Robinhood's Ethereum Layer-2 Network Goes Live: Public Testnet Opens for Developers

Robinhood Chain Enters Public Testnet Phase

Robinhood has announced that developers can now start experimenting with applications on its Ethereum layer-2 network, marking the debut of a public testnet for Robinhood Chain. This move creates a low-stakes environment for developers to assess the network's technical merits as it integrates into the retail brokerage's business.

Broad Vision for Decentralized Finance

According to Johann Kerbrat, senior vice president and general manager of Robinhood Crypto, the company's vision for embracing decentralized finance (DeFi) is extensive. However, Robinhood is particularly focused on how compatible stock tokens are with traditional workflows. "We don't want to make it another [layer-2 network] that is just about scaling," Kerbrat told Decrypt. "We're actually using this underlying technology to actually rebuild some of our systems."

Expanding Services with Layer-2 Technology

Traditionally, layer-2 networks have been seen as a way to improve Ethereum's performance, but Robinhood is leveraging this technology to expand its services and carve out its own niche in the crypto ecosystem to engage customers. The testnet phase targets developers familiar with building products like perpetual futures exchanges and lending platforms, as well as institutions that may eventually use Robinhood's networks to offer their own products.

Stock Tokens and Regulatory Landscape

Eight months ago, Robinhood rolled out stock tokens for customers in Europe, providing synthetic exposure to U.S. stocks and private companies. Kerbrat expressed a desire to expand this service to as many jurisdictions as possible. However, in the U.S., investors currently have limited access to tokenized assets, with the Securities and Exchange Commission (SEC) crafting guidance around digital representations of real-world assets. Coinbase is among crypto-native companies racing to bring similar products to market. "We are going to be pretty careful about the rollouts," Kerbrat cautioned.

Strategic Approach and Technology Stack

Following the stock tokens rollout last year, Kerbrat described the testnet phase as a critical step that will inform the company's vision for facilitating round-the-clock trading, with crypto serving as a backbone. "We're using [Robinhood Chain] for stock token trading, which is really the way to mimic what we are doing in the U.S.," he added. "We are not stopping at crypto trading."

While Coinbase and Kraken have developed layer-2 networks using OP Labs' tech stack (behind Optimism), Robinhood is taking a different approach by modeling its network on Arbitrum, an Ethereum scaling network created by Offchain Labs. Steven Goldfeder, co-founder and CEO of Offchain Labs, stated, "With Arbitrum's developer-friendly technology, Robinhood Chain is well-positioned to help the industry deliver the next chapter of tokenization."

Market Context and Future Outlook

This development comes amid broader market movements, such as Robinhood's recent earnings miss and ongoing efforts by companies like Strategy to buy Bitcoin "forever" despite paper losses. The testnet phase represents a significant step in Robinhood's strategy to integrate crypto and traditional finance, potentially reshaping how investors access tokenized assets globally.