Bankless
July 3, 2025

Robinhood vs. Coinbase: The Trillion Dollar Race to Build the Financial Super App

In a timely debate, David from Blockworks and Omar from Dragonfly break down the dueling strategies of Coinbase and Robinhood, analyzing their distinct paths to becoming the definitive financial platform for the on-chain era.

Coinbase: The AWS for Crypto

  • "What I see Coinbase today becoming is, instead of just a front end... it's more trying to become like the AWS. They will not win the distribution game... What they're trying to be is a B2B platform."
  • "The long-term thesis on Coinbase is that it is the thin infrastructure layer for the economy moving on chain and is going to power every single frontend trad-fi or fintech front end in the world."

Coinbase's primary strategy is to become the B2B infrastructure backbone for the entire on-chain economy. It aims to package its exchange, custody, and payments technology into a "Crypto-as-a-Service" offering, allowing traditional finance giants like JP Morgan and Fidelity to provide crypto services without building the risky backend themselves. While its retail app remains, the core growth engine is shifting from acquiring individual users to integrating with large institutions and capturing their entire customer bases at once. This high-margin B2B play is complemented by a lucrative, stable revenue stream from its USDC partnership with Circle.

Robinhood: The Next-Gen Super App

  • "My thesis is that Robinhood is building the multigenerational financial super app for our generation... they went right after this cohort of customers that was young, didn't want to pay fees, but was on their phone."

Robinhood’s vision is to build the all-in-one financial super app for Millennials and Gen Z. Its strategy hinges on consolidating a user's entire financial life—from stock and crypto trading to spending and retirement—into a single, elegant mobile-first interface. The ultimate prize is capturing the estimated $10 trillion generational wealth transfer, positioning itself as the primary destination for assets inherited by its young, tech-savvy user base. By growing with its customers as they become wealthier, Robinhood aims to make itself the indispensable financial hub for the next generation.

The Converging Battleground

  • "Robinhood just announced the Robinhood chain. They also announced tokenized stocks... Coinbase, maybe two or three weeks ago, filed some requests with the SEC for a regulatory sandbox for tokenized stocks."

While their grand strategies differ, the two giants are beginning to clash. The most direct competition is emerging in Layer 2 blockchains and tokenized assets. Robinhood’s announcement of its own L2 chain and tokenized stocks (initially for EU users) is a direct shot at Coinbase’s Base ecosystem. Coinbase’s advantage is its crypto-native brand, deep liquidity, and a vast token selection. Robinhood’s edge is its massive distribution and unparalleled user experience. The fight for on-chain dominance has officially begun.

Key Takeaways:

  • The podcast concludes that this isn't a zero-sum game of "Coinbase vs. Robinhood," but a tale of "Coinbase and Robinhood" leading finance into a new era on parallel, yet increasingly intersecting, tracks.
  • Bet on a Thesis: Coinbase is a pure-play bet on the entire global economy moving on-chain, positioning itself as the essential B2B infrastructure provider.
  • Follow the Money: Robinhood is a bet on demographics, strategically positioning itself to capture the next generation's financial life and inherit trillions in the great wealth transfer.
  • The Next Frontier is On-Chain: The new battleground is Layer 2. Coinbase’s established Base ecosystem will face a formidable challenge from Robinhood Chain, with tokenized stocks as the initial prize.

For further insights and detailed discussions, watch the full podcast: Link

This episode reveals how Coinbase and Robinhood are racing to build the financial super app of the future, with one betting on crypto-native infrastructure and the other on next-generation retail distribution.

Coinbase vs. Robinhood: Setting the Stage

The debate centers on two financial giants with similar market capitalizations but divergent paths. At the time of recording, Robinhood ($HOOD) stands at an $81 billion valuation, up 135% year-to-date, while Coinbase ($COIN) is valued at $85 billion, up 30% year-to-date, with most gains occurring recently. While Coinbase is the established crypto-native incumbent, Robinhood is aggressively expanding into crypto, launching a Layer 2 and tokenized stocks, setting the stage for a competitive battle to define the future of finance.

Coinbase's Business Model: From Exchange to Infrastructure

David from Blockworks explains that Coinbase, which began as a simple Bitcoin on-ramp, has evolved into a full-stack on-chain brokerage. While transaction fees from its exchange still generate the majority of its revenue, the company has successfully diversified its income streams, particularly during the last bear market. Key to this diversification is its partnership with Circle, which provides substantial revenue from USDC stablecoin reserves.

  • Revenue Diversification: Coinbase has reduced its heavy reliance on cyclical trading fees by adding subscription services like Coinbase One and, most significantly, its revenue-sharing agreement for USDC.
  • Strategic Shift: David argues that Coinbase is transitioning from a consumer-facing distribution platform to a B2B infrastructure provider, aiming to become the "AWS for crypto."
  • Quote: David highlights the core of Coinbase's future strategy: "What I see Coinbase today becoming is instead of just a front end... it's more trying to become like the AWS... they will not win the distribution game compared to TradFi incumbent or even a Robinhood... What they're trying to be is a B2B platform."

The "AWS for Crypto" Thesis

The speakers agree that Coinbase's primary growth vector is becoming the backend infrastructure for the entire on-chain economy. This involves packaging its existing technology—exchange, custody, and payment solutions—and offering it to other financial institutions. This strategy allows companies like JP Morgan or Morgan Stanley to offer crypto services to their clients without building the complex and risky infrastructure themselves, with Coinbase operating invisibly in the background.

