This episode reveals how Robinhood is leveraging Arbitrum's technology to tokenize private AI giants like OpenAI and SpaceX, fundamentally challenging the traditional barriers between public and private markets.
Interview with Vlad Tenev, CEO of Robinhood
The Vision for Tokenizing Private Companies
- Vlad Tenev frames Robinhood's new offerings as a direct response to a major inequity in modern capital markets. He notes that transformative AI companies like OpenAI and SpaceX can raise nearly unlimited capital while remaining private, shutting out retail investors from significant value appreciation. By tokenizing these private shares, Robinhood aims to democratize access to assets that were previously exclusive to high-net-worth individuals and institutional investors.
- Tokenization is the process of converting rights to an asset into a digital token on a blockchain, enabling fractional ownership and 24/7 trading.
- Vlad argues that while the benefits of tokenizing public stocks are incremental in the U.S. due to its relatively efficient infrastructure, the impact on illiquid private assets is profound.
- He believes this move is critical as the AI platform shift, potentially larger than the internet, is currently concentrated in private markets.
- "If we can democratize it, make it available... I think that could resolve one of the greatest long-standing inequities in capital markets today."
Addressing Supply and Demand for AI Stocks
- The initial rollout of tokenized OpenAI and SpaceX shares is positioned as a "gift" to users, with one million OpenAI and half a million SpaceX shares made available. Vlad acknowledges this initial supply is limited.
- The immediate focus is not on massive volume but on perfecting the technology to enable 24/7 trading of these private assets, which he calls a "big technology unlock."
- Strategic Implication: The limited initial supply could create a significant premium on these tokens. Investors should monitor how Robinhood plans to scale the supply and what mechanisms will be used for price discovery as trading becomes fully active.
- The long-term vision is to expand this to thousands of private companies, creating a robust secondary market and eventually a primary capital-raising mechanism for startups.
The Future of IPOs vs. On-Chain Liquidity
- Vlad suggests that on-chain tokenization presents a powerful alternative to the traditional, burdensome IPO process. He observes that many founders now prefer to stay private indefinitely, a trend that locks out retail investors.
- By creating deep, on-chain liquidity for private company shares, Robinhood could enable these firms to access public market-like benefits (e.g., liquidity for employees and early investors) without a formal IPO.
- This model could challenge the dominance of traditional exchanges like NASDAQ and the NYSE if price discovery for major private companies shifts to crypto venues.
- While Vlad remains "pro-IPO," he sees tokenization as a necessary solution for companies that choose to forgo the public markets.
Bridging TradFi and Crypto
- Vlad attributes Robinhood's ability to launch these products to its unique position at the intersection of traditional finance (TradFi) and crypto. He argues that success in this area requires deep expertise in both domains, which few companies possess.
- He highlights Robinhood's decade of experience navigating heavy regulation ("TradFi muscle") combined with its scale as a major retail crypto platform.
- This dual strength allows them to build compliant, user-friendly products that merge the two financial worlds, cashing the "check that the crypto industry conceptually wrote in 2013" about tokenizing everything.
Perpetual Futures for Tokenized Stocks
- When asked about extending crypto-native instruments to these new assets, Vlad confirms the underlying technology is highly general.
- Perpetual Futures (Perps) are derivative contracts without an expiration date, allowing traders to speculate on an asset's price. They are a cornerstone of crypto derivatives trading.
- While not committing to a specific roadmap, he acknowledges the possibility of offering perps on tokenized stocks in the future, driven by customer demand.
- He also defends traditional options, noting their unique utility for complex strategies like "iron condors," suggesting Robinhood will offer a diverse suite of derivatives.
Navigating US Regulation
- Vlad clarifies the regulatory pathways for these new products in the U.S. He believes tokenized stocks will fall under the SEC's jurisdiction, while perpetuals would be governed by the CFTC.
- He expresses optimism about ongoing conversations with the SEC's crypto task force, suggesting that tokenized stocks could be approved through existing regulatory frameworks without new legislation from Congress.
- Robinhood's approach in the U.S. is cautious, prioritizing full compliance and ensuring regulators are on board before any launch.
Robinhood's Evolving Crypto Strategy
- Vlad acknowledges that Robinhood's product strategy has historically been "Apple-like"—entering markets later with a focus on superior user experience and design. However, with tokenized private stocks, Robinhood is now on the "bleeding edge."
- He points to features like gasless swapping in the Robinhood Wallet as an example of their focus on abstracting away crypto complexity for mass-market users.
- This shift from a fast-follower to a first-mover in a key crypto vertical signals a deeper, more aggressive investment in the space.
Interview with Johann Kerbrat, GM of Crypto at Robinhood
The Strategic Rationale for Perpetual Futures (Perps)
- Johann Kerbrat, who leads Robinhood's crypto business, explains that perps were launched first in the EU because of regulatory clarity under the new MiCA (Markets in Crypto-Assets) framework.
