Robinhood maps Ethereum layer-2 ambitions

Robinhood Markets has set out plans to build an Ethereum layer-2 network as part of a broader push to deepen its role in crypto trading, tokenised equities and on-chain yield products, arguing that anchoring the project to Ethereum’s security is central to winning user trust and regulatory confidence.

The brokerage, best known for commission-free equity trading, says the layer-2 is designed to handle higher transaction volumes at lower cost while settling back to Ethereum for finality. Executives involved in the project describe the decision as a pragmatic response to customer demand for faster, cheaper on-chain activity without sacrificing the resilience and decentralisation associated with Ethereum’s base layer.

Robinhood’s head of crypto, Johann Kerbrat, has framed the initiative as a natural extension of the firm’s expanding digital-asset roadmap rather than a standalone experiment. The layer-2 is expected to underpin several products already in development, including tokenised shares offered to non-US customers, crypto staking services and future decentralised applications tailored for retail investors. By operating its own execution environment, Robinhood aims to control user experience end-to-end while remaining compatible with the broader Ethereum ecosystem.

Industry participants say the move places Robinhood among a growing list of financial platforms seeking bespoke blockchain infrastructure rather than relying solely on public networks. Layer-2 systems, which process transactions off the main Ethereum chain before batching them for settlement, have gained traction as congestion and fees on the base layer persist during periods of high activity. For consumer-facing firms, the economics are compelling: lower fees enable smaller transactions, while predictable costs simplify compliance and disclosure.

Robinhood’s approach appears to favour established Ethereum scaling frameworks rather than building from scratch. Engineers familiar with the project indicate that compatibility with existing wallets, developer tools and smart-contract standards has been prioritised to reduce friction for both users and third-party developers. This strategy mirrors a broader trend in which financial institutions opt for modular blockchain components that can be audited and adapted as regulations evolve.

Tokenised equities remain a central pillar of the plan. Robinhood has already outlined programmes allowing eligible customers outside the United States to trade blockchain-based representations of shares, with on-chain settlement promising extended trading hours and faster transfers. A proprietary layer-2 could give the firm greater flexibility over corporate actions, compliance controls and interoperability with traditional custody systems, areas that have posed challenges for earlier tokenisation efforts.

Staking is another area where the layer-2 could play a pivotal role. By aggregating staking activity and managing validator interactions through its own network, Robinhood can offer yield products while maintaining clearer oversight of risks such as slashing or liquidity constraints. Analysts note that this model may appeal to regulators, who have scrutinised opaque staking arrangements following market disruptions in earlier crypto cycles.

The decision to root the network in Ethereum’s security model reflects lessons drawn from those disruptions. Several high-profile blockchain failures exposed the vulnerabilities of lightly secured or highly centralised networks, reinforcing the appeal of Ethereum’s mature validator set and battle-tested consensus. By settling transactions back to Ethereum, Robinhood seeks to reassure users that assets are ultimately protected by one of the most decentralised smart-contract platforms in operation.

Market reaction to the announcement has been cautiously positive, with investors and developers weighing execution risk against the strategic upside. Building and maintaining a layer-2 entails ongoing technical costs and exposes the firm to scrutiny over network governance and uptime. Any outages or security lapses could have reputational consequences that spill over into Robinhood’s core brokerage business.

Competition is also intensifying. Crypto-native exchanges, payments firms and even some banks are experimenting with their own blockchain rails, aiming to capture value from settlement and custody rather than ceding it to public networks. For Robinhood, differentiation will depend on whether it can translate infrastructure ownership into tangible benefits for retail users, such as lower fees, broader asset access and seamless integration with traditional portfolios.