  • Crypto as a Service: This new offering allows fintechs and financial institutions to integrate Coinbase's digital asset trading and custody solutions directly into their platforms. Coinbase announced this service with over 200 institutions already using it.
  • Coinbase Commerce Protocol: Launched on Base, this is a generalized payment solution designed to disintermediate traditional payment networks like Visa and Mastercard. It allows large retailers to effectively become their own credit card issuers, customizing logic for rewards and chargebacks.
  • Strategic Implication: Investors should monitor the adoption of Coinbase's B2B services. Success here would transform Coinbase into a high-margin, scalable infrastructure provider, insulating it from the volatility of retail trading and direct competition with distribution-focused players like Robinhood.

Coinbase's Other Growth Levers

Beyond its B2B ambitions, Coinbase has several other significant, non-materialized revenue streams that contribute to its long-term valuation. These include its venture arm, its Layer 2 blockchain Base, and its dominant position in institutional staking.

  • USDC Revenue Share: Coinbase receives 100% of the interest income from USDC held on its platform and a 50/50 split on interest from USDC held elsewhere. This is a highly profitable, stable income stream that is expected to grow as stablecoin market caps increase.
  • Base L2 Revenue: While the take rate from on-chain transactions on Base (approx. 3 basis points) is much lower than its exchange fees (approx. 30 basis points), the strategy is to drive massive volume, similar to Solana's model of low fees and high throughput.
  • Coinbase Ventures: As one of the largest VC firms in crypto, Coinbase holds a significant portfolio of equity and tokens in emerging projects. While the exact value is undisclosed, it represents a powerful, long-term call option on the growth of the entire crypto ecosystem.
  • Competitive Tension: Omar from Dragonfly notes a potential conflict: "there is an inherent tension between Coinbase's retail business and this exchange infrastructure as a service business." Institutions may hesitate to pay a direct competitor for backend services.

Robinhood's Thesis: The Multigenerational Financial Super App

Omar outlines Robinhood's journey, which started in 2013 with two key insights: the world was going mobile, and retail users hate fees. This led to the creation of a slick, intuitive, mobile-first trading app that leveraged Payment for Order Flow (PFOF)—a model where market makers pay Robinhood for routing retail trade orders to them. This allowed for a "zero-fee" user experience that attracted a massive, young user base.

  • User Base: Robinhood has grown from 2 million users in 2017 to over 26 million funded accounts today, with 75% of users under the age of 44.
  • Revenue Model: The business generates roughly $3 billion in revenue, split between transaction-based income (options, crypto, equities) and interest income (margin lending, cash sweep).
  • The Super App Vision: Omar's core thesis is that Robinhood is building the definitive financial super app for the next generation. "Robin Hood is building the multigenerational financial super app for our generation and they were brilliant in the sense that they went after the youngest cohort of customers." The strategy is to grow with its young user base, offering a consolidated suite of financial products—banking, credit cards, retirement accounts, and crypto—so they never need to leave the platform.

Robinhood's Strategic Execution and Challenges

Robinhood's growth has not been without major challenges, most notably the 2021 GameStop saga. The platform restricted buying of certain stocks due to extreme volatility, which triggered massive capital requirements from the DTCC (Depository Trust & Clearing Corporation), the central clearinghouse for US equity markets. While this was a regulatory and capital issue, not a nefarious plot with hedge funds, it created a significant PR crisis.

  • Resilience: Omar points to Robinhood's ability to survive this "existential crisis" and emerge with a stronger, more diversified product strategy as a key indicator of a resilient management team.
  • Product Expansion: Recent announcements include the Robin Hood Gold card (with 3% cashback), banking services (via partners), and a push into crypto with tokenized stocks and its own Layer 2.
  • Actionable Insight: Robinhood's primary competition is not Coinbase today, but legacy brokerages like Fidelity and E*Trade. Its success hinges on its ability to consolidate all financial activities for the millennial and Gen Z demographic, effectively capturing the massive generational wealth transfer expected in the coming decade.

Direct Competition: The Battle for On-Chain Dominance

The two companies are now beginning to compete directly in the crypto arena. Robinhood recently announced Robinhood Chain, an Arbitrum-based Layer 2, and the launch of tokenized stocks for EU users, including private company shares like SpaceX. This directly challenges Coinbase's Base ecosystem and its own ambitions for tokenized securities.

  • Robinhood Chain vs. Base: While Base has a significant head start with a crypto-native ecosystem, Robinhood aims to leverage its 26 million users to bootstrap its own chain. However, David notes that other exchanges with large user bases (e.g., Bybit with Mantle) have struggled to gain L2 traction.
  • Tokenized Stocks: Both companies see tokenized real-world assets as a massive opportunity. Robinhood has moved first with an EU launch, while Coinbase is pursuing a regulatory sandbox in the US.
  • Perpetual Futures (Perps): David identifies US-regulated perps as Coinbase's key defensive move. By making complex derivatives accessible to its US retail base, Coinbase can offer a high-demand product that Robinhood does not yet have, leveraging its crypto-native expertise.

Final Verdict: Coin AND Hood

The conversation concludes that this is not a zero-sum game. Coinbase is the pure-play bet on the technological shift of the global economy moving on-chain, positioning itself as the foundational infrastructure layer. Robinhood is the bet on a demographic shift, aiming to become the all-in-one financial hub for the next generation of investors. While their paths will increasingly intersect, both are poised for significant growth by modernizing finance in distinct yet complementary ways.

  • David's Take: "I think Robin Hood is the demographic wealth transfer play. I think Coinbase is the technology shift play to the global onchain economy."
  • Omar's Take: He argues Robinhood is positioned to be the primary recipient of the trillions in generational wealth transfer, which could justify a valuation of several hundred billion dollars over the next decade.

Conclusion

This is a story of two giants carving out distinct paths to dominate modern finance. Coinbase is building the core infrastructure for an on-chain world, while Robinhood is capturing the next generation of retail users. Investors should monitor how each leverages its core strength to capture market share and new revenue streams.

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