Why Robinhood Is Launching Its Own Chain | Jacquelyn Melinek & Johann Kerbrat

That was that was so nice to hear. So refreshing. Um I also like that they gave me advice to drink Diet Coke. So I will take that anytime. Next we get to introduce Jacqueline Malanick who is going to have a great conversation with Robin Hood and she's with Token Relations.

So let's give it up for them.

Thank you. Hello everyone. We are not the SEC, but we are something so much better. A publicly traded company, Robin Hood, that is also in the crypto space. Woo.

I guess that's a shareholder in the crowd.

Pro employee.

Yeah.

But yes, I am Jaclyn Melnik. I'm the founder and CEO of Token Relations, and I am honored to be sharing the stage with Joe Han. He is the senior VP and general manager of Robin Hood Crypto. Yep. Correct.

Long title. I love it. Um, we are here today to talk about Robin Hood's new chain. I think it has surprised a lot of people by announcing it. It recently launched its test net.

What was kind of the impetus behind this? Obviously, it's been, you know, kind of in the works for a while, but for you personally, what were you like, "Yeah, we need a chain now."

Um, yeah, you don't ask yourself the morning like, "You need a chain." Um,

exactly. So for for us, you know, we wanted to build this uh tokenized stock product that we've been working on for a very long time and so we were pretty excited about building it and what we started to realize that we had a lot of blockers on what we wanted to build a lot of compliance system that we were had to set up for all the regulatory uh requirements that we have in different region of the of the globe. So um we kind of debated for a long time. We're like okay you know maybe we create our own L1 maybe we create um just another chain basically and then we thought about you know getting the security getting the decentralization of Ethereum um and also getting the liquidity from all the EVM. So that's why we picked to do an L2 with arbitrum.

Um so yeah

if we didn't have the regulatory climate that we have right now would you guys have done this still or no? Yeah, we um we started to work on the chain a long time before uh before even the the new administration. So um I definitely think it's easier for us to start launching some of his products. Um but if you think about when we launched stock token, it was in the EU because they already had the the Mika framework and the the MIT framework that we were able to use as well. And so a lot of the the work was done thinking outside of the US.

Um, and so we are pretty excited about the idea of the Clarity Act and everything because now we don't have to just exclude the US for all this cool product. We can also include them. Um, and so I think that's pretty exciting for an American company.

Yeah, 100%. What has been the response so far from Robin Hood's retail users, cryptonative builders, and then the institutional side? There's three categories we have to go through. Yeah,

we we'll try to go through them. Uh, we launched it last week um in consensus in in Hong Kong. So that was actually really fun to be there and uh the response so far has been super good. Um so we have almost a million uh wallet created on the test net. Uh we had about 4.

5 million transaction um 650k uh contracts. So you know so far we we're actually pretty impressed by the result and it's been super fun to look at what people have been building the developers. Um so you know it's just the beginning. It's not even been a week uh to be honest and so um it's really exciting and we also have this hackathon that we announced um it's going to be in New York, London, Singapore and other places and we're are going to give prize uh of $1 million. So, you know, excited to see also what else is going to be built in that time.

What is being built right now out of the ones that you've seen so far?

Um we saw some NFTs. Um one that was actually pretty cool that was creating like stock traders. Um, we saw uh a pers decks, we saw uh spot decks obviously um we saw people starting to use we have some stock tokens on the on the platform and so some people are starting to build things around it for yield and lending. So so far it's been it's been pretty fun.

What does this Robin Hood chain really enable that Robin Hood couldn't do before?

Um I think for us it was more like can we do it at the pace we want and with the level of UI and UX that we want. Um, one thing that we really care about is that anything that we launch needs to be very simple for for people to use. Uh, we actually don't even want them to realize that there is a blockchain necessarily. Um, so if you use our product in the U, you buy a stock token. Um, we don't, you know, ask you for gas fees, for chain, for private key, for all this stuff like it's not necessary.

Um, and we even put a pill at the top saying like, hey, this is a crypto product, by the way. Like you're not just buying a normal stock. Um, and so that's the kind of stuff that we wanted to be able to do without having to always, you know, negotiate with the chain builder and being like, hey, you know, we need this thing. Can you build it for us? Because otherwise we cannot launch the product that we want.

Um, and so having our own chain really gives us like that customized um, optionality.

