Robinhood's Plan to Bring Global Finance Onchain | Johann Kerbrat

Transcript

Nothing said on Empire is a recommendation to buy or sell any investments or products. All right, everyone. Welcome back to Empire. Very excited about this one. We've got the head of crypto at Robinhood, Johann. Johann, how are you doing man? >> Good. How are you? >> Very good. >> Long time no see. >> You've been busy. >> Yeah, it's been fun. >> [laughter] >> Yeah, we I remember when was our last chat? DAS? >> Yep, that's right. >> Uh and you're like, there's a lot of stuff coming. I can't fully tell you everything. There's a lot coming, so >> I didn't lie. There was a lot of stuff. >> No, you did not. You did not. I've never known you to lie, man. Um tell me about the evolution of I remember so Vlad I don't know if you were at Robinhood then. I would guess you were. Vlad gave

a keynote at permissionless, one of our conferences in 2022. I think it was I think it was in Palm Beach. >> Yeah, yeah. >> And kind of announced, you know, they're launching this crypto wallet and that was for me like that I mean, it was also our conference I'm biased, but I think of that as like the moment Robinhood started really pushing. Can you just Maybe we start macro with this and then go micro. Tell me about just the evolution. Like was the Was there always this grand vision? Was it kind of like, you know, let's do a V1 and then a V2 and then a V3? Like tell me about just the evolution of crypto internally at Robinhood. >> Yeah, I think the vision was always here. Um initially we started with this idea that customers should be able to access any type of financial instrument

that they are excited about. So crypto was one of them. Uh back in 2018 and that's when we launched, you know, Bitcoin trading and Ethereum trading. Um but then we we felt that the blockchain technology and crypto technology were actually able to power a lot more than just trading of assets. Um and we thought that it would be a great way for us to expand internationally, not just in the US through crypto technology because it's a lot easier to build. You can get access to a hundred of millions of people with just a wallet that people can manage themselves. And so um that's where the vision started.

We launched the wallet a few years ago like you mentioned. It was purely and now we are starting to add what the real vision is, which is tokenized assets, being able to get yield on your assets as well, and doing more and more with your crypto. So, the wallet is now live in 120 plus countries. We tokenized assets on it, our stock token product, and I think it's been a great way for us to really expand where Robinhood is, basically. >> Yeah. Yeah, I feel like you know, you've been doing crypto stuff for I guess you're right, 2018. That's when you launched Bitcoin, you know, the spot tokens, but 2023 you launched the wallet.

I feel like the Robinhood chain is your like you guys basically telling the industry like we are here. We are like we are like a very real player in this game. Yeah. >> Um I you know, I think we were always a a real player. We are one of the largest US retail platform. But I think the chain for us was not just a side project. Like I think what a lot of competitors have done is creating a chain just for the the sake of it. What we wanted to create was this infrastructure and this backbone where we can build new products, and we can bring to classic customers, retail customers, the benefit of the blockchain technology, and that's what we really wanted to do with this chain. So, it's integrated within our main app.

You can have the earn product that I'm sure we'll discuss about directly on it, and it's using the chain to actually give the benefit to the customer, even though they're not necessarily DeFi or crypto people, because I think the two worlds are converging more and more. And so, we need to stop this question of DeFi TradFi. We just need to bring everything to the customer and make sure that they get the the benefit of it. >> Yeah, 100%. What is the What is the actual benefit of doing all this stuff on chain? >> Um I think there's a lot of you know, accessibility question. Being on chain give us the possibility that everyone can build on top of our our chain is permissionless.

We can connect to way more partners, liquidity providers, market makers, DEXes because it's all available to us. We don't need to create separate fixed line with every single market maker or every single partner on on the chain. And I think that's the beauty of it. And the second beauty is what I was saying around the wallet. Available in 120 plus countries, all these people can now have access to our UX and UI and at the same time still get good pricing because it's using the chain where it's integrated deeply with Robinhood.

