Robinhood Provides Answers: Why Ethereum Becomes the Optimal Solution After Entering the Real Economy

The era of token narratives is coming to an end, and the real economy will rely on Ethereum L1+L2 to build on-chain businesses.

Written by: @ryanberckmans, Ethereum community member
Compiled by: Saoirse, Foresight News

This week, Travis Kling raised a point: Is there now an obvious conclusion — that companies engaging in real business have no interest in existing L1s and L2s? His first example was Robinhood. However, Robinhood is precisely the perfect counterexample: When real enterprises make decisions based on business logic, the vast majority will choose the Ethereum L1+L2 architecture.

Note: Travis Kling is the founder and Chief Investment Officer of the crypto asset management company Ikigai, with years of investment experience at Wall Street institutions like Point72, and is a well-known macro investor in crypto.

Robinhood chose Ethereum as its underlying L1 and then built its own Ethereum Layer 2 network using Arbitrum technology. Robinhood Chain relies on Ethereum Blob for data availability, uses ETH as its native gas token, and features a standard cross-chain bridge secured by Ethereum.

This does not negate the Ethereum L1+L2 model; rather, it confirms that this architecture is operating as intended.

The deeper core lies in the vastly different incentive mechanisms for different participants. The early crypto industry built public chains and chose tech stacks with the goal of issuing tokens; whereas the emerging on-chain economy in the real world is gradually establishing Ethereum L1+L2 as the underlying standard for cash flow businesses.

Two types of participants have entirely different objective functions. As the structure of market participants changes, the advantages of Ethereum will become increasingly prominent.

Old Crypto Economy: Everything Centered Around Token Optimization

The "real users" referred to in this article are entities that follow the classic business model: creating products that consumers need, earning cash flow through services, and enhancing the equity value corresponding to that cash flow.

Here, the "real users" derive their demand from normal economic activities, rather than purely relying on speculative demand generated by a new round of token issuance. Of course, crypto-native users also qualify as real users.

This is not a judgment on whether various protocols are useful or whether builders are pure in their intentions; it is unrelated to moral considerations. The core distinguishing point lies in the economic objectives of the operating entities.

The value of a token comes from only three sources:

1. Cash Flow: A reliable claim on future cash flows, akin to on-chain equity or bonds;
2. Utility Value: Grants holders privileges to access, control, and govern a high-value system. Even without cash flow, tokens that can control key resources still hold value;
3. Monetary Premium: People are willing to hold the asset long-term, confident that it will be recognized and accepted later. The asset transforms into a store of wealth, becoming the ultimate value target, rather than just a certificate waiting to be redeemed.

Monetary premiums do exist, but maintaining them is extremely challenging. They require strong network effects to form in market confidence, liquidity, ecological proliferation, scenario integration, and practical applications. Gold, the US dollar, Bitcoin, and Ethereum have each established different forms of monetary premiums, and almost no other assets can achieve this.

Looking back, since the popularization of programmable crypto assets, the vast majority of participants in the industry do not belong to formal enterprises pursuing stable cash flows. Their business models mostly revolve around selling tokens, with token value relying on utility expectations, speculative monetary premiums, or distant, hard-to-realize cash flow stories.

Some paths are very direct: develop a protocol and directly issue a native token; others may take a roundabout route: obtaining funding from ecosystem projects relying on token fundraising, then selling the acquired tokens for cash; and some projects do plan to earn revenue in the future. However, the valuation of tokens is severely disconnected from reasonable expected cash flows, and the essence of the business model still relies on market confidence in the tokens.

Almost everyone is replicating similar plays, and thus this model has gradually become the norm in the industry.

Of course, there are important exceptions: centralized exchanges mostly belong to pure cash flow businesses and naturally adopt a multi-chain strategy, integrating new public chains as if adding a new deposit and withdrawal channel; some stablecoin issuers are also real cash flow enterprises, initially serving users within the crypto circle, and are now expanding into a broader real economy.

But these exceptions actually confirm the core viewpoint: enterprises aiming to earn cash select infrastructure to maximize their own business benefits, rather than to boost token appreciation.