And what would you really like to see built? Cuz there's a lot of general purpose chains out there, but I don't really think that's what Robin Hood's going to be. It's going to be definitely financially aligned, right? Yeah, we we really want to do anything around finance. I I think for me what you know the the job will be done when the entire Robin Hood in Frag works on the chain and we don't need to use all these um old settlement systems that are kind of old school and you know if you think about how it works there's a lot of um you know just technology that has not really evolved um and so I think for us like we will be really really excited when you know entire Robin can work on the chain we can sell uh instantly we can have 24/7 trading on every product that we have.

Uh you can get your own mortgage using your your you know crypto and stocks and all these things uh without having to go to a bank and have like a very lengthy process that that's really when the the win will happen.

Do you see this kind of being the future of uh exchanges and then like financial apps as well where they do have this like 247 trading they have all this optionality that Robin Hood is getting or is this going to be unique to you guys? Um, you know, usually when we do something, a lot of competitors try to do it. Um, and I think, you know, it's part of the fun like, you know, we all try to do something with a different angle and one of us succeed, multiple of us succeed, I don't know. Um, but I think what's going to happen is the same thing with stable coin. Like you're you have like I don't know 50 stable coin at this point that are like more than a few hundred million market cap.

Um, and so it's going to be our role to actually create this abstraction layer where you can use any stable coin. We don't care. Uh, you can deposit whatever you want to use. You can get out with whatever USDC, USDG, whatever. Um, but we take away the complexity and I think it's going to to be the same thing for the chain.

Um, you know, everyone is kind of creating their chain right now. Uh, we're not the only one. Tempo, arc, all this stuff. And so at some point we don't want the people to have to focus on wait I want to transfer from this platform to this platform. So do I use ARC or Solana or whatever.

We just want you to be able to do it and we will take away that that complexity.

When you think about positioning Robin Hood today is it really towards more of a mainstream uh trader audience or are you really trying to get into like the cryptosphere? cuz for most chains out there they cater to crypton native audiences whereas yours your user base is not for the most part right

yeah I mean that's why I got excited to join Robin Hood um you know the idea we have 26 million plus customers the idea that all these customers can go on chain um the idea that we can keep expanding internationally and bring more and more people on chain that's what excites me um no offense but the group of crypto uh I I used to be one of them So I used to

you are a crypto person. What are you talking about?

I know but like we we used to be like the conference are so much bigger these days and it used to be like 10 years ago it was like we would meet at a coffee

and we'll be like hey how do we build a chain and um so you know this idea that we are just going to cater for crypto folks. I think it's just not what we are trying to do but more trying to bring the advantage of using the blockchain technology to everyone and we can pass the savings to the customer. we can actually improve the products to the customer and based on that we we will get more people excited.

Yeah. Okay. So, there's 26 million Robin Hood users and you said there's a million wallets in test net right now and I know I could create multiple wallets but let's just say for simplicity that it is a million different wallets. Um, so a million different users. Do you think all of those people are Robin Hood users or they're crypto people that want to get into Robin Hood's chain or it's a mix?

I think it's a mix. You know, let's be honest. I think a lot of our customers, they just use crypto when they can, but they don't necessarily want to build on the chain. So now we have more like developers that are building. Um, and I'm sure some of these developer don't use Robin Hood because they prefer other platforms.

And so, you know, for us, it's our goal to really start building the feature that are missing to attract these people. Um, and and that's what we've done like all last year. We've done a lot of products where you can now basically trade for as low as three basis point based on your volume on Robin Hood. And that's something that, you know, before you could not do um and I think that's really the type of feature that we were missing for a while to to get the more advanced uh traders. But I I think for people that are building on the chain, you know, the idea that you will get a distribution of Robin Hood, like if the feature is really good or if it's something that we can integrate within our main app, the idea that you can get 26 million using it is is pretty exciting.

So I understand why, you know, some people are building.

Yeah. Okay. I'm going to ask you kind of like a bit of a spicy question because there's a certain other exchange out there that also has a chain and I don't think they fully executed well funneling their users to said chain. How do you think about funneling the Robin Hood users to use this train?

Um, I have no idea which uh company you're talking about.

Um,

they're here, so I'm going to play nice.

Well, you know, I I think what was interesting is how they built in public and how they took the feedback and and pivoted away from uh whatever they were trying to do before. And so I think that's something that is actually pretty exciting. We we actually love to do that as well. So a lot of the products that we launch um we test it, we go talk to customers, we see how they react. Um we try to change the UI UIX to make sure that they understand what's going on.

