Robinhood's Stock Tokens Are Getting Weird

Transcript

This weekend, or week, over the course of the last like 4 days, right? Degens have uh realized, I don't know if realized is the right word, but Degens have decided that maybe it would be a good idea if they took these new tokenized stocks that everyone has been releasing, including on on Robinhood chain. And pumped and dumped them, I guess. They're like, "Yeah, meme coins, you know, they're they're cool, but like what if we did this to Nasdaq-listed stocks?"

And call them meme stocks. >> Meme stocks. >> I mean, you know, like the thing that's interesting is is we had this phenomenon in COVID, right? Like meme stocks were meme stocks, and you know, we had GME and and all of these these, you know, meme stocks that people bought, and they like, you know, short squeeze the monsters at Citadel and like all of these things, right? So, like we've we've been through this. So, you know, this feels like reinventing finance once again. But, you know, the timelines to reinvent finance are compressing. It's taking us like 4 years to catch up now instead of like 40 years.

So, I think the the the thing that um is is kind of funny about this, I guess, right? Is the every boner >> [laughter] >> buy routes through the Hims token, right? Which then gets locked into Uniswap V4 pool, right? And and so, this is like just, you know, Ponzinomics applied to like meme meme tokens right? And and and so, you know, the the theory is was um that uh if you, you know, buy a bunch of this uh token

um which has limited supply on Robinhood chain, that you can uh basically, you know, squeeze the shorts. I Not that there shorts on on uh these tokenized stocks at least in in size, right? But like someone has to come and try and arbitrage this. And so, uh yeah, the idea was like, let's let's pump this thing and see if we can uh actually, you know, impact the real underlying market. Um Obviously, that's challenging when uh the the underlying market is significantly larger than the meme token. So, um you know, it wasn't necessarily uh

the the most brilliant idea that um degens have come up with. Um but, like in principle, and I think this is this is the thing, right? Like this one may not have worked um as well as they wanted. Um but like in principle, there is an arbitrage between the chain version, right? Um especially if these are like one-to-one back tokens, right? Um so, in principle, if we all decided that we're going to buy a bunch of this tokenized thing, right? Um and someone has to arbitrage out the price differential between the chain and

the the actual, you know, market that it's listed on, you like this could work, right? Um you know, this this could work in principle. So, um yeah, like I don't think we've seen the end of this. I think we will find a way to uh to make this uh a little bit crazier. Um and, you know, especially the thing the thing I think about about crypto is like once someone does something and it gets attention, every other person is like, "Oh, let me, you know, throw my old system at this and see if I can concoct a scheme, right?" So, like we're going to end up with like ohm for stocks where like you buy a bunch of stocks and we then borrow against it and like

recursively loop it and like do some some crazy [ __ ] So, um, yeah, I I don't know. What's your what's your thoughts on uh, the the general activity um, in in Robinhood chain at the moment. It seems to be going pretty well for for Arbitrum. >> I think just the fact that it's on chain. I think that we talked about you you you opened that up with GME and how the short squeeze happened. I don't know. When when was that was a year and a half ago or a year ago? >> I like 2021 2021 or something, right? Like this is like 5 years ago. It's crazy. I know. 8 years ago.

>> You know, it's it's just gone by so fast. >> I know. It really has. >> there's a difference here though and that's these are tokenized on chain where those were those had some kind of a broker. Am I not right? Like I I don't I don't know that much about this kind of stuff, but I think at this point we're running it back, but it's much more on chain. I think when the when the GME stuff happened, there was a broker and it could get shut off and the way this works is it can't get shut off. Yeah, and it did. >> Remember like and and it was Robinhood that that shut it off, right? The irony is is uh, delicious, right? And you know, in in fairness, right? The reason why uh, they had to shut off the the meme stocks is because their clearinghouse

came to them and said, "Hey, um, if possible, we would like a billion dollars tomorrow." And they're like, "What the [ __ ] are you talking about, man?" And uh, they're like, "Yeah, like this is really dangerous and our job is like, you know, protecting markets and we need to make sure that like your counterparties are secure, etc., etc. Like all of this stuff that they need to do. And so then they had to come up with a billion dollars, and it was a whole thing. So, um you know, like be careful what you wish for, I guess, Vlad, because you're really like putting yourself back in the exact same position, but potentially far, far worse. So, we'll see. We'll see what happens.