- The primary design goal was to create a mobile-first, intuitive interface for a product that is notoriously complex and typically requires a desktop setup for active management.
- The backend for the perps offering is powered by Bitstamp, the exchange Robinhood recently acquired, which will also serve institutional clients.
- Actionable Insight: The combination of tokenized stocks and perps creates a future where users could trade perpetual futures on tokenized assets like Tesla or OpenAI shares, a significant convergence of TradFi and DeFi primitives.
The Choice of Arbitrum for the Robinhood Chain
- Johann details the decision to build the Robinhood Chain using Arbitrum's Orbit stack, a framework for creating custom Layer 2 chains.
- Key Factors:
- Customizability: The ability to build specific regulatory requirements and scaling solutions directly into the chain.
- Stylus: An Arbitrum feature that allows developers to use common programming languages like Rust and C++, not just the crypto-native language Solidity. This is crucial for long-term flexibility and attracting a wider developer base.
- MEV Control: The initial use of a single sequencer gives Robinhood control over transaction ordering, preventing predatory practices like front-running that are illegal in traditional markets.
- While the chain will start centralized, Johann states the plan is to decentralize over time, for which the Arbitrum stack is well-suited.
Interoperability and the Future of Stock Tokens
- A core part of the strategy is ensuring these tokenized stocks are not trapped in a "walled garden." The goal is for them to be interoperable and transferable across different chains and platforms.
- Initially, transfers will be limited to the Robinhood app, but self-custody will be enabled soon.
- Johann clarifies that while anyone will be able to transfer the tokens peer-to-peer in the future, minting and burning (creating and redeeming the tokens for the underlying stock) will require KYC through Robinhood or a compatible partner.
- Strategic Implication: This model paves the way for tokenized stocks to be used as collateral in DeFi protocols on Arbitrum and other EVM-compatible chains, unlocking immense potential for composability.
Fostering a Developer Ecosystem
- The Robinhood Chain is intended to be a permissionless platform where external developers can build applications, particularly those focused on real-world assets (RWAs).
- Johann contrasts this with other chains focused on "degens," stating, "We wanted to be the number one chain for real-world assets."
- This invites the broader DeFi community to build on top of Robinhood's infrastructure, potentially creating lending markets, derivatives, and other financial products using tokenized stocks as a foundational asset.
Interview with AJ Warner, Arbitrum
The Evolution of the Arbitrum-Robinhood Partnership
- AJ Warner of Arbitrum describes the partnership as a long-term, evolving relationship that began with a simple wallet integration and culminated in powering Robinhood's core tokenization strategy.
- The "north star" of the collaboration was always tokenized stocks, which aligns with crypto's core promise of democratizing access to financial assets.
- He emphasizes that the initial token minting and burning for the demos occurred on Arbitrum One, Arbitrum's main public network, before the eventual migration to the dedicated Robinhood Chain.
The Flexibility of the Arbitrum Orbit Stack
- AJ highlights why Arbitrum's technology was a better fit for Robinhood than alternatives like the OP Stack.
- Arbitrum Orbit allows for complete customization and sovereignty. A project can launch its own chain without being forced into a shared governance or interoperability model, which is a key feature of the OP Stack's "Superchain."
- This flexibility was critical for Robinhood, which needed to own its stack and tailor it to specific regulatory and product needs.
- The economic model involves a 10% profit share from the chain's sequencer revenue back to the Arbitrum DAO.
Comparing Robinhood Chain to Base
- AJ draws a clear distinction between the Robinhood Chain and Coinbase's L2, Base.
- Different User Bases: Robinhood's core users are from traditional finance, not crypto. This means the Robinhood Chain will bring a net-new, additive user base to the on-chain economy, rather than just serving existing crypto natives.
- Ecosystem Maturity: Arbitrum One is already an entrenched, credibly neutral hub for DeFi liquidity. This provides a strong foundation and a potential migration path for applications that may start on Arbitrum One and later move to the Robinhood Chain.
Arbitrum's Strategic Focus on "Finance"
- AJ frames the partnership as part of Arbitrum's broader thesis of merging TradFi and DeFi into a single, unified concept: "finance."
- He notes that Arbitrum has always prioritized technical execution for demanding use cases like DeFi and gaming, citing its early implementation of fast block times.
- He points to Stylus as the next major unlock, as it enables developers to build privacy-preserving applications (like on-chain dark pools) by pulling in complex cryptographic libraries written in languages like Rust, which is far more efficient than doing so in the EVM.
- Actionable Insight: For researchers, Arbitrum's focus on performance and flexibility via Stylus makes it a key platform to watch for the next wave of sophisticated on-chain financial applications, especially those requiring privacy and high throughput.
Conclusion
This episode details a landmark convergence of TradFi distribution and DeFi infrastructure. For investors and researchers, Robinhood's move to tokenize private AI stocks on Arbitrum is a critical development to watch, as its success could unlock a new era of composable, liquid, and accessible real-world assets on-chain.
