Robinhood's strategy: its own Ethereum L2 and tokenized assets

Transcript

A few months ago, Robin Hood announced a huge move into digital assets at their to catch a token event. Since then, they have been building non-stop and everyone is paying very close attention to find out how Robin Hood plans to compete in the crypto space and what it means for this emerging industry and asset class. Hello and welcome to the Milk Road Show, the daily crypto show that knows that the best way to catch any token is when it's falling like a knife. Today is Thursday, November 20th, and we are joined today by Johan Kerbat. Johan is the senior vice president and general manager of Robin Hood Crypto where he oversees the engineering team and leads strategy for the company's cryptocurrency business. Johan is going to share a ton of alpha all about what's going on at Robin Hood Crypto. There's going to be a lot of great things in

this. I really hope you stick around for the whole thing. And a quick note, we are running a short listener survey to help us make our show even better. It takes under five minutes and two people will win either our $499 crypto investing masterass or a one-on-one call with our research team. If you want to help shape our podcast, help us make our content even better, go visit milkroad.com/servey and the link is below in the show notes. Today's episode is brought to you by BlockTrustir. Let AI outsmart the market and grow your crypto while you sleep. Bridge. Power your business with instant stable coin payments. No friction, no banks, just global finance made simple and figure markets. Earn solid returns on your cash because sitting idle is not a strategy. And without further ado,

welcome to the Milk Road Show. Johan or Johan [laughter] how are you, sir? >> Good, good. How are you? >> I am doing well. If I can get the view to switch here. >> Okay. [laughter] All right. Well, we're off and running now. Um, I thought a great place to start would would be with the opening shot that Robin Hood fired of acquiring Bitstamp for around $200 million. This was shortly before the Teeta token event where Vlad talked about Robin Hood's plans for crypto. Um, and I thought that that would be a great place to get your thoughts. Why was this acquisition so important strategically for Robin Hood crypto and what is the state of that relationship today? Yeah, you know, I I think it was one of the biggest move we

did on the crypto side because for a very long time, customer were thinking about us as more of a smaller crypto player that was just uh available at the same time as you have other assets like equities on the platform. Uh but we've actually been working on crypto for a very long time. Uh we actually launched crypto in 2018 during the the winter uh of crypto and the vision you know from our founder Vlad and Beiju was really that if we want Robin to be accessible to everybody uh we need to have all the asset class that they're looking for for their financial uh lives. And so adding crypto was really part of this. And we took some times to build like some of the key features that you know we needed

for for our customer like crypto transfer and and things like that. But at some point we realized that you know we also needed to have more advanced feature for like the advanced trader. Uh we we needed to be able to build like new tools that they cannot find on other platform and our previous system was a bit restrictive from that. So having an exchange allowed us to do a lot of this advanced feature. uh it also allowed us to expand internationally. Uh Bitstamp has 50 plus license across the globe and we also were able to do a lot more with institution where before we were only retail focused. So we closed the acquisition just in H1 toward the end of H1 and so since then we've been working on integrating more and more of our

products with with Bitstamp. some of the features that you have on Robin Hood like Robin Legend which is this like advanced web app uh is using Bit Stamp as one of the exchange in the background. So you know you will see more and more of this uh synergies happening but yes for us it was a big step forward. >> Gotcha. So it was a way to really like unlock a lot of regulatory compliance, expand into new markets, amplify the product offering. Um that makes a lot of sense. I'm curious though what the the market opportunity that Robin Hood sees here is and how you think about that because there's already a lot of centralized exchanges offering crypto services in the United States and globally. Um how so what is the opportunity in the market that you see?

What is the plan to capture that? And then I think this is really the question is how does Robin Hood crypto plan to like differentiate itself from some of these other players already on the market? >> Yeah, I mean you know for us it's already a pretty big opportunity. you know, we we announced during our Q3 earnings that our crypto revenue was up 100% year-over-year. Um, and so, you know, it's it's already a pretty big part of of the Robinood mission overall and the the vision of the company, but I I think on the exchange side, there is still a lot that we can do. uh they there are to your point a lot of uh competitors but there are not that many that are uh fully regulated that are backed by a public company uh that have

very strong balance sheets we also don't have a lot that are thinking outside of the box I think you know when we launch product we try to do things in in very different ways for example we recently launched in the EU our perpetuals uh offering and you've seen it maybe during the event um in can, but the UI and UX are extremely different. And the reason for that is because we want more people to be able to use these tools like Advanced Trader and Pro Trader are able to do uh and and for a very long time we excluded a lot of these other type of customer just because we we didn't really think about them when we were building uh products. I think especially in crypto, you know, a lot of time uh I

I like to say that it's been made by engineer for engineer and we kind of almost forgot that not everyone understand what's going on on the blockchain and all these things. Our point of view is that you should actually not necessarily understand everything. You should care about the product that you want to use and be able to use it without necessarily knowing what's uh happening on the on the uh on the background. you know, like the same way that when you're sending a text to your friend, you don't necessarily know the protocol that the SMS is using behind the scene. >> So, I wasn't going to bring this up now.