On the lending products, you get the best of DeFi with a high yield, but you also get the simplicity of of Robinhood, the UX, UI, and everything that we build around it. So I think, you know, that's just an evolution of the technology that we've been using for TradFi, where you don't restart your exchange anymore, you don't, you know, stop working on on weekends. Everything is live and it's on the blockchain. >> Yeah. Yeah. Um internally I would guess so we just acquired this company Masari. And so now we have two systems, right? We have two CRMs, we have two, right? We have two databases. So I am going through internally connecting these, you know, kind of integrating these two things. I would guess internally at Robinhood there's all these benefits of doing

things on chain, but you have two different systems, right? You have an off-chain order book, you have an on-chain order book, you have, you know, a wallet here, you have self-custodial, non-custodial. How does that How does that work internally? And then also how does that um How do you think about that maybe on like a five or 10 year time horizon? Is there a world where all of Robinhood moves on chain or there's just no need for that? >> Um, you know, I think for me I see the convergence happening more and more. I think for trading equities, for example, right now we are still using very specific American exchanges, but you could see a world where you can connect to any exchange in the world using tokenized assets. Um, the way that you can use your portfolio as collateral, right now it's mostly on on margin and things like

this, but for a lot of countries you can't easily do this, but we still going to stocks it's actually a lot easier. So, I I think the two world will will converge. I don't know if the entirety of Robinhood will will be on chain. I think that's maybe a bit more further than 5 years. But I think you you see the benefit of of the chain and I think the more we can bring this benefit to the customer, the more it will be a no-brainer for them to use the on chain version of this product versus the the off chain where they have probably less benefit from them. >> Interesting. So, you basically just want to build a system some some sort of back end system where you can actually just plug in all the liquidity venues that you want to. It could be it could be a DEX, it could be

a SEX, it could be a New York Stock Exchange, it could be NASDAQ, it could right? >> Yeah, and that's usually what we've been trying to do as much as possible to offer all the best price to our to our customers. So, for example, even on our centralized platform, if you place a Bitcoin order, we will look at the pricing from different exchanges, different market makers, and we'll only route to the best one. And I think that's what we want to do for for everything, right? If if you want to lend your money, we'll look at multiple options and make sure that we'll give you the best one. The the one that we've built on chain we feel is pretty good.

But if tomorrow there is a off chain option that is even better, like we will absolutely look at it. But I think for us, when you think about the cost saving that you have with a chain where everything can be automated through smart contracts, verified through actual code, and not just having middle player in between that are all taking like a cut of of the of the fees or whatever revenue, I think blockchain will just bring so much improvements on a lot of pricing and a lot of projects that we try to do yourself basically.

>> Yeah. Yeah, I I mean, I'm biased. I tend to I tend to I tend to agree. How does crypto work internally at Robinhood? So, there's two different models that I've seen, which is Uh, it's kind of like linear versus horizontal, right? So, do you like do you have your own Is there a crypto P&L? Or is there like >> Yeah, we have >> Okay. >> We have a business line, so basically Robinhood is is pretty amazing in the in the sense that we have 11 different business lines that are making at least nine figures in revenue. Um, and that really diversifies the overall group. Um, and so when crypto is a bit down like this year or the sentiment is a bit lower, you can see other business lines like prediction market that are actually going uh up. And >> You have 11 business lines doing 100

million >> Yeah. >> or more a year. >> Which is uh you know, a great feat for a company like Robinhood. Like we we were able to diversify quite a bit. And I think that's really advantageous because the market is changing, you know, during COVID there was a lot of pressure on Robinhood, will people still trade? And then people were trading and then the the rates increased, so people were like, okay, well, people are not going to trade as much, but all of this really diversified the overall business. And I think it really makes the company uh solid. And crypto is just one business line.

>> Mhm. >> Um, and so we have all-in P&L. Um, basically we own, you know, employees that are working, engineering, product, uh and also the the cost that we have to to run the business. >> Yeah. What is your um like in if you're looking at a P&L, what are your like revenue sub items here? Like is it like trading fees, blockchain fees? Okay. >> Yeah, basically these kind of things. Uh, we also um, you know, we we acquired Bitstamp last year. >> Ah, yeah. >> On an exchange, so an institutional business. Uh, we have staking, we have lending, so different uh type of revenue there as well. And yeah, trading fees definitely that's still the largest portion of our revenue.