>> Yeah. No, I agree with Austin, and I also I don't know. I think it's I find my own perspective on this stuff interesting because I used to like deeply hate this [ __ ] like really deeply. And like be offended by it. And now I'm just like I just laugh at it. I'm just like, all right, like let's [ __ ] go. Like I >> Yeah. >> [laughter] >> You know what I mean? And I don't know if that does something about me, or if it does something about the world, or the environment, or whatever, but like all right, like everyone's having fun.

There's some people that probably are losing boatloads of money. They know what they're getting into. Okay, like let's go. Like maybe some type of good will come out of this. >> Yeah, let people Let people do do what they want. I mean, you know, again, like I think the the thing that um you know, there was a lot of like gnashing of teeth and and you know, freaking out back in the meme stock times, right? Because people are like, oh, retail people are buying things, you know, that's too expensive, and it's not really, you know, GameStop's not really worth this, and they're going to lose all their money. And they kind of like a lot of people made a lot of money. And it's actually uh it was actually like obviously someone eventually loses

money, right? But like, you know, um the a lot of people made a lot of money uh buying buying, you know, GameStop early and and a bunch of those other uh those other meme uh meme stocks. So, um you know, on on some like there was there was a period of time where, you know, Matt Levine who who I'm a huge fan of was like retail has taken over the market. Like they are driving the action here, right? Like you know, and that was that was kind of I think during COVID times a little bit of the vibe is like we're taking it to the man. We're going to go you know, we're going to punish those Citadel guys and teach them a lesson for I don't know.

Providing liquidity. Like I don't I don't know what what they were but you know >> They No, they were somehow I mean, I don't know if they were actually sticking it to the man but they were trying to take back some semblance of like control and empowerment in this like era that was very it was just a very weird time, right? And so people being able to do this was felt empowering, right? Even if they lost money, they still you know, there was a lot of people that were taking part in it and it felt like whatever. I don't know. Also the world is like burning. COVID's happening.

Let people let people be degenerate. Like it's fine. >> It's funny. Yeah. Yeah. >> Yeah. I mean and I always Well, I was just going to say like back then I would back then I called it I I would I would say that like it felt like crypto was leaking. Like crypto like the crypto culture was like leaking back into the real world. And it was very weird to watch. I feel like this a bit of the same is happening again except I don't know. A bit more on chain and it's not leaking so much. It's sort of like a actual merging of like >> Yeah. I mean the merging has been happening, right? Like the merge the merge of, you know, tradfi and and

crypto is like now deeply entrenched right? >> Exactly. So, that's I think I I And you know what? If people want to trade boners or whatever, >> [laughter] >> more power to them. Let's [ __ ] go. >> So, not just the on-chain nature of this. I think it's it's cooler that this is more on-chain. Like, I'm glad to see this be more like tokenized assets. And it is kind of like one foot in traditional and one foot in and and it is like an L2 or an L3. So, that's like the job of that kind of thing. Uh Another thing that is a big winner here that we haven't addressed is the UX. The

UX around buying these tokens, especially in like the FOMO app, is like super smooth. It's so good. Like, it's just like bring money from any of these places into this app, go, buy the thing you want. You never get like a giant uh you know, thing of call data anywhere. You never get an error with a giant thing of call data. You get the thing that you hit the buy button to get, and it all happens very fast. And then you hit sell, and the thing is moving rapidly, and you hit sell, and you get that much when you when you sell it. So, I think like shout out to the FOMO app and really like the onboarding of normies that it's doing right now will hopefully lead to some like cypherpunk-pilling of people along the

way. Sure, right now they're all playing with tokenized boners, but I think there's more to it. And I think that as you get into this and learn more about on-chain stuff, you start to get a little bit more cypherpunk. Cuz it's cool. It is like more cool to be cypherpunk, and it >> Yeah. >> These these roads lead to L1. It's just probably a long way from what we're seeing right now to like actually returning to mainnet on L1 and being a cypherpunk. >> The thing is though, right? That like the the in previous eras, the impediment to L1, to things happening on L1, uh uh cost.

