How Robinhood built its own blockchain to control compliance and fees

0:00I'm Ashan Addison from the Crypto Coin Show and today on Blockchain Interviews, we have John Kerbot, SVP and general manager of crypto at Robin Hood. John leads Robin Hood's entire crypto strategy, including the Robin Hood chain. The company launched the chain in this past July and it has been hot as ever in the markets. And the whole crypto market's really been kicking up.

0:21Excited to hear your take on it, John. And I believe the chain just crossed over 1 billion in total value locked. Maybe we can dive into that and so much more with the global expansion. Thanks so much for taking the time.

Yeah, excited to be here. How are you?

Very well and I'm excited for these crypto markets. It seems like the tide

0:43is turning and Robin Hood chain launched at a great time. I think a lot of different layer 1 chains over and layer twos over the years try to time their launch and they think too hard over it rather than maybe just a combination of luck and timing and it so far it's working well for Robin Hood chain just crossing huge TVL markers. I'd love to hear

1:09from the inside, you know, the past couple months since the launch, your expectations of it and the outcomes.

Yeah. You know, really excited about the overall outcome so far. To your point, we actually crossed 1.6 billion in TVL. So

amazing.

we're are making progress towards the 2 billion mark and on the total asset market cap, we are more than 2

1:32billion, 2.2. So you know overall pretty pretty excited by how much adoption we've seen not just by customer but also by the developer. I was talking to you know academy CEO last week and he mentioned how many developers are building on the chain. It's more than 40% of their demand currently. And so I think that shows that to your point when you kind of

1:58remove the barrier you bring institution but you also bring retail at the same time. You are able to create this ecosystem that is thriving and people are actually exciting to connect to the chain and build on top of it. So overall, you know, we are still at the very beginning. So we're really focusing on building and creating the foundation for us to move forward. But

2:18So far happy with the results.

Definitely. And I'd love to hear more about the builders and what they're building. And that actually ties into my next question of why the chain, you know, Robin Hood of course has has been trading equities and other financial products for many years and cryp including crypto. And there also have been, you know, Ethereum and

2:42Salana have sort of been known as the future of finance and supposed to be the vision of taking over the financial system and moving it on rails on Ethereum. But then comes Robin Hood's own chain. Can you walk me through that decision of the need for its own chain? [snorts]

Yeah, it was a combination of reason. I think the main principal reason was

3:05really to be able to control our own destiny. We wanted to create a chain that was hyperfocused on real world assets and on AI technology. We wanted to make sure that we could support any type of bots and agents kind of automation. So when we launched the chain by default you had skills to create wallets to connect to unis swap and be able to swap and the

3:30you know for us being able to control the entire kind of structure at the compliance level for all the complex products that we're trying to launch in all the different jurisdiction in the world. But also being able to control things like the cost of the gas thing like that was really important for us. So that when we see for example that

3:51you know transaction are becoming too expensive we are able to reduce the overall gas for the chain and therefore like bring more and more people into the chain. If we were to use another chain like another one we would have been a bit less flexible and would have been kind of depending on whatever the chain is focusing on. So here we have a bit of our own kind of

4:14destiny that we can control decide what are the parameters that we want to optimize for and at the end of the day we still benefit from everything at the L1 level. So we still benefit from the Ethereum Foundation working on all the improvements that they are doing on the network. We are also still getting a lot of the security and decentralization aspect of Ethereum.

4:36but having this like custom layer at the top really give us a lot of choice and a lot of personalization. So that's kind of how the decision was was made and why arbitum. We've been working with them for a very long time. We like their technology. you can build on in any language with stylus. You can also have different ways to prioritize transaction in a non kind

5:02of prioratory way. So that's the kind of things that we were f focusing on when we decided on the chain.

Definitely. And I recall in the previous cycles trading meme coins or trading any coins on the decentralized ledgers when it got busy all of a sudden you're paying 10 if not for these direct swaps like $100 fee and people are still doing it because they believe they would

5:27make more. But being able to control that and hopefully I think we're past that point. I don't know if that will happen again in a crazy frenzy the network that's congested, but having your own chain on top of that should at least solve that and be able to control the fees cuz cuz fees are important and when you're not in that two week frenzy craze, you know,

5:47people care about keeping more of their own money when they're trading, especially frequently.