I was going to come to this later, but since you touched on this, um, I want to drill in on that that user experience and and sort of like user interface piece a little bit more. This has historically been something that the crypto community and web 3 has struggled with, right? Is making a user interface that's accept or um, userfriendly and intuitive. Robin Hood has very publicly said that they want to be sort of a a financial super app and you guys are are known for the the ease of like uh use and accessibility of your applications. Um how are you thinking about this specifically as it relates to crypto and like how how what is the strategy around that or how how have you thought about solving that problem for crypto from the Robin Hood crypto perspective?

>> Yeah, I mean there's a few things. So the first thing that we do is any product that we launch behind the scene we spend a lot of time going back and forth with customer. We do user research, you know, we give the tools uh to the customer and we see how they use it. Where did they have a problem? What did they not understand? What are they missing? And I think this feedback loop is really critical because you know I haven't seen it happening at a lot of company where I worked at in the past. But it really help us get a a tool uh in the shape that we think people will will actually start to use it. The second thing that we try to do is for some of the product we launched is to actually add the blockchain to power it in the

background but not necessarily have to explain everything to the customer. So uh two products that we launched recently one is stock token. So it's like this uh uh token that represent US stocks and ETF in the in the EU. Um if you go through the flow it's actually almost the exact same one as a US flow. We just added a little pill that says that it's a token at the top just to tell people like, "Hey, by the way, this is a crypto product." But outside of that, you know, we didn't ask for gas. We didn't ask for wallet address, uh any anything complicated because really our point was if we want people to start using uh stocks on chain, they they can't have all this complexity when they can just use a normal brokerage and have everything like a lot simpler. And I

think that's really where we need the industry to to go to like let's focus a bit less about you know which chain we're using or whatever. Like that's cool for you know the behind the scene but as user you just want to have access to whatever stocks uh you're looking for. You don't really care if it's happening on on a specific chain or not. >> Right. Okay. So this is takes us nicely into the next topic I wanted to ask about which is tokenization. um tokenization of equities and a lot of other um things beyond just stocks uh has been a big focus of a lot of leaders of the financial world recently, but it hasn't really gotten to full adoption yet. There's a lot of reasons for that, but um Robin Hood has been collaborating with Arbitum to get tokenized stocks launched in Europe. Um and I want to

hear your thoughts around this experience. First of all, why did you choose Arbitum to partner with to do this work? Um and what are some of the takeaways on that so far? And what are the plans to sort of expand this? just talk a little bit about the work you've done on tokenization thus far. >> Yeah, absolutely. Um I I think tokenization is one of the most exciting thing and that's why everyone is talking about it. Um you know so far the the only really successful tokenization project was really stable coin where we we took uh the the hard dollar and we say like okay we're going to create a tokenized version of the dollar and being able to have all the benefits of blockchain. So transparency, 24/7 fractionalization, um instant uh transfer, you know, like all these things make uh using stable

coin versus bank wire so much easier, so much faster. Um and so we think that we can do the same thing but for other asset class. Um obviously we're Robin Hood. Uh we are one of the uh big brokerage in the US. So we want to start with stocks. Uh but we think it can apply to to anything else from private stocks to real estate to arts. Um anything that you want to transact with and uh you want to be able to to exchange and trade basically should be able to to be tokenized. And so that's been what we've been focusing on on the arbitrum side. So you know a lot of companies have creating uh created either L2s or L1's. uh for us a lot of our focus was we want to have the

security of a proven chain so Ethereum uh we don't really want to focus about you know creating miners or validators uh we don't want to focus on decentralization and convincing people to run our own valator or miners so we're going to use something that already exists and uh for a long time and doing very well so Ethereum and then uh we wanted to build an L2 on it Uh we started with basically arbitrum because that was ready to use and we can use their stack to actually create our own L2 u and we think that really brings kind of the the best of the two world.

We get the security from Ethereum. We get you know all the the good work that the Ethereum Foundation is doing on it and we also get on top of that all the great work that the Arbitron team has done. Uh there are a few things that we're excited but for us really the the partnership with arbitum has been starting for I started actually a long time ago. We we did some partnership on our wallet and now we we decided that you know this conversation can go a bit further and you know so far you know it's been great and we think that when we're able to launch uh the public uh mainet it's going to be really a good thing for Robin in the sense that we we're taking a step forward again on crypto.