>> Yeah, yeah. Okay, so Robinhood itself has these 11 business lines doing uh you know, over 100 million a year. If you fast forward a couple years, what is the crypto P&L? Like could you have a couple yourself doing 100 Could you have staking as you know 50 million a year, lending is 100 million a year, and trading is What do you What do you think that looks like? >> Yeah, to to be honest, I couldn't tell you right now because we haven't done this type of projection at this sub-item level but our goal is also to make sure that crypto can be a business that is also diversified and not just based on volatility of of trading. And I think that's what we've been trying seeing lately with institution, for example, we we have a lot of institution that are

just you know, using our platform a bit as a white-label platform to offer crypto to their customer, or some of them are using it to on-ramp and off-ramp between stablecoins to be able to send more easily between the their entities. So, I I think we will see more and more of this diversification happening in our business. >> So, you guys have a crypto as a service business as well. Ah, nice. Okay. >> Um it's been available for for a while. Uh we have some banks in Europe using it, for example, BBVA. Um and I think it's been pretty interesting to see because for a lot of these institutions, they want to get into the space, but they also don't want to build everything from scratch, and so we are able to give them a solution kind of uh key in hand, and and they can

build on top of that. >> Ah, interesting. Interesting. Um how big's the team? How big's the crypto team? >> Um I don't even know if we have an exact number, but it's it's pretty large now that we >> I guess if it's Did you acquire um the Canadian company, Wonder Wonder Fi? >> Um and and Robinhood Canada is live since July 1st as well. >> Nice. It's been a nice exchange. You want to talk about the chain? >> Yeah, absolutely. >> Tell me Tell me about the chain. >> Um well, it's launched on July 1st as well, so 3 weeks in. Um market cap is about 750 million. Uh we have about half a billion um in TVL as well. And we passed 105 million transactions. So, I think what it shows you in is that in 3 weeks, we saw a lot of excitement and engagement

with the chain. I think the main reason was we wanted to have an ecosystem ready to use as soon as we launched. Um so not only uh you were able to connect to our PCs only because we we've done a few partnership, but we also launched at the same time as all learning product to bring some of the stable coin TVL into the space. Um and then we did some partnership with Slider as a perp stacks, Arcus on the spot side. Um and we're really seeing a lot of, you know, excitement around meme coins lately and uh some of our RWA uh projects like stock token where uh we have about 19 million in TVL there.

>> I'm looking at a chart right now. Uh you guys overtook base. Uh is that right for daily active users? >> Um it kind of depends, but we are one of the top uh in term of daily active user, in term of developer as well, we're pretty high. I think the data always depend on how you slice it, so >> Yeah, yeah. I know, we know the game of on-chain data. Yeah, yeah. >> are trying to be careful there, but uh we're definitely seeing a a good traction right now. >> Yeah, yeah. What What do you What design decisions did you guys make like when you guys are building the chain, there's so many design decisions that go into building a chain? Like how much do you embed natively into the chain? How much do you work with external partners? How much do you build internally? Even like

the the yield that you give on a lend borrow, like that is a decision. Is it fixed? Is it variable? Those are all these micro decisions. Can you tell me about how you got some of the big decisions that you guys made? >> Yeah, the biggest one I think, you know, was deciding on how we were building it. Uh there was a lot of question on should we buy a should we build a L1 or should we uh build an L2 or L3? Um what we felt like that we wanted to build on top of Ethereum. We felt like we wanted the to get the decentralization and the security of the L1.

>> Why did you want to build on top of Ethereum? >> Liquidity, decentralization, security. Um I think for us that was pretty important. We also wanted to be able to make our own design decisions on block time, gas fees, this kind of thing. And so, when we decided to build using the Arbitrum stack, we were able to get all of those benefits and at the same time make some of our own decisions. So, for example, when we saw that there was a lot of excitement around the chain, we made sure that we could try to reduce the gas fees to make sure that people could still trade. That's not something we could have done if we were not kind of owning the the chain and and the decision around it. Um the second part is that we like the tech from Arbitrum.

For example, you have Stylus where you can build any type of language around it. You also have a way to create priority orders that are a bit different from the predatory mode in my opinion in some situations. So, you know, all of these kind of things were were important. But I think at the end of the day, it's what I was telling you about earlier is this deep integration within the main app that I think gets people excited. >> Yeah. >> They realize that our own product that we launched is just the first one and that we will have more and more integration. And I think that's where it's it's a big game changer for us.