Incentive Mechanisms Ultimately Shape Technical Architecture

The objective function of an entity determines its choice of technical route. If a company's core mission is to operate a cash flow business, blockchain is merely infrastructure. The purpose of choosing a public chain is to reduce risk, optimize products, reach users, and maintain profits.

If the primary goal is token monetization, the choice of public chains becomes extremely flexible. Whichever public chain provides ecosystem funding, the project will develop on that chain; if a certain protocol on Chain A succeeds, they will replicate similar products on Chain B for investors to benchmark token valuations; as long as they want to issue a new token, any new L1, L2, application chain, gas token, governance system, or niche tech stack can be packaged as a promotional highlight.

The issue does not lie in the diversity of technology itself. The crypto field will continue to see a surge of applications, protocols, layer-two solutions, and specialized execution environments, ushering in a Cambrian explosion of innovation. What truly distorts the industry is the mentality that any new idea must independently create a sovereign ecosystem, building an L1 from scratch, preparing security budgets, cultivating liquidity, and issuing native currency assets, completely disregarding whether there is actual demand for the business itself.

As the industry gradually shifts focus to cash flow entities, innovative exploration will not cease but will increasingly be built on a unified foundation. Enterprises will focus on differentiated development at the application layer and layer two, relying on Ethereum L1 for settlement, security assurance, liquidity support, and value storage. Ultimately, the industry will form a dumbbell structure: diverse applications flourishing at the edges, while foundational infrastructure continues to concentrate.

The common logic of the old crypto industry: building a complete technical architecture around the tokens they want to sell to investors.

Market Participants Are Iterating

The future of the crypto industry will undoubtedly differ from the past, with the core reason being — the players have changed.

The previous US government continuously suppressed the development of the on-chain industry, but now the tide has turned. The formal implementation of the "GENIUS Act" establishes a federal regulatory framework for payment stablecoins; the EU's MiCA regulatory framework is fully effective. Brokerage firms, payment companies, banks, asset management institutions, and governments worldwide are beginning to lay out strategies for stablecoins, asset tokenization, and on-chain business.

This does not mean that all regulatory challenges have been resolved, but large institutions can finally plan for long-term on-chain business.

We are at the beginning stage of a large-scale S-curve adoption.

As the industry matures, crypto and traditional financial systems will no longer be fragmented. Assets, currencies, transactions, finance, identities, and trust will all be jointly supported by on-chain and off-chain systems. Ultimately, the term "Web3" will gradually fade from public view, just as "Web2" did, and everything will be referred to as the internet.

At that time, the proportion of real enterprises serving ordinary users in the crypto market will significantly increase. Not only will the number of enterprises rise, but more critically, the scale of funds, user base, total assets, and institutional influence will all tilt towards these entities.

They will no longer be crypto projects struggling to find business models solely to support token narratives, but rather real companies utilizing blockchain to improve existing businesses and create entirely new cash flow avenues.

The market landscape will thus be rewritten. The infrastructure selection logic of the token economy era is completely unsuitable for cash flow entities.

Real Enterprises Procure Blockchain Infrastructure

Real enterprises can bear very little trial-and-error risk budget for infrastructure. They do not wish to bear additional burdens of consensus mechanisms, cross-chain bridges, validator systems, gas assets, governance tokens, liquidity operations, and other unrelated burdens. Any new technical module must create user value; otherwise, it becomes a liability.

Blockchain should serve the business, not the business accommodating the blockchain.

Some businesses are naturally suited for multi-chain layouts: exchanges, wallets, stablecoin issuers, and various asset issuance platforms require broad user coverage. However, even when operating multi-chain, it does not mean that all public chains hold equal status; typically, a core public chain is selected to handle liquidity, asset issuance, settlement, business data storage, and deep ecological integration.

The vast majority of on-chain businesses will focus on deeply cultivating a primary chain or a few chains within the same system.