100%. And fees are important also for the health of the chain, right? like you don't want the fee to be absolutely low and so low that a bot could spam and actually still profit from from the spam. So you want the fee to be high enough that it prevents the

6:11spam, but you don't want it to be too high that it will actually prevent to your point trading activity. So we're trying to kind of find the sweet spot right now and we're we're still experimenting on it, but obviously we've never hit an issue where like it was like a $100 gas fee. That's for sure. Like we

we are more in the 30 cents at the very

6:32max. But we want to be at much lower. So that's something that we've been like working a lot on.

Definitely. And that seems more than reasonable if especially if you're trading in size. And to your point about having low fees, that was one of the enticing features of these layer 2s that were on top of Ethereum in the past cycle. And yeah, the fee would be 0.001,

6:58but the revenue of the chain was, you know, like $50 a month or something. [laughter] and it's like, it was great, but it wasn't sustainable for the company. Of course, Robin Hood has many other streams of revenue, but for a chain, you need some other ways to sustain it besides just balancing the gas fees, right? [snorts]

Yeah, we have many ways to,

7:25generate revenue. So, obviously, there's a gas fee that is kind of the main driver, but we also have our Robin wallet, which is one of the principal wallet for Robin, chain. And obviously we are getting transaction fees there as well. And then there are you know more and more business lines that are created around the chain that we still have

7:46to kind of work on with institution. But our goal is to make sure that you know for the retail it should be lower cost to interact with the chain. That's why for example we are covering the gas fees on our Robin wallet and on some of our other like platform where we interact with the chain. But the goal is to really bring most of the value to

8:07the customers and for us you know we think there's a very good impact on what we can offer to our retail customer. For example raidon earn allows you to get about 7% approximately on your stable coin. And that's because on the main app we create a smart wallet for you and we do the transaction to the chain. Everything is kind of done for

8:32you. So you don't have to worry about all the complexity. But we could not do that if we were not using our own chain and our own infrastructure. I think you know being able to really build on top of what we created with a chain is something that is pretty unique and allow us to offer more product to our customer at the end of the day.

8:53

There's been the story of two wolves as I was reading the meme coins and the and the tokenized stocks. And you know, I was reporting through Crypto Coin Show on pawns and some of these Robin Hood chain memes that had significant volume, significant returns for maybe some people. Who knows? You know, no, no one ever buys the bottom and sells the

9:15top. And a lot of people end up losing money, of course, when you're doing highly volatile, small assets. But that

frenzy generated a lot of revenue in trading for Robin Hood. And that seems like it's cooled off. I'm still seeing stuff, but not not as in as much of a craze. And meanwhile, I'm sure tokenized stocks is are slowly building

9:39and that's not something that, you know, explodes overnight and people are trading and then it disappears. That's something that's here to stay, but it might take a while. How is has that balance been of those two wolves since the launch and where do you see the chain at right now with it? Yeah, I think it's a combination of reason. We are pretty excited by all

10:01the activity on the on the meme side. I think it's important for the chain. I think it brings liquidity, brings retail customer into it as well. And if it wasn't for this kind of liquidity to come you know maybe we will not have as many market maker or as many institution connecting to the chain. So you know Romeo chain launched on July 1st and by August I think most

10:26major exchanges and most major wallets were already integrated with the chain which I think was one of the you know clear signal that people were excited about the chain and the activity on top of it. But for us you know we were always kind of focusing on all the aspect. We didn't want to just optimize for me coins. We don't want to optimize

10:47just for real world asset because we think it's a combination. But on the stock tokens we really made sure that they were composable so that you can actually build things on top of it using hooks for example in swap or creating them as a base layer for another tokens. So we've seen a few meme coins created with the stock token as as a peg and I think that's

11:10the kind of thing that we're excited about. There was a lot of development on the on the chain that honestly we haven't thought about when we were creating this product, but our main focus was to create the primitives that people can use to build more things on top. And so if that's me more if that's more reward asset usage, we're not the one to decide, you know,

11:33we want to give accessibility to everybody and they can decide which which part is the most exciting for them. And on the trading volume you know going down. I think it's mostly an aspect of you know trends right now you have a lot more activity on the major tokens like Bitcoin and Ethereum and others. The volume of on these coins has picked up quite a bit.