And so I I think you know overall I'm not trying to say like we're going to do better or not. I think for us we are maybe a bit more focused on this financial system that I was talking about and how do we kind of power Robin Hood and on top of that power new application that are going to use the the system that we built. Um but you know I I think for for us it's going to be this deep integration within our main application or Robin wallet that is kind of a self-custo wallet and all the app that we have across the globe. Um, and all the products that we're building are going to kind of use the b the the chain um in the background.

Wait, so how will it show up within the actual app? Like people will know they're using the chain and the wallet and all these things or will it be like abstracted away and it'll just feel like another part of Robin Hood?

I think you will see. But um, you know, I think we'll we'll try to abstract as much as possible. I I think for us that's really key. you know, as soon as I don't know, you talk to someone in your family and you're like, "Hey, you should lend your um your dollars to get yield." And as soon as you start talking about, "Hey, create your wallet and create a private key and blockchain."

Most people are scared away. So for for us, the goal is to bring the right education tools um so that you understand what's happening, but we're not going to make it a requirements before you can interact with the product.

Okay. My last major question on the chain front and then we'll talk about tokenization is when you think about well you guys already did uh does launching a chain kind of change the way you think about revenue long term?

Um no I I think for us revenue is you know there's a we have uh 11 different business line uh at Robin that are generating like nine figures more um and and crypto obviously is a is close to a billion in revenue for for last year. So for for us we always want to plant new seeds and new business line that are going to take time to evolve and and generate revenue. Um and the chain is one of them. So you know for us right now revenue is definitely not the priority. It's more adoption and seeing what people build.

How do we encourage them to build more? All these kind of things. Um but not revenue.

Okay. Yeah. Revenue is not a big priority in this industry.

Well I wouldn't say that necessarily but I

making a joke. I'm making a joke. I'm making a joke. Okay. Um, you've talked about tokenization as a major opportunity in the past.

So has your CEO Vlad. What assets do you think are the most realistic for major adoption in the next two to three years?

Yeah, we are doing a lot of work on private equity as everybody knows. Uh we've done some work last year um around giveaways and we want to do a lot more around that. Uh we think private equity is still one of the biggest kind of uh inequalities that exist uh today. So, you know, in the US, you need to be an accredited investor. You need to have access.

It's really hard to get access in general. Even if you're uh a famous LP or famous billionaire, it's going to take like some some work. And so, we want to solve that. Um, and we also think the tokenization engine that we build can work for any type of asset, um, including real estate, including art. So, you know, more to come on that, but we definitely don't think public stock is the only thing we want to tokenize.

What about on the front of like private markets, funds, equities?

Yeah, I mean um funds is maybe something that we are a little less um on top of it right now because there's just so many layers of fees and complexity around it. Um so working with the right people to create the right fund structure, it's definitely something we want to do. Um tokenizing existing fund that you can get anywhere else, uh we are a bit less um into it right now. I also want to talk about the acquisition of Bitstamp. Um, how does that kind of play into the institutional infrastructure uh and the strategy that we're discussing on the front of tokenization and then the chain as well?

Does it all kind of like wrap in together?

Yeah, so Bitstamp is also going to use a chain. Bitstamp is also kind of sharing a lot of the system that we have on on Robin. So all the advanced features that we've been building around like uh smart exchange routing uh being able to trade from the charts uh being able to use AI um to get recommendation all these things um that's using a lot of bitstamp tooling behind and so our goal is to kind of create these two uh separate system that are also talking to it quite a bit and the chain yeah will power kind of everything

and from a regional standpoint obviously we are in Denver you were in Hong Kong last week do you think the US is positioned to kind of lead on this front of tokenization and capital markets on chain.

I I I think so. I think you know for for we were pretty slow to start and we we had a a little speed bump in the past few years but I think now we are back on track. Uh I think as soon as we can get the clarity act unlocked on the hill we'll be able to kind of move forwards and you know you heard the chairman uh right before talking about tokenized securities and all the effort that they are trying to do on it. So definitely think that the US come can come back and be like the the capital of crypto again.

Last question, Johan. If this all pans out the way you envision, what will Robin Hood look like in the next 3 to 5 years?

Um I think we will stop talking about Robin Hood brokerage and Robin Hood crypto and the things will be a lot more mixed. Uh which which is really what we are expecting that we will be able to power a lot more of the infrastructure using onchain

superch or is it a super app then?

Definitely a super app. We're gonna do a super up. Come on.

Okay. All right. There we go. Amazing. Well, thank you so much for taking the time and thank you to everyone for listening in.

Thank you.