>> Did you ever think about buying a chain? >> Um we always look at, you know, acquisition. Um I think it's always a question of like, you know, what acceleration are you getting from this acquisition versus just partnering or versus doing something else. Um and I think, you know, for us we we felt pretty good about this solution where we were able to start from scratch so not have necessarily like baggage from from the chain or, you know, any history and also build what we really cared about, which for us, you know, we're really focused on developers. So, we wanted to have a ecosystem ready to go. We also wanted to have fast block time because I think that's the main issue sometimes we are seeing on chain. So, all of this was was pretty useful to do that from the

beginning. >> Yeah. Do you do you see the chain as a going back to the P&L like is the is the chain a P&L item? Like will the chain make money and spit off fees or do you almost want to drive the fees to zero to enable all this trading and lend borrow activity and perps? >> Yeah, it's a balance. You know, right now it's definitely looking like it will generate revenue, but also we want to find a way to make sure that people are excited about using it. The last thing I would like to do is to optimize for revenue on the chain, but therefore people don't want to use it as a trading player. So, they don't want to develop on it. So, you you have to find a balance. You also don't want to make it completely zero because then you get

spam all over the place with fake activity, which is also not good for either the customer or for the for the chain because now you have to develop more systems to actually support the load. So, so it's a balance, but I think for us we we see it more as a back-end solution to build on top of it and purely like something we want to optimize revenue for. >> Robots and machines will outnumber humans on chain and Peak is how they get there. Peak OS enables any machine to do business on any chain. It turns machines into autonomous actors [music] and liquid assets with ease, giving robots access to capital and the ability [music] to compound their value. That means funds, allocators, and institutions can underwrite, finance, trade, and route capital to machines the

same way they [music] handle any other asset. Millions of new potential consumers for any Web3 service from compute to storage to anything [music] a machine may need without a human in the loop. Head to peak.xyz or click the link in the show notes to find out more. >> How did you go about selecting the partners? And how did you like how did you even almost philosophically think about this? Like why didn't you just build a lend borrow internally? Why work with Morpho? Like yeah, how did you how did you go about this whole entire thing?

>> Yeah, so a lot of things were about how we announced the chain. You know, we we actually announced it last year >> Right. during our first event in the summer. >> That was the the ECC one. That was the ECC one. >> Yeah, I'm glad. Yeah, yeah, yeah. It was pretty cool. Um and you know, at the time a lot of people were asking like, "Hey, why did you just announce a chain?" And the goal for us was to really say like, "Robin is coming into the space. If you want to build with us, we're child." Um and then during DAS, we we actually announced the testnet. Um a a a couple of weeks before that and the goal was also to say like, "Here's the technology. Start building with us."

And so, a lot of people just reached out saying, "I'm building XYZ. Want to see if Robin is interested." Um and we focused a lot on developer tools. So, you know, we we partnered with people like Alchemy, Previ, uh a lot more that just to make sure that we had the right infrastructure in place. Um and also with DEXes and and other platforms to make sure that we could have the trading side um in place. For lending, Morpho was one of the options that we looked at, but um honestly, we are very happy with the team. Um the the way that they were thinking about building product really matched how we wanted to build products. Um we wanted to do something different from the

competition. Uh you mentioned it like I think the when we launch, uh we are basically giving a return of about 7% approximately. And that rate is going to be stable for a while until it will change based on on activity, but um we didn't want to launch something on day one and a few hours later, it would it would completely change. The other other thing we wanted to do was to get an insurance um to make sure that if there's an issue on the smart contract or something like that, uh some of the losses will be covered. And so, we partnered with uh Lloyd's of London, uh which was also an interesting thing because we created probably one of the largest uh insurance program for crypto

with them. Um and that required deep discussion with all of these partners that we we took uh for for the program. So, you know, having strong partnership really allows you to to build unique user experience, in my opinion. Um and that's what we we really like to do. >> Because then you can go with Morpho to Lloyd's. >> Yeah, but uh Lloyd's is contracted with with Robinhood, but having all the details from Morpho was helpful for us to get insurance and so on and everything like that. >> Is the dream to pick like one or two partners in each category? Like with the DEXs, you've got um I'm forgetting the the I mean, Uni Uniswap and then they're not DYDX anymore. I forget the name.

Arculus? Um like do you want like one or two in each thing? Or is it like, "Hey, eventually we want to work with Aave and Spark and Camino and Sky?" Or is it like, "Look, we're just deep with Morpho and like they're great and they're design partner." >> I think it really depends on what we want to build. Um there are products where, you know, we think that having just one partner is better. There are products where we think that, you know, projects will We we don't necessarily know where everyone is going. Like there are new ideas being developed on a constant basis and uh I wish I had a crystal ball, but sometimes I don't. So, that's why we want the chain to be permissionless.

