TLDR
- Robinhood is developing a three-phase plan to transform tokenized stocks into fully permissionless assets that users can withdraw and use across DeFi platforms
- Phase 1 launched in Europe with nearly 800 tokenized securities confined to Robinhood’s app
- Phase 2 focuses on 24/7 trading infrastructure using acquired Bitstamp exchange
- Phase 3 aims to make stock tokens work across decentralized applications like lending protocols
- The company uses Arbitrum layer-2 network and Stylus technology to bridge traditional programming languages with Ethereum compatibility
Robinhood is working on a plan that could change how people trade stocks. The company has launched tokenized stocks in Europe and is building toward a system where these digital assets can move freely across blockchain platforms.
The brokerage revealed a three-phase roadmap during Devconnect in Buenos Aires. A.J. Warner, chief strategy officer at Offchain Labs, outlined the stages in an interview with CoinDesk. Offchain Labs develops Arbitrum, the layer-2 blockchain network hosting Robinhood’s tokenized offerings.
Phase 1 is already live in Europe. Users can buy tokenized versions of nearly 800 publicly traded securities through the Robinhood app. The company plans to add private equity tokens as well.
These tokens currently stay locked inside Robinhood’s platform. Users cannot transfer them to external wallets or use them on other platforms. The tokens exist on the blockchain but remain confined to Robinhood’s ecosystem.
Building the Infrastructure
Phase 2 centers on infrastructure improvements. Robinhood acquired Bitstamp for $200 million earlier this year. The company plans to use this exchange to enable round-the-clock trading of stock tokens.
Traditional stock markets operate during set hours. Crypto markets run continuously. Robinhood wants to merge these two models by offering 24/7 access to tokenized equities.
Warner described the infrastructure work as essential groundwork for the final phase. The company is leveraging Arbitrum Stylus technology to solve compatibility problems between traditional finance systems and blockchain networks.
Most financial platforms use programming languages like C++ or Rust. Smart contracts on Ethereum use Solidity. Arbitrum Stylus allows developers to write smart contracts in C++, Rust, and Python while maintaining compatibility with the Ethereum Virtual Machine.
Opening the Gates
Phase 3 represents the biggest change. Stock tokens would become fully permissionless assets. Users could withdraw tokenized stocks from Robinhood and use them across decentralized finance applications.
A person could buy tokenized Apple stock on Robinhood, withdraw it to a personal wallet, and deposit it as collateral in a DeFi lending protocol like Aave. The tokens would function like any other digital asset on the blockchain.
This model removes the traditional intermediaries from stock trading. Stocks would no longer be confined to brokerage platforms and clearinghouses. They would become programmable assets in an open financial system.
Warner characterized the plan as a long-term project. He stated that phase 3 focuses on making assets permissionless and giving users the ability to interact with DeFi applications.
The company hasn’t provided specific timelines for phases 2 and 3. The roadmap represents Robinhood’s vision for pushing traditional finance onto blockchain rails.
Robinhood stock has climbed 280% over the past year. The shares trade at a forward price-to-earnings ratio of 51. Charles Schwab trades at a P/E of 17 and Interactive Brokers at 27.
The company went public in mid-2021 during a bull market. It hasn’t faced a major market downturn as a public company yet. Some analysts consider the stock expensive given its valuation compared to established competitors.
Robinhood currently offers zero-commission trading, cryptocurrency trading, a subscription service, and sports betting options. The tokenized stock platform adds another product line to the company’s growing list of offerings.
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