On the eve of its Q2 earnings report, Robinhood announced the mainnet launch of its Layer 2 chain, Robinhood Chain, along with a suite of crypto products including tokenized stocks, on-chain lending, and AI-powered trading. The news drove the company's stock up 8.35% to $108.6, a six-month high. In the highly competitive L2 landscape, Robinhood Chain – backed by Robinhood's massive user base and mature financial operations – quickly attracted a roster of top protocols, while inadvertently stirring an unexpected community controversy.
Building Its Own L2: Mainnet Launch and On-Chain Financial Products
At its 'The World is Flat' event in London on July 2, Robinhood unveiled its strategic focus on on-chain finance, AI trading, and global expansion. The centerpiece was Robinhood Chain, a Layer 2 built on Arbitrum Orbit that went live on public mainnet after months of testing. It directly connects Robinhood's on-chain users and offers developers a plug-and-play DeFi environment. Robinhood positions the chain as an institutional-grade, AI-native infrastructure optimized for real-world assets (RWA).
Expanding the product matrix, Robinhood added tokenized stock support in Robinhood Wallet, covering over 120 countries and regions. Users can trade these tokens via DEXs like Uniswap, Rialto, Lighter, 1inch, and Arcus, and use them as collateral in lending or liquidity pools. Previously Europe-only, the feature now goes global amid surging tokenized asset demand and competition between traditional and crypto trading platforms. Robinhood Wallet also launched on-chain perpetual contracts, offering a 90-day fee and gas subsidy package plus points incentives. For US users, Robinhood Earn – the app's first decentralized lending product – is gradually rolling out, allowing users to deposit the USDG stablecoin in a self-custodial wallet for an estimated ~7% APY. The product is powered by Morpho's lending infrastructure, supported by Steakhouse, Ethena, Spark, Maple, and others, with an insurance mechanism to reduce risk. Robinhood also extended its AI trading capabilities on-chain via 'Agentic Accounts,' enabling eligible US users to set risk parameters and let AI autonomously execute market scanning and trading strategies – a tool previously introduced in equity and options.
These moves come as Robinhood's crypto business faces headwinds: Q1 crypto revenue fell 47% YoY to $134 million, and notional trading volume dropped 48% YoY to $24 billion. The company needs new growth engines. Globally, Robinhood serves ~28 million users and continues international expansion: it launched in Canada, its Singapore subsidiary received an MAS capital markets license, it plans to offer commodity, ETF, and forex perpetuals in Europe, and crypto trading services in the UK are imminent.
Protocol Rally and dYdX's Controversial Pivot
Leveraging its user scale, top protocols – Uniswap, 1inch, Lighter, Morpho, Chainlink, BitGo, Ethena, EtherFi – have joined Robinhood Chain, spanning trading, liquidity, lending, oracles, custody, and cross-chain. Yet the most contentious integration involved dYdX, which launched a new DEX called Arcus on Robinhood Chain. On July 2, dYdX Foundation announced Arcus, a platform supporting 95 tokenized stocks, perpetuals, and major crypto assets, with plans to allow crypto and tokenized stocks as collateral and offer pre-IPO equity in companies like OpenAI. A beta went live, with full launch expected later in 2026.
The community outcry stemmed from Arcus being built not on dYdX Chain but as an independent product on Robinhood Chain. dYdX founder Antonio explained in an open letter that running dYdX Chain forced continuous trade-offs between performance, UX, and decentralization, while rivals with faster execution and simpler experiences grabbed market share. The choice of Robinhood Chain was driven by its ~27.7 million funded accounts, providing an instant user base and liquidity; additionally, Robinhood Crypto made a strategic investment in Arcus.
However, many community members perceived this as the core team abandoning dYdX Chain, diverting resources and attention to Arcus, potentially cannibalizing dYdX's brand value. The specter of an Arcus token airdrop (given dYdX had one of the largest airdrops in DeFi history) could lure traders and liquidity away from dYdX Chain, diluting DYDX value. dYdX Foundation responded that its support for the dYdX protocol and community governance remains unchanged; dYdX Chain functions (trading, deposits, withdrawals, staking, governance) continue normally, with DYDX staking rewards still paid in USDC and treasury assets under DYDX holder control. Antonio, claiming to be DYDX's largest holder, stated his interests are deeply aligned with the community, promised that any future Arcus token would include allocation for the dYdX community, and granted early access to Arcus for dYdX traders. Despite these assurances, market fears persisted: DYDX fell ~40.7% intraday.
Overall, Robinhood's ambition extends far beyond a single blockchain infrastructure. Drawing on its huge user base, established brokerage business, and global compliance footprint, Robinhood aims to use Robinhood Chain to transform from an internet broker into the next-generation global financial gateway. Whether this vision materializes remains to be seen.