Anyone can develop on it. And there are some projects that are really cool. Like, you know, in the morning, sometimes I look at my Twitter account or my X account and I see all the stuff that are being launched and and it's really exciting to see, but for all of us, when we want to do this deep integration that that we have, um it's most likely with one or just a few partners because, honestly, we don't have the the bandwidth to build like unlimited amount of of projects. Uh but you've seen it, for example, on our wallet. We created a perps experience. It's pretty well designed. It's I think a lot simpler than what everything else is available on the market. And we did this partnership with Lido to really create this unique experience where you can use your stock token as collateral or you can um you know see the purpose

directly on your wallet. And so yeah, those type of deep integration does require like contracting partnership and so usually we don't have as many as as we would like probably. >> Yeah, yeah. Could you ever see like bringing some of these teams in house? >> I I don't think it's necessarily the goal for us. I think you know being part of Robinhood will also mean that they will have specific requirements, specific set of rules to do and I think for for a lot of those startups they are able to move very quickly because they are still startup stage.

>> So it's nicer that they're outside of the Robinhood. >> In a way right because you know otherwise we'll have to look at them on a custom basis. Like I think the startup is still the most exciting part of the creation of companies they can experiment, try things, iterate until they find product market fit. I think you know once you're part of a larger company it's a bit different and you have to kind of align with the vision of the of the product. >> Yeah. How did you think about trying to think the right way to ask this question. You guys are in a very privileged position and like a a place of extreme leverage I would say. So there's nearly all crypto companies would love to be integrated into Robinhood and for many that you integrated with it's actually probably

like a make or break moment for that company. And I'm sure when they have their board meeting the number one thing they're doing or when they're fundraising they're saying we got integrated into Robinhood. How did you think about using this leverage? Like how much to flex this leverage? >> I [sighs] think you know it really depends on what we are trying to do. There are products where we want to use this leverage to bring something unique to our customers. That can be higher return or lower fee or something like that but I I for us the main vision has always been how do we expand um the amount of customer that want to interact with

blockchain and crypto, and how do we bring to this customer a better product that would they are currently able to to get. And I think that's where, you know, we will have some of these partnership discussions. Um I think if I'm being honest, the most useful part of being Robinhood is that I can reach out to almost anyone, and they usually pick up the phone. >> Mhm. >> Where like um I work at a startup before, and when you try to cold email or cold phone somebody, like it takes a bit longer, and usually you have to >> Yeah. >> ask a favor to somebody to get introduced. So, that's really the the the biggest advantage that we have is that, you know, if I put on Twitter or X tomorrow that I want to build XYZ, I will get a response and and someone

interested to work with us pretty quickly. And I think that that's awesome. But >> Yeah. >> you also get, you know, Robinhood with 27 million funded accounts. Uh it's a pretty unique distribution lever, and so obviously what we want to bring in front of our customers is something that is safe to use, but also that gives them benefits that they are getting out of the >> yeah. >> How did you think about structuring from a financial perspective? And I'm sure there's, you know, you can't go into all the details here, but um like can let's use Morpho for for an example. Like can you just get a bunch of Morpho tokens? Do they pay you? Do you pay them? Is it all just rev share? Like how do you How do you structure these financially?

>> Uh we don't have rev share with Morpho. I think the the main question for us was really how do we build this product in a different way. Like I mentioned, the the rates that is not fluctuating constantly, uh the fact that we are able to connect directly the pool into our main app, like these kind of things. Sometimes we do have rev share. Um so, Lighter, for example, uh Vlad, the the CEO of Lighter, mentioned our our rev share. Um it's public. It's on the contract. Um but I think, you know, for for us it's like like we are at this stage of the chain where it's less about optimizing for revenue and more optimizing for for adoption I would tell you.

>> Yeah. Interesting. Any uh any teams get close to being live with Robinhood and then something fell apart at the last minute? >> Um I don't think so. I think usually, you know, we we spend a lot of time selecting the partner, creating contracts, and all these things. So, um I not on my group at least. Um there are times where a negotiation are difficult because, you know, we are public companies, so we have a lot of requirements and things that not necessarily everyone wants to deal with.

