The success of Robinhood Chain proves that Ethereum is not dead

Original Ryan Berckmans

Compiled by / Odaily Planet Daily Golem

The previous era of the crypto industry dumped tokens through infrastructure, while its next era will choose Ethereum L1+L2 to build real businesses.

Travis Kling raised a question this week: "Is it now obvious that companies that really get things done are not interested in L1/L2?" Robinhood was the first example he cited. But on the contrary, Robinhood is almost a perfect counterexample: When real companies make business decisions, they almost all choose the Ethereum L1+L2 model.

Robinhood chose an existing L1—Ethereum, and then built its own Ethereum L2 using Arbitrum technology. Robinhood Chain uses Ethereum blobs to ensure data availability and uses ETH as its native gas token, with its security also provided by Ethereum.

Therefore, Robinhood did not deny the Ethereum L1+L2 model; on the contrary, this model is running as expected on Robinhood.

The "buyers" choosing Ethereum have changed; past crypto industry projects chose public chains and technologies to sell their tokens, while the emerging real-world on-chain economy is using the Ethereum L1+L2 model as the foundation for cash businesses.

As the composition of buyers changes, I believe Ethereum's advantages will become more apparent.

The old crypto economic system centered around tokens

What I mean by "real businesses serving real users" refers to a traditional company model: creating products that customers need, earning profits by serving customers, and enhancing the equity value of those profits.

Here, "real users" refers to consumer demand arising from ordinary economic needs, rather than speculative demand primarily generated by new token issuances; crypto-native users are clearly real users. This is not a moral judgment on whether the protocol is useful or whether its developers are sincere, but merely a distinction regarding the operational goals of the real economy.

The value of tokens can only come from the following three aspects:

• Cash: A reliable claim to future cash flows, similar to on-chain equity or bonds;
• Utility: Access, control, governance, or other privileged participation rights in a valuable system. Even without cash flow, tokens that control important things clearly have value;
• Monetary premium: People hold the asset because they expect others to accept and recognize its value in the future. This type of asset is no longer merely a claim that must ultimately be exchanged for something else, but has become a store of wealth—a terminal value asset.

Monetary premiums exist in reality but are also very difficult to maintain. They require deep network effects based on trust, liquidity, distribution, integration, and utility. Gold, the US dollar, Bitcoin, and Ethereum have all built different versions of this effect, while other assets have hardly managed to do so.

Looking back, since the popularity of programmable cryptocurrencies, the vast majority of industry participants have not been ordinary cash flow businesses. Their economic goals are often to sell a token, whose value is primarily based on utility, expected monetary premium, or distant future cash promises.

Sometimes, their plans are straightforward—launch a protocol and sell its tokens; sometimes, their plans are more indirect—obtain funding from a token-funded ecosystem and then monetize the acquired tokens; sometimes, a project does expect to be profitable in the future, but due to the disconnection between the token's valuation and any possible future cash, the actual business model remains confidence in the token itself.

This has become the norm, as almost every project is doing something similar, but there are some exceptions.

Centralized exchanges are essentially cash trading business platforms and naturally support multiple chains; connecting another chain is like adding another deposit and withdrawal channel. Some stablecoin issuers are also cash trading businesses; they initially served customers in the cryptocurrency space and are now rapidly expanding into broader economic fields.

But these exceptions precisely prove one point: businesses targeting ordinary cash transactions will choose infrastructure that maximizes business rather than maximizing token value.

Different business goals will build different projects

The ultimate goal of a business determines its technology choices.

If the goal is cash trading, then blockchain is the infrastructure, and the selection criteria are to reduce risk, improve products, reach customers, and ensure profits; if the goal is token monetization, then the choice of blockchain has greater freedom, and after obtaining public chain funding, the business can choose to develop on the blockchain that funded it.

For example, if a protocol succeeds on Chain A, then you can launch a similar protocol on Chain B so that investors can price your token through comparison. Want to hype a new token? Then a new L1, L2, application chain, gas token, governance system, or some special technology stack could become selling points.

The issue is not the diversity of the technology itself; the crypto industry will continue to see explosive growth in applications, protocols, L2 architectures, and dedicated execution environments. The problem is that people tend to turn every new idea into a sovereign independent ecosystem (with its own L1 architecture, security validation, liquidity base, and monetary assets), regardless of whether its underlying product is independent.

As the crypto industry transitions to cash businesses today, various attempts continue, but these attempts will increasingly be built on common infrastructure. Businesses will specialize in development at the application layer or L2 while relying on the Ethereum L1 layer for settlement, security validation, liquidity maintenance, and monetary asset management. The result is not a reduction in innovation but a balance: the edges become more diverse, while the underlying becomes more centralized.

In the past, traditional crypto economies often chose architectures around the tokens they wanted to sell, while the emerging on-chain economy will choose architectures around the products they hope customers will buy.