Enterprises generally have three types of choices:

1. Ethereum L1: Chosen when the business seeks extreme decentralization, trusted neutrality, minimal risk, and deep liquidity. L1 transaction costs are higher, trading for the industry's strongest shared security environment;
2. Build Ethereum L2: If enterprises need operational control, high customization, compliance capabilities, stable cost models, low latency, and high throughput, they will build a dedicated layer two. This allows them to operate an independent blockchain according to their needs while remaining bound to the Ethereum underlying;
3. Use mature shared layer twos: If the business scale is insufficient to support an independent layer two, they will directly deploy on existing public L2s, with Base, Arbitrum One, and Robinhood Chain becoming common development platforms.

These enterprises will still engage in cross-chain asset transfers, external product outputs, and connections to other networks. Having a core main chain does not mean being closed off; asset interoperability and business external connections have become standard for on-chain businesses.

However, the core belonging chain is crucial, as it determines the entire system's security foundation, standard data state, liquidity transactions, operational models, and long-term development dependencies.

Why the Ethereum L1+L2 Architecture Meets Enterprise Needs

Ethereum precisely dissects the two core demands of large enterprises: L1 creates a highly decentralized, trusted neutral, and liquidity-rich global settlement hub; various L2s form a diversified execution environment market, enabling high-speed, low-cost, vertically customized, and independently controlled operations.

The underlying remains stable and neutral, while the upper layer flexibly adapts to different operating entities, judicial jurisdictions, differentiated products, and user groups. Layer twos not only achieve Ethereum's scalability on a technical level but also expand it on an institutional level: institutions can operate their businesses according to their own rules without requiring the global underlying public chain to accommodate their needs.

Independent L1 can also provide operational autonomy and high performance. In certain scenarios, complete control over consensus and data availability is valuable. However, full sovereignty comes at a high cost.

A brand new independent L1 must be built from scratch and continuously maintain security budgets, validation nodes, cross-chain trust assumptions, liquidity, development tools, ecological cooperation, and institutional credibility.

It will form a new island of security and liquidity, significantly increasing the friction costs of interoperability with Ethereum L1 and its vast Layer 2 ecosystem. Enterprises should only bear this expense when the independent consensus mechanism itself can create substantial commercial value.

For the vast majority of enterprises, the benefits of building an independent L1 cannot cover the comprehensive costs.

A customized Ethereum Layer 2 can almost achieve most of the advantages of an independent L1: high TPS, control over execution logic, autonomous upgrades, customizable fees, transaction ordering, delay management, access rules, and product-specific features.

At the same time, Layer 2 has additional advantages that are difficult to build in the short term for native L1: relying on Ethereum for settlement and data availability, native standard cross-chain bridges, seamless integration with existing Ethereum assets, and cross-chain interactions that minimize trust requirements based on the same underlying layer.

The design details of Layer 2 solutions remain crucial. Administrator permissions, upgrade keys, proof systems, and withdrawal protection mechanisms determine how much underlying security users can inherit.

Even if the operator has high control permissions over Layer 2, it still relies on Ethereum L1 to establish an unbreakable settlement foundation. Enterprises do not need to independently operate and secure a Layer 1.

An Ethereum Layer 2 is both an independent blockchain and a part of the Ethereum economic system. The operator can customize the execution environment while reusing Ethereum for settlement, Blob data storage, and cross-chain interoperability; most will deeply integrate ETH into the ecosystem, directly using ETH as the Gas token; native standard cross-chain bridges allow L1 assets to flow into the Layer 2 economy with low trust thresholds.

Every new Layer 2 will create differentiated product tracks, continuously amplifying Ethereum's network effects.

The Choice of Robinhood is Highly Indicative

Robinhood's development path has textbook-like reference value. The company first launched its stock token business on the mature shared Layer 2 Arbitrum One; after validating the business model and clarifying its own needs, it launched a dedicated blockchain based on the Arbitrum platform.

This could very well become a common development path in the industry: first relying on shared infrastructure to validate products, and once business scale, product needs, and profit models are met, upgrading to build a dedicated L2.

Robinhood Chain is tailored for financial services. It achieves 100 ms latency, predictable transaction prices, and high throughput based on Arbitrum technology, with the entire infrastructure meeting Robinhood's requirements for performance, security, and regulatory compliance.