Uh but I I don't remember something where we were about to go live and and killed it last minute. >> [laughter] >> Did you uh That's fair. That's good. That's good. Uh did you think about doing anything with Hyperliquid or Hyperliquid builder codes? >> Uh we we've discussed a few times. I think, you know, for for us, we really wanted to build a platform that was kind of very unique to Robinhood. Um I think on perps, we are just at the beginning. It's it's a new primitive, right? It it just launched um like a a few years ago, and um we are seeing more and more enthusiasm around it. I think there are a lot of question on regulation in the US, for example. In the EU, we are offering in offering the the perps through our centralized

platform using Bitstamp as an exchange for for the for the actual contracts. Um so, there's a lot of question around that. On the DeFi side, having this strong relationship with Lido that we we invested in in them uh last year, plus some of the other uh pro- protocol that we mentioned like uh Orcas, I think for us it was a good structure that we could actually use to really build what our customer are asking for. >> Mhm. >> Sometimes when you partner with a larger group or larger platform, um it gets a bit more difficult to to optimize for, you know, our customers.

So, uh I think that was kind of the the decision process. >> Yeah. Yeah, how much of the um moving things on chain uh how much of the benefit is related to like global access, would you say? >> For me, that's a big part. Uh global access, I think, is is key. Uh we still have a lot of liquidity that could come into our American companies and American exchange that cannot because um accessing uh these assets are difficult or it costs a lot of fees, uh a lot of commission. Um you know, if you look at Europe, you still have a lot of platform that are pretty big that are still charging at least €1 in commission. Um so so I think we we want to solve this accessibility and the the global aspect through the wallet is is pretty unique

because um in a lot of places, you can't walk to your broker or you cannot walk to a bank, but most places you can have a phone and an internet connection. And so, that really changed the way that you can own assets. >> Yeah. Um tokenize equities, underhyped, overhyped? >> I think it's >> Underhyped? >> Yeah. >> Yeah. >> I think so. I think we're at the beginning. Um obviously, if you're American and you can have access to a platform like Robinhood, probably not the most exciting for you to have tokenize US assets. Uh but I think for a lot of places it's hard to get to. Um and these assets are going to give them exposure to US stocks and ETFs in a much easier and cheaper way.

And I think for us in the US, you will start seeing these benefits when it comes to other type of tokenized item like real estate, art, private equity, uh stocks from other exchanges. Like, if I ask you tomorrow to buy a stock on an Indonesian exchange, I'm pretty sure that, you know, you you can't do it right away with your accounts. You will have to use multiple broker. Um and I think that's what we are going to fix very quickly. >> How much of that is regulatory arbitrage versus like the technology allows it? >> I think it's mostly right now the reason why tokenized assets are not as widely spread is I think regulation. We're still waiting on regulation in the US.

You know, clarity is still in progress. In some places there are clarity but not necessarily everywhere and so I think if tomorrow we had a a clear rule book across the world, you could actually see the adoption of tokenized assets. >> Do you and so like now now on Robinhood you have tokenized SpaceX and you have normal SpaceX, right? Do you eventually from a user perspective maybe maybe we're fine with that. Maybe there's just users who love to do things on chain and there's users who love to do off chain. The other product you know, pushback maybe is let's combine this and make it just one asset and the user doesn't need to know if it's on chain or off chain.

What's the product decision there? >> Yeah, I think right now it's mostly separated because for the tokenized version it's going to be on a wallet for the Robin chain and on the non-tokenized version it will be on our our main platform but you could see a world, you know, with a proper regulation and and structure but you could see a world where most customer won't care if it's on chain or off chain. They just want to be able to trade 24/7. They want to be able to send it if they want to send it somewhere else or use it as collateral on the platform or take a loan against it and we should make sure that the UI and UX does that for them but all the complexity of private keys and wallets and all these things we we want

to abstract that away for for the customer and that's what we've done for the other product. When you use Robinhood Earn on the platform, you won't have to create your own wallet. You won't have to interact with DeFi at all. Like everything is done for you and I think that's what matters. If you want adoption, like we need to make it easy to to access. >> Yeah. Where do you think about um it makes sense to subsidize things across the platform. So, for example, like Robinhood Earn is like one of the best Earn programs on the market today. Um the real rate of lending today is like 3 or 4%. I think you guys have it fixed at seven or it's roughly seven.

>> It's roughly seven now. >> Roughly seven. So, there's some subsidy, right? And like how do you Yeah, I guess how do you think about that one specifically? Maybe we can go into Earn specifically cuz I'd love to hear about it, but also like where else do you subsidize and where does it make sense? >> we don't subsidize. So, probably not the best topic for me, but I think on some program that we we launched, for example, in Robinhood Canada that we just launched, uh we are not charging any fee for the next like 90 days or so. Um and so it's not necessarily subsidizing, but it's like, you know, we are operating basically um without making necessarily revenue from from trading.