Which is not a thing now, right? Um so, you know, uh Robinhood, yes, is like a vector for getting more retail uh you know, wider wider retail adoption um of tokenized equities and and all of these things, meme stocks, meme tokens, meme tokenized equities, whatever whatever instrument it is, like that's that's um you know, obviously awesome, and you're right, it's an L3 on an L2 on an L1, and you know, it is all tied to Ethereum, um but you could do this on Ethereum just as easily and arguably better.

Because you'd have more liquidity, you'd have more stable coins, more, you know, if you really want to pump a meme coin uh into a meme stock, you're probably better to do it on Ethereum. Um >> That's where a lot of the liquidity is, too. >> Exactly, yeah. Like if you if you really want to pump something, like that's where, you know, there's a bunch of ETH there. You get a few you get a few ETH whales uh into that game, right? Um there's far more liquidity and and uh buying power on mainnet than there is on, you know, on an L3. Um But yeah, I I I agree with you. I think um I think, you know, FOMO it's interesting. Like I've spent 3 years building Infinex, right? And and we never built a a native mobile app

because we were still kind of one foot in, one foot out of like trying to uh address the existing market, right? Um not the market, you know, and and that market kind of never arrived last cycle, right? Like we were expecting at some point, you know, uh a bunch of retail people come in, and it didn't really happen. Um and so, we ended up, you know, kind of focusing more on like someone like yourself, right? Like, you know, who's uh have >> Sorry. That's okay. That's okay.

>> Yeah, you're focused on passkeys and more cryptography and some of that stuff right? >> Yeah, we want to send money in, and it disappears. >> But it's really fast. >> And and you know, like even if you look at the UX that is it is quite different to like even Uniswap, right? Like even any 20 tokens, they don't do any 20 tokens. They have cash and you buy things with cash, right? Um now, you know, there is some limit to like what that UX can do. If you want to start adding some, you know, stuff, it starts adding complexity. But once you've crypto pilled someone, once they've got stables and you know, they >> Well, Mt. Gox would do it, right? I mean, Mt. Gox crypto pilled uh Tay for sure, right? Like that's that

happened, I'm sure. >> Yeah. So, but yeah, I think I think, you know, a bunch of people with uh with, you know, apps on the App Store and stable coins, you know, slinging it around on chain, uh it bodes well. I think it's a good it's a good indicator that like we're we're going in the right direction. >> Yeah, I'd also it's uh like the diversity and the competition is is better for everyone. But like a lot of people when they look at FOMO, the super deep crypto nerds are like, "This is horrible. Look at this."

It's so centralized and evil. Okay, yeah, but like there's also benefits and there's upsides and the UX just works and people don't have to understand data and the gas doesn't fail. Like there's so many different things, right? You don't have You don't have a 10-step onboarding process. Right? Like you just you just sign up. I signed up and then um and now it emails me the most degenerate crypto news. And this is like a very far cry I would kind of love it if it did, though. Like I >> [laughter] >> Exactly.

