Traditional brokerages enter the crypto space, Robinhood lays out plans for Ethereum Layer 2 network

Robinhood is a well-known internet brokerage in the United States, with high recognition among young users in the country. In addition to traditional brokerage services, Robinhood has also been actively extending its business into the crypto ecosystem in recent years.

Now, Robinhood has finally made a substantial move. On July 1st, Robinhood announced on its official Twitter that it will collaborate with Arbitrum to build Ethereum-based Layer 2 scaling using Arbitrum's Orbit technology stack.

The most important purpose of this move by Robinhood is to construct its own platform, where it can achieve stock tokenization and conduct related token trading.

It is not surprising for traditional financial institutions to enter the Ethereum ecosystem. Previously, BlackRock invested in RWA to purchase Ethereum, and JP Morgan issued crypto assets based on Base, among other actions they have taken to enter the market.

However, these actions are quite different from Robinhood directly constructing its own Layer 2 scaling.

The actions of these large financial institutions seem more like a trial, while Robinhood's move is a full commitment to the battle. Now, it is not just an internet brokerage but is about to become a crypto enterprise.

Interestingly, just recently, Coinbase submitted an application to the U.S. Securities and Exchange Commission for stock tokenization trading. I believe that given the SEC's current attitude and efficiency, the approval results should come out soon and will likely be optimistic.

I wonder if Robinhood chose this timing because it saw this favorable opportunity?

It can be imagined that once the SEC's approval yields optimistic results, Coinbase and Robinhood will become pioneers in stock tokenization trading among U.S. listed companies. This imaginative space will likely be amplified and speculated upon by participants.

In fact, Robinhood's stock price has already started to stir recently.

In addition to raising imaginative space and boosting stock prices, the more significant meaning of Robinhood's move is that it will certainly play a strong demonstrative role in the U.S. brokerage industry. First, it will provide a reference for the industry in terms of technology selection, and second, it will set a model for business expansion.

I believe more brokerages will build their platforms through Ethereum Layer 2 scaling and will quickly venture into stock tokenization.

I have never had much interest in stock tokenization, as I have shared multiple times in previous articles. What I am truly interested in is another piece of information that seems to have gone unnoticed by many:

At the same time that Robinhood announced the construction of L2, someone discovered that a transfer transaction had already taken place on Arbitrum, and the transaction involved equity in OpenAI.

In my view, this is essentially a repackaging of ICO.

And what does ICO mean? I believe participants who have experienced that crazy history will remember it vividly.

According to public information, OpenAI conducted its latest round of financing in March this year, raising $40 billion, with a valuation of $300 billion.

Since OpenAI is a private company, its current series of financing valuations are relatively low. When it goes public, its valuation will generally be several levels higher than it is now. However, its pre-IPO financing usually does not target retail investors but focuses on institutions. Therefore, we often say that the major benefits of such companies are largely consumed by VCs.

The reason ICO was able to create a frenzy in the crypto ecosystem was, on one hand, that it facilitated project financing, and on the other hand, it allowed retail investors to participate in early-stage investments, bringing astonishing returns to them.

Now that OpenAI's unlisted equity has been tokenized and traded on-chain, it sets a precedent for equity trading in such companies.

Looking across the entire tech industry, there are indeed many good companies like OpenAI that are unlisted and still in the process of financing. If in the future, their unlisted equity can be traded in this way and retail investors can participate, the imaginative space will be vast.

Therefore, I estimate that companies like Robinhood and Coinbase, after achieving stock tokenization trading, will next explore equity tokenization trading. If equity tokenization trading can be opened to retail investors, the potential returns it can bring to them will be quite astonishing.

Of course, the obstacle to opening equity tokenization trading to retail investors lies not in technology but in regulation.

Fortunately, the current SEC has a relatively lenient regulatory attitude. I wonder if this will bring benefits to retail investors and the entire crypto ecosystem?

In my previous articles, when sharing about the prosperity of the last Ethereum ecosystem, I specifically mentioned that NFTs are one of the few applications that can bring a large number of outside users into the crypto ecosystem.

Now, Robinhood's actions seem to have a hint of this, but we will have to wait for time to witness the final effect.