Uh but it it's it's like customer acquisition. Uh you know, instead of spending money on marketing, uh Robinhood bought a stadium and put, you know, its name on it yet. Uh >> Yet? Yet? [laughter] >> Well, you never know, right? But uh we we've never done that, right? So, instead of spending hundreds of million on something like this, uh we're now spending it to give back to to the customer instead of charging them fees, for example, in Canada. Right now they can trade crypto without any fee. I I think that's kind of the the mental process there. Uh but everything that we do, obviously, there's math behind it.

We make sure that uh we see a moment where it's going to be be positive for for both the company and also for the customer. >> Yeah. What's the story to Wall Street around Robinhood's crypto strategy? Is it there's just it's a new it's a new product line and, you know, we had 10 that did 100 bill you know, million and now we have 11 and then we'll have 12 and 13. Is it more like a tech play, like efficiency internally? Is it, "Hey, there's this new bucket of users that we can go attack that we don't attack today?" >> Yeah, it's a combination of the three. Uh Uh, definitely the global access I think is important for us. Uh, you know, building Robinhood the way we build it in the US in every single country in the world, uh, will take a long time. And so, we think DeFi and,

uh, the on-chain version of Robinhood can actually get us a lot faster. Uh, but we also see it as a as a revenue stream. And we also see it as a way to attract customer who are excited by DeFi and but what we've seen on the chain, uh, you know, the past 24 hours on DEXs, I think there was half a billion volume. Uh, those customer are mostly pure DeFi, uh, customer that came from different chain and pushed to the Robin chain. And, you know, until now we were not touching them. So, I think it's a good thing for us. >> Yeah, I think a lot of the So, looking at the metrics now, total 24-hour DEX volume over 560 million dollars, DeFi TVL three over 300 million, protocol TVL 540 million, almost 100 over 100 million total transactions, almost 2 million

total addresses, which are like for people I mean, pretty shockingly large numbers, I'd say. So, you know, tip of the cap, hats off to you. Um, uh, there can be there's a lot of mercenary capital in crypto, where I'm sure, you know, money floods to the new thing in hopes of a token, right? Or some sort of reward. Now, I think there's two elements here for you guys. There's the teams building on top of you, who are the new teams. Maybe people are hopeful they'll give a reward. Um, uh, there's also this idea that maybe Robinhood chain launches a token one day. So, I don't know if you have comment commentary on that.

>> Um, so, when teams build on it, uh, you know, some of them are going to do tokens, I'm sure. And that was the reason we wanted to create a permissionless chain. I think I don't really want to get to every single projects and tell them what to do or what not to do. And they should decide for their own strategy. Uh, on our side right now, we don't have any plan for token. Uh, we launched with Ethereum being the gas fee for the chain. So, you know, we we are contributing to the ecosystem as well. Um and and I think we are more interested into this type of deep integration than necessarily just launching a token for the sake of launching one. Um if tomorrow there is a real reason to have a specific token

that will give benefits to the customer, that's something that we we could look into. >> Yeah. When you think about your competitors, who are your competitors? >> On chain? >> Or I don't know. I I mean I'm I'm assuming as a company it was the I mean for many years it was the brokerages, right? Like Robinhood's going after, you know, E-Trade and Charles Schwab and I think in many ways you guys have over overtaken them in in some some at least for my generation you've overtaken them. Um when we have other crypto apps on the There've been many folks on on Empire recently who said, you know, Robinhood is our competition, right? We don't We look at Robinhood as the competition. So I'm curious who you look at.

>> Uh >> [sighs] >> It's always a hard question. I think Obviously we look at everybody that is in the in the space. Uh we look at market share. We want to understand if we have product market fit, right? And so for product market fit the best way is to talk to your customer and to understand if they use you or if they use somebody else. If they use somebody else, probably because your product is not good. Um so so we try to look as much as possible to understand if we gain market share or if we keep our market share. Um I think at this point in the crypto space, I think we are still way too small to just focus on that. Let's focus on you know, increasing the pie and making sure that we have more and more customer across the world interacting with

crypto. Um and you know, in the future when everyone has a wallet and everyone is trading on chain, that's when we can really focus on the competition, but um you know, when I look at our our different competitors on on the pure crypto play, um I still think we are just at the beginning. You know, the amount of people that are owning tokenized asset, for example, is still fraction of the amount of people holding actual equity. So, I think we we have a longer longer journey ahead.