Buyers are changing

The future of the crypto industry will be vastly different from the past because the "buyers" have changed.

The previous US government heavily suppressed the development of on-chain trading, but this trend has now reversed. The "GENIUS Act" has come into effect, providing a legal framework for stablecoin payments, and Europe's MiCA regulatory framework is also fully applicable. Brokerage firms, payment companies, banks, asset management companies, and governments around the world are formulating strategies for stablecoins, tokenization, and on-chain trading.

But this does not mean that all regulatory issues have been resolved; it at least proves that large institutions can attempt more blockchain business.

We are approaching the beginning of the S-curve of true adoption in the crypto industry.

As we move out of this phase, the crypto industry and traditional finance will no longer be two distinctly separate categories. Property, currency, transactions, finance, identity, and trust will all be coordinated through networks formed by on-chain and off-chain systems. Ultimately, "Web 3" will gradually be phased out like "Web 2," and everything will return to the internet itself.

As this process advances, there will be a larger proportion of real enterprises among crypto market participants, serving ordinary consumers in a broader economic system. This proportion will not only be reflected in the number of companies but also in terms of funding scale, user numbers, asset sizes, and institutional influence.

These companies are no longer crypto projects seeking business model support for tokens but are enterprises using crypto technology to optimize existing or emerging cash businesses. This also determines their technology choices; infrastructure choices aimed at token economies do not guide infrastructure choices aimed at cash economies well.

Real enterprises will not build infrastructure from 0 to 1

Typically, real enterprises have limited budgets for risky infrastructure construction. They do not want consensus mechanisms, cross-chain bridges, validator economies, gas, governance tokens, and liquidity startups to become six unrelated side businesses, where each additional link must create customer value, or it becomes a burden.

Chains should serve businesses, not businesses serving chains.

Some businesses are inherently multi-chain. Exchanges, wallets, stablecoin issuers, and certain asset issuers may require extensive distribution. Even so, "multi-chain" rarely means that every chain is equally important; different chains often have their own exclusive domains in liquidity, issuance, settlement, product status, or deeper integration.

Most on-chain businesses need to make special commitments to one chain or a few chains, and their choices usually take three forms:

• When on-chain businesses need maximum decentralization, trusted neutrality, risk minimization, or liquidity, they will use Ethereum L1 services. L1 execution costs are higher because it bears the most powerful shared environment;
• When businesses need control, customized features, compliance, predictable unit economics, low latency, or high throughput, they will build their own Ethereum L2 layer. Because they can obtain a dedicated chain according to their own wishes while maintaining a direct connection to Ethereum;
• When businesses do not need an L1 layer and it is unnecessary to build their own L2 layer, they will typically use one or more mature shared L2 layers. Base, Arbitrum One, Robinhood, and other mature Ethereum L2 layers have become common deployment platforms.

These on-chain businesses will still conduct asset bridging, "product exports," and connect to other networks; having their own main chain does not mean being isolated from the world, as importing, exporting, and interoperability are also core components of on-chain businesses. But the main chain remains crucial, as it determines the system's security, normative state, liquidity relationships, operational models, and long-term dependencies.

Why is the Ethereum L1+L2 model still in use?

Ethereum separates the two key elements required by large enterprises.

The L1 layer provides a highly decentralized, trusted neutral, and highly liquid global hub, while L2 offers a fast, low-cost, specialized, controllable, and customizable execution environment market.

L1 remains neutral, while the edge L2 can adapt to different operators, jurisdictions, products, and users. L2 not only technically scales Ethereum but also politically expands it: organizations can operate in their own way without requesting the global center (L1) to become their private chain.

Independent L1s can provide control and performance advantages; in some cases, complete sovereignty over consensus and data availability is worth it for projects, but obtaining these is not cheap.

New L1s must create and maintain their own security systems, sets of validators or operators, cross-chain bridges, liquidity, tools, integrations, and reputations. It will form a new security and liquidity island, increasing the costs and frictions of interoperation with Ethereum L1 and the broader L2 economy (i.e., the dominant on-chain economic network).

For the vast majority of enterprises, the value created by an independent L1 is insufficient to offset these costs.

Customized Ethereum L2s can gain most of the business advantages that enterprises want from adopting independent L1s: high TPS, control over execution, upgrades, costs, ordering, latency, access rules, and product-specific features.

Moreover, L2 also provides advantages that independent L1s themselves do not possess: Ethereum for settlement and data availability, standard L1 bridges, assets and capital close to Ethereum, and a path for achieving increasingly minimal trust interoperability.

The design of L2 remains crucial. Admin privileges, upgrade keys, proof systems, and withdrawal guarantees determine how much security assurance users can obtain at any moment. But even L2s with control by a few operators can provide users with a solid settlement foundation on Ethereum L1. Companies do not need to operate and maintain their own L1 layer to run their businesses.