11:59And so people are also a bit less focusing on the more like longtail assets. And you also see a lot of activity on the stock markets right now. there's a lot of changes with the rates also. So I think it's a bit of a very difficult market right now. Lot of moving pieces and so obviously we're going to see people being a bit more cautious for now and I'm sure that

12:24we'll see things change when when the market stabilize a bit. Mhm. Yeah. Sometimes it takes an event like explosives explosiveness of Robin Hood chain or some kind of meme token that gets people excited and then there was a series of events over the last month despite the Clarity Act not passing. It seems like all of crypto and digital assets are moving up. It's just

12:50been long enough since the last cycle, few years that the timing just works out perfect with the launch of the chain and just it's been long enough in the four-year cycle. Combine that with a lot of people in crypto that were active traders, they did move over to [clears throat] stocks and equities, perpetuals and other things when the when Bitcoin and all of crypto was

13:14consolidating or going down, you know, they needed to do something. And I think with Robin Hood, it's very easy to have that in one platform. A lot of the crypto exchanges, they don't have that. And it's nice, you know, and I did the same, you know, I was a starter in crypto and then I'm like, okay, I need to diversify and get into real projects,

13:32Real companies here, and Robin Hood is a perfect platform for that. I'd love to learn more about the tokenized stock and the 247 trading of it and the growth on and how it's been so far and where you see that going in the near future.

[snorts]

Yeah, we so far, you know, we're at 170 million in TVL for the stock tokens. And we've seen like

13:57pretty large usage during the weekends and during some of the days where the market is closed and so I think for us that's a real signal that 24/7 is something that customer want. I think 70% plus of the trading of these stock tokens is happening outside of the exchange hours. And that was kind of one of the main hypothesis right for

14:20the stock tokens between the 24/7 trading and the instance element. So we're really excited about seeing customer actually adopting it. And I think the second part is really seeing how people are using this composible tokens to create new things around it. I've seen you know application that are giving portion of the tokens. If you use a specific

14:46token at a at a store at a shop you see people creating like coins based on one aspect of the company. Like all of this I think makes me pretty excited that we're just at the very beginning of tokenization and when you're going to be able to do that at scale for different exchange across the world and potentially also for different type of asset not just like public stock

15:14but also private equity

and you know arts, real estate, all these kind of things. you're really going to change the way that people are holding their assets and how they are going to be able to interact and transact with it.

Definitely. And on the real world assets tokenization, it seems like the you know, I remember going to the security tokenization

15:40conferences in 2018. We're almost at the 10 year 10ear mark. It was supposed to be something that was happening right then and then and there. And it takes a while and equities have are sort of more down the line. It's it's been you know money market and private you know private stuff u that hasn't really been trading. And I think the liquidity

16:03has been a major issue and that was the issue in the beginning 10 years ago is that you have you know one stock gets tokenized and then there's nowhere else to trade because there's low liquidity. How do you think we can solve that liquidity issue with tokenized stocks and can Robin Hood solve it?

Yeah, I think it's a combination of

16:22distribution and connection. So Robin Hood obviously has a lot of connection with market makers for the main business the Robin crypto business and the other equities business. And so this market makers relationships are pretty important for us to go on chain. And then a distribution. We are one of the largest platform in the world of crypto

16:47asset. And so the more we can expose customers to this type of assets, the more you're going to see flow going coming from retail and institution matching with it. The other part that I think is important is to have the real utility around it. I think you know a lot of these funds that you were mentioning that were tokenized it was still pretty difficult to access. It was

17:10also pretty unclear why you would want to hold that version versus another one.

this the stock token that we launched,

you really have the advantage of the 24/7 trading. You have the advantage of being able to move from crypto assets to stocks very quickly based on what you're trying to do on your strategy on the markets. And so I

17:32think we're just at the very beginning. We still don't have the stock tokens available in the US and multiple other countries. And we're also not fully kind of building the entire asset class. Like right now we have 190 assets. And so I think there's still a lot that we need to do on our side to make sure that it's ready for all of the

17:56retail base. But we start to see this like early signal of product market fit and I think that's very encouraging. Like I said like we had multiple billion traded on D5 for the stock tokens. So I think it shows that people are really excited about it. It's just a question of how can you use them for other things than just pure trading.

18:16So we started to open collateral using your stock tokens on platform like lighter for example that are offering per and I think that's also contributing to positive aspect because now you can hold your portfolio and not necessarily have to sell but you can actually use that as collateral to open other purpose position and I think that's the type of products that are

18:40going to be a gamecher for the adoption of stock tokens. Definitely, I agree. And to that point, partnering and making integrations like this, you know, the first point about why that you answered on why Robin Hood chain versus going to a different chain. How about the dexes? Is it a an issue of liquidity and growth and why not just build your

19:05own version of lighter? You know I think for us it's always a question of like prioritization and obviously we could build everything from scratch but at some point you want to focus on what you're really good at and I think where we are extremely good is to remove barrier to entry to remove the complexity not necessarily to build the bests and I think for us partnering

