Robinhood Builds Ethereum Layer-2 on Arbitrum to Power Tokenized Stocks

Robinhood’s crypto unit has expanded its involvement in blockchain infrastructure by committing to a layer-2 network built on Arbitrum, rather than launching a standalone blockchain. The decision reflects a strategic shift toward speed, focus, and integration with Ethereum’s existing ecosystem. Company leaders see Ethereum’s security and liquidity as core advantages that remove the need to rebuild complex foundations from scratch.

The brokerage surprised many in the cryptocurrency sector when it revealed plans to build on Ethereum’s scaling layer, rather than introducing a new layer-1 network. According to crypto chief Johann Kerbrat, the choice came down to priorities. An L2 allows Robinhood to inherit Ethereum’s security and decentralization while remaining compatible with the wider EVM ecosystem.

This approach lets the firm avoid the technical burden of maintaining its own base layer. Instead, development resources can focus on customer-facing products like tokenized stocks and future digital assets. Ethereum effectively handles the hardest parts, including security guarantees and settlement, allowing Robinhood to accelerate product delivery.

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Tokenized Stocks Expand Rapidly

Moreover, its tokenized stocks are already running on Arbitrum One, the most actively used rollup on the Ethereum chain. In addition, this architecture allows it to have faster transactions and lower pricing while preserving Ethereum’s security levels. Finally, it intends to move these assets seamlessly to its new Arbitrum chain once it is launched publicly.

Demand has been driving the rapid expansion. The tokenized stock market started with approximately 200 stocks last summer. However, customers’ demand has caused the list of those stocks to rise beyond 2,000. Customers do not want to be limited in the choices they have access to. So, the solution came in the form of an expanded list of stocks offered by Robinhood.

This move is an indicator that the way in which retail investors can have access to traditional markets via blockchain networks is set to undergo a major shift. This is due to the elimination of friction and new possibilities that come with tokenization.

A Broader Vision for Onchain Assets

The Layer 2 network is still operating on a private testnet and has not yet been scheduled for a public release. Nevertheless, for Robinhood, it is a starting point for something much larger than stocks. They also anticipate being able to tokenize private equity, properties, and other real-world assets.

At the same time, Robinhood has been expanding its other crypto services, including staking. Although the service debuted in Europe, the company expanded the service to the majority of the United States in response to the updated regulatory framework. The adoption rate of the service has been impressive.

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