At the same time, Robinhood Chain is essentially an Ethereum Layer 2: relying on Ethereum Blob for data storage, ETH as Gas, and connecting to Ethereum's standard bridge without third-party validation nodes.

This is the standard model for physical enterprises to create on-chain products.

Robinhood does not need to issue its own Gas token out of thin air and then prove to the market that the token has long-term monetary premium. Robinhood itself is a publicly listed company with equity, and all revenue growth comes from users, products, existing assets, and cash flow generated from transactions.

Blockchain is merely infrastructure.

Choosing ETH to pay for Gas is a purely rational business decision. Layer 2 itself needs to pay ETH to Ethereum in exchange for L1 underlying services; ETH has ample liquidity and is fully adapted to the ecosystem. If a dedicated Gas token is issued separately, it will only add extra costs for promotion, liquidity maintenance, price volatility, and reputational risk, without improving Robinhood's core business.

The measure of Robinhood's success or failure lies in application layer products and off-chain derivative businesses, rather than whether it can create a brand new asset with monetary attributes.

Therefore, many people's understanding contains misconceptions: some claim that Robinhood's self-developed blockchain represents its abandonment of the existing L1/L2 system. In fact, the opposite is true: Robinhood simply does not want to share the same execution environment with everyone else; it has not abandoned Ethereum but has chosen Ethereum as the underlying mother chain of its own blockchain.

The Ethereum L1+L2 architecture is no longer just a theoretical concept.

Coinbase made the same choice when building Base. Coinbase is not an Ethereum-promoting institution; Brian Armstrong (Coinbase co-founder and CEO) has publicly stated that he is more optimistic about Bitcoin in the long term. However, when the company selected the underlying infrastructure for on-chain business, it still built Base as an Ethereum Layer 2.

This choice is highly persuasive ------ the decision is based on commercial interests, unrelated to faith preferences.

When the enterprise's goal is to create cash flow business rather than to host token issuance, it will ultimately make rational business judgments. The current default optimal business solution is: Ethereum L1+L2.

What the Changing Landscape Means for Ethereum and ETH

The structural change in market participants is a long-term significant benefit for Ethereum.

In the past, the competitive landscape of public chains was dominated by projects eager to issue tokens, distribute ecological subsidies, and rely on token valuation narratives.

In the future, the main competitors in the industry will be physical enterprises, making decisions around security, user expansion, operational control, market coverage, liquidity, and cross-chain interoperability optimization, all serving cash flow businesses.

Market demand will continue to gather around Ethereum's dumbbell architecture: L1 will bear extreme security and liquidity needs; various L2 will accommodate expansion, customization, and autonomous operation demands.

The path to Ethereum's popularity does not lie in forcing all enterprises to squeeze into the same shared execution chain, but in becoming a common settlement, security, liquidity, and asset foundation for countless upper-layer environments.

This is also beneficial for ETH. The growth logic of ETH relies on building a global currency network and accumulating market consensus; it does not belong to cash flow businesses.

ETH is a high-quality value storage asset, the native asset of Ethereum's global settlement layer. It acts as collateral, liquidity carrier, treasury reserve asset, and productive asset within the entire ecosystem, continuously growing into the ultimate storage asset.

An increasing number of physical enterprises are conducting business based on Ethereum, which will continuously popularize ETH among a vast number of users, embedding ETH into various products, and expanding application scenarios.

Liquidity and consensus will deepen continuously, further consolidating ETH's monetary premium, which is essentially a powerful network effect.

The old crypto economy: designing a complete technical architecture around the tokens they want to sell. The emerging on-chain physical economy: choosing a technical architecture around the products they want to deliver to customers.

The optimization goals of the two types of participants are completely different, which will shape a distinctly different competitive landscape for public chains.

Robinhood is not an exception but a lighthouse.

Physical enterprises choose Ethereum L1 when pursuing the strongest neutrality, lowest risk, and top liquidity sharing environment; they build Ethereum L2 when they need operational autonomy, customization capabilities, and high performance; if the business volume is insufficient to support an independent blockchain, they deploy on mature shared Layer 2 (mostly Ethereum-based L2).

Enterprises make this choice, not because they are extreme believers in Ethereum, but purely for commercial considerations.