19:33with really good ones is pretty important. To your point, there's also already liquidity there. They also have a platform that is battle tested for multiple years. And so we can focus more on the integration. So for example, with lighter we created a native integration of perin wallet for the customers that are eligible. And so it's not like you're just

19:55connecting with wallet connect or something like that on a on one of this like lanky web frame inside a wallet interface. It's it's actually a real product where you can very easily select your your take profit, your stop loss, you can select your leverage, select your collateral and in a way that is very intuitive. I think that's what we want to focus on. And obviously

20:18in the future, if we think that at some point we're missing something to really create the best experience, we'll build it. But by default we are more focusing on what is the best experience that we can give to our customers and also bring the most value to our customers and based on that we decide if we want to partner or build from scratch.

Definitely. And I saw over the summer

20:42dozens of wallets and applications integrating Hyperlquid and Dexes that just have liquidity already. And it just makes sense to you know to that's been an issue that we should be partnering together rather than competing against each other in some aspects to help grow the industry and get more adoption.

Yeah, absolutely. It's something that

21:06you know I think it's really how do we bring the traditional markets on blockchain. I think it's going to be through through these different steps.

And as you expand all of these different product lines with Robin Hood chain, there's also expanding geographies as well. I saw the expansion into Canada, the UK, Singapore. What's the main focus of those if there

21:33is right now? and why is now a good time to be expanding internationally?

I think for us really the goal is we want Robinu to be available everywhere in the world. And so I think there are different strategy in some places we're using our Robin chain and our Robin wallet. And in other places we want to bring the entire product suite that is what made Robin famous really

21:56Free stock trading or at least you know as as close to commission free as possible. And we really want to offer the entire like life of an investor journey within Robinet. So you can open your retirement account on Robin in the US. You can also open your joint account

22:23when you get married or you can have your accounts for you know just you as an individual investor. Those product don't exist necessarily everywhere in the world just yet. But so we launch in the UK. We have crypto brokerage and also ISAs in the UK that are available. We also just launched crypto in Canada following our acquisition of Wonder and

22:49just recently we launched our family and friends in Indonesia in Singapore. So slowly we are going to be able to expand across the world and we will be able to really bring the same product that we have here in the US a bit everywhere. So it's going to take a little time because getting all these licenses and building all these products from scratch is taking time. But I think for

23:12us the mission of Robin Hood doesn't just stop at the US and we want to expand internationally.

Yeah, I love that. I'm looking forward to seeing it. I have family and friends in Canada and there's been a lot of consolidation and takeovers of exchanges and we need somebody to build a foundation, build roots and get better access to some of the instruments that

23:32they have in the US as well. So thank you to the Robin Hood team for that.

Absolutely. And you know, the more we can do outside of the US, the more we can also bring regulation at the same level and all the different products that we're launching. And so I think it's pretty important for the retail customer at the end of the day.

Definitely. And looking into the near

23:54future, I'm I'm very optimistic and a bit bullish on crypto for the rest of 2026 and Q4. What are you most excited about with you and the team working on Robin Hood chain in this next quarter leading into the beginning of next year?

I think for us we are just at the beginning for the chain. You know we are investing a lot more into it in

24:20the next few months and so you will see more and more product launches. But I think what's also exciting is to see the regulation updates at the SEC and the CFTC level. For example there was the innovation exemption last couple of weeks by the SEC and I think it's going to bring more ways to access this type of stock tokens u within the

24:43US and that's really what I'm excited about the day that we can connect the entire world into tokenization is going to be a good day for the investor because they're going to be able to benefit from tokenization and at the same time we're able to finally finally get the US kind of at the same level as the rest of the world. That has been a bit more one

25:06step ahead. So I think we can finally catch up and get to a place where we can trade this type of asset in the future.

Mhm. Yeah, I'm excited to see that. And there's just so much capital in the US, but the regulation or the debate over getting things signed, you know, it's the Clarity Act itself was in discussion for so long. And then it seems that once

25:28that was shot down, a lot of great things happened from from other regulatory bodies. So, it seems like we're turning a bad thing into a positive and hoping that helps Robin Hood and the industry overall. So, I'm looking forward to seeing more of the same. Wishing you and all the team the best moving forward and I'll be watching the chain the continued

25:48growth and would love to have you back on at the end of this quarter or the beginning of next year to hear what's happened since and I'm sure there'll be a lot because it's the industry is moving so fast. So thank you so much John for taking the time and I appreciate it.

Yeah absolutely. See you soon and happy to come back anytime. [music]

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