Ethereum L2s are both independent blockchains and part of the Ethereum economic system. They can own and customize their own execution environments while leveraging Ethereum for settlement, data availability, and interoperability management.

L2s often deeply integrate ETH into their application economies, such as using it as a native gas token. Normative cross-chain models provide a trust-minimized path for capital and assets on L1 to enter the L2's "local economy." Each new L2 has a unique product interface, and Ethereum's network effects will continue to strengthen.

Robinhood made such a business decision

Robinhood's development path is highly instructive.

It first issued stock tokens on the mature L2 Arbitrum One, and after validating the product and understanding its own needs, Robinhood launched a proprietary chain built on the Arbitrum platform.

This is likely to become a standard strategy for real enterprises: first build a business on a certain blockchain, and then upgrade to a dedicated L2 when scale, product demand, and unit economics reach a certain level.

Robinhood Chain is tailored for the financial services industry. It uses Arbitrum technology to provide 100 milliseconds of latency, predictable transaction pricing, high throughput, and infrastructure customized according to Robinhood's performance, security, and regulatory requirements.

At the same time, Robinhood Chain is still an Ethereum L2. It uses Ethereum blobs to ensure data availability and uses ETH as native gas, with its official bridge to Ethereum requiring no third-party validators. This is what it looks like when a real enterprise builds a true on-chain product.

Robinhood does not need to launch a Robinhood gas token, nor does it need to persuade the public that it deserves to have a lasting monetary premium. Robinhood itself owns stocks, and its economic benefits come from customers, products, assets, transactions, and cash flows; the blockchain is merely its infrastructure.

Using ETH as gas is a simple business decision. L2 services already use ETH to pay for L1 service fees, ETH has strong liquidity, is widely used, and is the system's native token. If Robinhood were to use a proprietary gas token, it would also increase issues related to distribution, liquidity, pricing, and legality, and launching a token would not improve Robinhood's core product.

Robinhood's success will depend on its application layer and the off-chain business supported by that application layer, rather than its efficiency in creating new monetary assets. Therefore, it is inaccurate to say that Robinhood built its own blockchain and rejected existing L1 and L2 services.

Robinhood simply rejected sharing its proprietary execution environment with other projects, rather than rejecting Ethereum; on the contrary, it chose Ethereum as the parent chain for its proprietary blockchain.

Previously, Coinbase made a similar decision by launching Base. Coinbase is not an advocate of Ethereum, and it is well known that Brian Armstrong has publicly stated his enthusiasm for Bitcoin far exceeds that for Ethereum. However, when Coinbase chose infrastructure for its on-chain business, it still chose to become an Ethereum L2.

Base is precisely the strongest evidence that the Ethereum L1+L2 model is not just theoretical; Coinbase's decision was made for business considerations, not ideology.

When companies build cash businesses rather than conduct token sales, the decisions they make are all business decisions, which determines that the infrastructure they will choose is the Ethereum L1+L2 model.

What does this mean for Ethereum and ETH?

This change in the composition of participants is extremely favorable for Ethereum.

Historically, the competitive landscape of blockchains has been dominated by teams whose incentive mechanisms focus on token creation, ecosystem funding, and token valuation. Looking ahead, the competitive landscape of blockchains will increasingly be dominated by companies that optimize security, customers, control, distribution, liquidity, and interoperability, all aimed at serving cash businesses.

This shifts the demand towards Ethereum's "barbell" structure: L1 is used to minimize risk and maximize liquidity; L2 is used for scaling, customization, and operator control.

Ethereum's ability to develop into a globally universal platform is not through forcing all companies into the same shared execution environment, but by becoming the underlying common settlement, security, liquidity, and asset layer for numerous environments.

This is also good news for ETH. The success of ETH lies in building a monetary network and global trust; ETH is an excellent equity certificate and the native asset of Ethereum's global settlement layer. Throughout the ecosystem, it serves as collateral, liquidity assets, treasury assets, productive assets, and is becoming a terminal asset.

As more and more real enterprises build applications on Ethereum, they will distribute ETH to more users, integrate it into more products, and enable it to play a role in more areas. This will enhance ETH's liquidity and investor confidence, thereby strengthening the monetary premium, which will ultimately evolve into a larger network effect.

Robinhood is not an exception but a beacon.

Real enterprises will use Ethereum L1 when they need the most neutral, lowest risk, and highest liquidity shared environment globally. When they need control, customization, and high performance, they will build their own Ethereum L2. And when their business is not yet sufficient to support the construction of an independent blockchain, they will deploy to mature blockchains, usually Ethereum L2.

This is not because they are fans of Ethereum, but because they have made rational business decisions.