>> Yeah, yeah, yeah. We were on the on the this on the round up the other week we were talking about the updates at, you know, Coinbase and Base. Um And you know, you know, Co- Kobe stepped in you know, there's a bunch of updates. I'm sure you you've seen. I'm curious if you have any thoughts on maybe what Base has gotten right and what Base has gotten wrong. >> Well, I I think there was a lot of discussion around the the social experiment that they they've tried and um honestly, I I don't know exactly what went wrong and why it didn't work out.

But I think it's interesting that companies the size of Coinbase are trying new things like social on chain. I I think like I said, we're at the very beginning. There's still a lot to do. And I think overall, you know, I have a ton of respect for for both Jesse, Kobe, and Brian. And so, the structure, whatever they want to organize the the company on, makes total sense. If for them it makes sense. I'm just excited to see that, you know, Coinbase is pushing also on chain on products that are also similar to to ours because again, like tokenized asset will only work if we have more and more people starting to to use it and interact with it.

>> Yeah. What do you think happens with tokens? And maybe the context here is you mentioned at the very top of this there's this big convergence happening. Used to be DeFi over here and TradFi over here and there's this big convergence. If you look at tokens, the especially if we get clarity, the conversation is like you know, return to fundamentals and revenue and real metrics. If you look at equities, they're starting to trade, you know globally permissionlessly you know, through 24/7 365. So, you you know, you kind of tokens becoming a little more like equities. You have equities becoming a little more like tokens. Are these just going to be the same vehicle over time or will they always be separate?

>> Yeah, probably. I think you know, a great way to raise money for a lot of companies has been to create a token and to then use that as a way to create a community, give updates and news to the community and then build an entire company around it and and we've seen it with uh platform like Ethereum and others like this was a different way to to create a company, but such a powerful way as well. So, I think you'll see token being this easier way and you'll also see company maybe not going public uh on traditional exchanges, but actually deciding to use crypto token to uh continue to raise money or or go

public through a token. Um I I think those two worlds are are going to converge for sure. >> Yeah, 100%. Um what are the metrics you look at? I mean, obviously revenue. You have a P&L and it's revenue and cost, but like do you care about daily active users? Is it daily active builders and developers? Is it TVL? Is it >> Uh all all of the above. Yeah, I think daily daily active user is very important for us. Uh we don't want to create a chain just for bots or just for a few advanced trader. We we want to create a chain for a lot of people. Uh TVL I think is also a good signal for you to understand if you're getting people to actually engage with it. Um obviously we have our own product that is going to bring a decent amount of the

TVL, but also um all of our products >> like the Chrome extension and yeah. >> other coins on the platform. Um and then, you know, number of transaction, uh number of wallets, all these things. Obviously a lot of that can be uh you know, changed with how much AI is coming into play and people creating agents. Um but we also wanted the chain to be AI first and so we have skills that are already deployed from Privy, from Uniswap so that you can um easily create your agent and interact with our whole chain. And I think we'll we'll see where where everything goes, but right now, you know, we've been pretty happy with how things have have launched. And the question is, how do we keep on on this momentum?

>> Yeah. How into crypto is Vlad? >> Oh, he's he's a he's all really into crypto. He's he's been on a lot of podcasts talking about it. And uh you know, he really cares about it. And I think that's one of the the reason we have such a a great crypto arm at the company is because even when the market was down, like let's say in 2018 when we launched, um a lot of company or competitor were saying, "Crypto is dead. I don't care about it." And Vlad and and Baiju were actually on the other side saying like, "You know what? If that's something that our customer want, we're going to offer it to them." And you know, right now it's been a a good bet for them.

>> Yeah. Very good bet. What is the biggest place where you and Vlad disagree? >> I don't know if we really disagree on on anything in in particular. I think Vlad and I have been working super well together. Um the question is more like, you know, he will always want us to move faster. And and sometimes I'm I'm more the engineer in the background being like, "Hey, I need a bit more time to to build." Um but other than that, I think we're like we're doing pretty well. >> that's a good good duo. Good duo. Uh Johan, thank you, man. Is there anything um that you're really excited about that we haven't covered or anything that you're seeing in the industry that you think maybe others are missing that you want to cover?

>> No, I think, you know, that was a great discussion so >> Amazing to be here. Uh congrats, my friend. Um yeah, rooting for you. It's been very cool to see. And maybe Vlad says you're need to move faster, but feels like you guys have been pretty quickly so >> Thank you. Appreciate it. >> congrats, man. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only. And the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds, or projects discussed. [music]