It's giving It's definitely like It's, you know, and and so when I think about like obviously like the wallets that I've built and like MetaMask specifically, it's like like that's not I don't know. It's not the crypto way of doing things, but it's it's so different. And there are benefits. Again, like there are You can You can simultaneously say that you don't like the degeneracy and the like this how financially nihilistic something is and also acknowledge that the UX is better. Okay? People not being completely overwhelmed by the onboarding process is better. There are a lot of things that are better. And hopefully in an ideal world, the competition will inspire like

ideally it's not that MetaMask then just like turns into this other thing or Rabbi turns into this other thing, right? Ideally it's like the best pieces move back. Right? And it everyone sort of levels up in different ways. And FOMO gets more let's say what's more powerful >> the inside, right? Like the you know, they're they're pressured to respond to that by like supporting Ave so that you can borrow against your meme stocks, right? And and you know, open that up. I mean it is interesting cuz like MetaMask has an app, right? And and last cycle um MetaMask and Phantom uh managed to stay you know, everything that Infura did, MetaMask and Phantom managed like just stay ahead of us,

right? Like we would be like, "Oh, we're launching this thing." And like they would have it like within a week, right? Um and and we couldn't >> That's by the way, that is very new though. That is like a thing that's >> It was annoying. It was super annoying. I did not appreciate it. I was like, "Fuck >> [laughter] >> these guys. Stop launching things. You guys don't launch things. What are you doing?" >> We learned how to ship. >> I know. I It was the most annoying thing. It was really really annoying. I can't even tell you. I would like [ __ ] doomscroll the MetaMask like launch announcement channel. Um but but so so um you know, MetaMask has an app, right? Um MetaMask supports swapping and tokens, but you know, there is something to be said for like incumbents have a

hard time figuring out how to reinvent themselves and your FOMO's like we don't give a [ __ ] about any of this stuff, right? We're we're going to you know, optimize for uh and and you know, the the market feedback and this is probably the genius of the FOMO guys saying we don't care. We're just going to go and do it and see what happens. But like the feedback that we had was people kind of wanted a native mobile app, but as like an additional thing. They really wanted like the desktop app with desktop perks and desktop, you know, that's the pro traders wanted like all of this stuff, right?

>> called unks now. Plumber unks. >> [laughter] >> Yeah. >> We listened to the unks. That was the problem. That was the problem, man. And and so so you know, but to your point say like we've over last six weeks said, "Fuck it. We're just going to build the native mobile app." Like why are what are we doing, right? Like that's where the UX is is going to be and we held off on that for the longest time because we weren't confident in in what the thing was that we're going to build. And now we're like actually like we should just lean into the form factor. It'll force us to make some decisions and force us to like do things differently by just adopting that form factor instead of saying we're going to build a desktop app and then add this nice little mobile app as a

convenience factor, right? Like you know, you got to burn the boats and just say let's do it. >> And what will be the custody model within the mobile app? Are you still going to do key pass keys and try to do self-custody for everything or >> Yeah, still still turnkey, >> Okay. >> Still turnkey, right? So so I you know, I think I think like becoming custodial is not the answer to this, right? >> regulation, the the risk of losing money, like money in a database somewhere is not what we're here for. It does onboard 30 people per second or whatever FOMO's saying, but like that's not what we're here in in the in the crypto world to do. It we don't want lines of of money in a database somewhere. We know the the evils of that

already and we've seen that fail. So, I think it's hopefully just a stepping stone. Sorry, I I interrupted your mobile. >> No, no, no, no. I like I I think that's a that's a good sound bite, right? Like we do not want to and and you know, this is the thing that I think everyone, all the incumbents and and you know, uh synthetics as well like tried to reason about how to do this and and you know, um like coming at something from first principles with no extra requirements, let's call it, right? Like throwing away all the requirements. Like FOMO was able to just go, uh like don't worry about this. Not a requirement that you can swap any token any token. They just want to buy tokens, right? So, you you need cash.

Like that's a design decision that then flows through everything that you do. Um and you know, in some ways limiting, but if the thing that people want to do is buy things, then it's actually not limiting because they just want to buy [ __ ] so it's fine, right? So, um you know, so I think there's a lot of lessons to to you know, learn about like FOMO crossing the chasm into resale land, right? By by you know, doing what retail people expect. I have money and I want to buy a thing. The end. >> If you enjoyed this segment, make sure you tune in at 4:00 p.m. Eastern every Wednesday where we have much more content like this.

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