say Arbitrum doesn't do as well in the meme coin craze as other ecosystems. And every ecosystem sort of has their different communities and cultures. But this has kind of been always our focus and during the defi bearer days we probably went down with it. But as this is all coming back, I think Arbitrum's the excitement, the euphoria for the ecosystem is coming back with it.
- [52:55]
A
Yeah, I do like that sentiment of like, you know, the OP mainnet are the governance philosophers and the base chain are like consumer crypto in crypto culture. And Arbitrum has always been defi and execution optimized. And so it makes sense that that's what Robinhood chooses because that's what their core product offering is. There's always, there's been a. There's a strong alignment between those two brands.
- [53:17]
E
Yeah, 100%. I think that people like to say like crypto and like Tradfi or Fintech are that different. I don't think they are. I think there's a lot of cultural similarities, elements, and it really all comes down to relationships, teams and obviously product. And yeah, we've been I think very focused. I think we've had a very product focused. I remember, you know, everyone talks about fast block times now. It's like the new hot thing. Arbitrum had sub 250 millisecond blocks time since 2021.
- [53:43]
D
Right.
- [53:43]
E
And like for us that was something we identified really early is going to be a critical thing to expand use cases. That's why Arbitrum did so well with perps as they sort of expanded off of Ethereum, mainnet with you know, gmx, Vertex and others. I think Stylus, which is not as popular today is going to be that sort of next unlock. Just so in case your listeners aren't aware, Arbitrum is an EVM compatible chain, but Stylus enables you to launch contracts in Rust C C fully interoperable. So we're seeing a lot of teams now that like you know, Fintech is meeting crypto privacy and privacy layers are really important on top of this. And Stylus enables you to have like privacy optimized because you can just pull in cryptographic libraries like super cheap. Right. So we try and stay ahead of the ball in terms of what we think are the features that our users and developers are going to want and execute.
- [54:33]
A
On that thesis, I do see privacy becoming an increasingly important and discussed. It's starting to crescendo as a topic especially as Tradfi comes on and realizes like oh no, all of my assets are totally transparent to everyone. And so it's good to see that there is potential path for lots of the Arbitrum stack to also access some of the privacy that we so desperately need.
- [54:54]
E
100% we have. Like for example, there's a team like when they launched on day one with Stylus called Renegade Finance and it's essentially on chain dark pools and it's the coolest thing and I think they have like more than 30 zk proofs generated on each transaction. Again, they're doing it on Arbitrim. It's a super cheap transaction because again they're utilizing Stylus. So we extended the evm. We, we recognized early the EVM is the huge mode of the Ethereum ecosystem. But we can do more and that's like what the flexibility of L2s offers without compromising on the EVM. And we thought that, you know, Stylus is a great, a great combination there. Cool.
- [55:25]
A
Aj, congratulations. It's been a very big day. Congratulations.
- [55:27]
E
Awesome. Thank you.
- [55:28]
A
Cheer.
- [55:33]
C
Sam.