Why Robinhood Chose Ethereum Layer 2 Instead of Layer 1: Full Explanation
Key Highlights
- Robinhood chose an Ethereum Layer 2 instead of Layer 1.
- Johann Kerbrat, Robinhood’s Crypto General Manager, said Ethereum provides security and decentralization that new L1s often lack.
- Robinhood is building its Layer 1 with Arbitrum technology for tokenized assets.
Robinhood stated that Ethereum provides its new Layer 2 enhanced security and decentralization. As per the company, this was a key reason Layer 1 was not chosen. It also cited Ethereum’s strong infrastructure and interconnected liquidity across EVM ecosystems. Crypto General Manager at Robinhood, Johann Kerbrat, discussed the company’s decision to build a Layer 2 network. He also pointed out decentralization concerns and liquidity access as key factors influencing the strategy.
This move comes when Ethereum updates its scaling strategy. According to Vitalik Buterin, Layer 2 networks are still important, but their role is changing. The focus shifts from simple scaling to chains built for specific uses.
Concerns Around Layer 1 Networks
Johann Kerbrat said numerous large non-Ethereum Layer 1 networks face centralization challenges. Kerbrat points out incidents where validators restart the system simultaneously during disruptions.
In contrast, Kerbrat also said that Ethereum provides an established infrastructure that developers can depend on. This structure enables builders to focus on applications rather than rebuilding core network components. It has security developers without additional engineering effort. Teams can direct their resources toward building services instead of maintaining base network functions.
L1 is considered a “closed system,” whereas Ethereum L2 enables Robinhood to tap into the massive existing liquidity of the Ethereum Virtual Machine (EVM) ecosystem.
Robinhood Built On L2 Network
Robinhood has launched a public testnet for its new Ethereum Layer 2 network built using Arbitrum technology. The directors describe the network as a financial-grade Layer 2 designed to support tokenized real-world assets such as stocks and ETFs, alongside several digital assets.
Developers can now access network entry points, technical documentation, and compatibility with standard Ethereum development tools. The testnet environment lets the team experiment with integrations, run infrastructure, and identify issues before a planned mainnet, which will be launched later this year.
L2 Built For Security With Low Fees and 24/7 Trading
Robinhood’s chain was built for 24/7 trading, seamless network bridging, and full self-custody of on-chain assets. According to the company, the network targets use cases including tokenized asset platforms, lending markets, and perpetual futures exchanges.
Developers can access to simulate trading and settlement flows. The tokens also mirror traditional equities for testing; however, they are not meant for real shares or carry actual financial value on the testnet.
Robinhood is also planning deeper integration with its own wallet. It enables users to interact with dApps on Robinhood Chain inside its existing products. Kerbrat also addressed how Layer 2 costs can differ from project to project. Some networks have extremely low transaction costs, while others capture portions of Ethereum’s fee structure.
During early planning, Kerbrat said Robinhood focused less on fee revenue and instead prioritized accessibility and integration with existing liquidity networks. It reflects the company’s broader goals for blockchain infrastructure.
Final Thoughts
Robinhood’s Layer-2 solution provides a secure, high-speed, and low-cost alternative to the main Ethereum blockchain. Moreover, Layer-2 is permissioned, meaning everyone is verified, and complies with the laws. This move also supports deeper integration with the Ethereum ecosystem news and existing financial systems.