>> Gotcha. Okay. So help me understand a little bit about how this works in terms of like the the transition from just partnering with offchain labs and arbitum transitioning to the Robin Hood chain and being fully live as your own uh ETH L2 like why not just leave it all on arbitum like what's the the thought process behind that decision and and when do you expect that to happen? Yeah. So, so we are still going to work with offchain labs but basically we're we're taking the arbitrum stack. Um, and it's part of kind of the orbit chain that they created where basically multiple chain can exist and coexist within their system. Um, and the reason why we we wanted to personalize it was more like there is a lot of tools that we need to

create for compliance reason. uh there are different rules depending on where you live in the world uh that will uh affect some of the token that uh you may use and so we felt like being able to have our own chain where we can customize things u will be a bit better than just putting everything into the contract level um and we also think that people will be able to reuse what we're bringing on on the chain um and so if developer wants to interact with uh some of the tools that we're building or some of the asset class that we have you know they will be able to do it So um that's kind of the idea behind it. I think the the reality also is that we we want to make sure that you know we can still benefit from all the work that arbitum

is doing because we want to focus on really bringing the financial system into the chain and arbitum is doing a ton of work on all the kind of the infrastructure layer. Um and so we think that this partnership is a great way to kind of again like get the the best of the two world. Bitcoin changed the investment game. Now AI changes the strategy. Crypto's wild ride demands perfect timing. Selling before drops, buying as it climbs. While most investors panic, seller hope, a select few leverage a crucial edge, AI. Block Trust IRA's trading platform spots market patterns with precision no human can match. Since 2020, their Animus AI platform has outperformed Bitcoin by over 250%.

Visit milkroad.com/blockrust today to get up to $2,500 in bonus crypto and transform your investment strategy. Stable coins are the biggest use case in crypto right now. But let's be real, using them on chain is still way too complex. That's exactly the problem Bridge is solving. Recently acquired by Stripe. Yep, that's Stripe, Bridge helps businesses send, store, accept, and launch stable coins instantly. Explore the future of global financial infrastructure at milkroad.combridge. >> Gotcha. Yeah, that's really helpful because I think a lot of people were wondering about this like why not do your own L1? Why an L2? Why Ethereum?

And I think you kind of explained how that balances like you said the best of both worlds there. Um tokenization of dollars has been the one tokenized asset that's really found product market fit, but it took a long time for that to really happen, I think, in in in the scale that it has. Um, and so I'm curious about, you know, you've talked about real estate and art and other tokenized products that or assets that that might be of interest on the platform. Um, but where are you mostly focusing that energy right now? Is it still trying to get tokenized equities off the off the ground? Are you exploring other things? Like what do you think the next tokenized asset that finds product market fit is going to look like?

>> Yeah, I mean I I I think you know there is a few reason why stable coins took so long. uh there's a bit of a cultural shift that was needed. Uh there are also you know a lot of uh situation where we're thinking about potential scams and issue. We had you know some of the mix stable coin that uh exploded I guess is is the word that created some issues as well. U but I think you know we're past this world. Uh we have like some solid companies now issuing stable coins. uh you have the genius act uh that kind of make it a legitimate uh product and you're starting to see actual institution using it. Um probably is one of them but we're starting to use it a

lot more with our market makers and and service providers. So I think you know there's many reason why it took so long where I feel like it's not necessarily going to be the same for tokenized stocks or whatever is coming next because we've we've passed this world where you know there's all all this mess happening on on chain but um I think for tokenized dogs and more [clears throat] it will still take some time right like you still need some of the exchange to adapt to the technology you will need some of the brokerage to also adapt to the technology And so I think for a pretty long time we're going to see two different world where you have two different type of assets the tokenized version of it and the non-tokenized

version of it. But you know if we're able to kind of build on top of it if you see lending pool if you see ways to get collateral to borrow against your uh tokenized version of of Tesla or whatever you will start seeing a lot more interest to get into it and and you will see more institution also adopting it. So I think that's what needs to to happen to really make uh tokenized um stocks and other mainstream. The other thing that we are going to see is the accessibility. Uh if you're someone in I don't know a very random country u you don't necessarily have access to a US worker age or if you do you have to usually pay a lot of fees and it's complicated. uh with some of these uh

tokenized version of assets, you will have a lot more accessibility the same way that we've seen for stable coin where countries have been able to adapt to the stable coin to kind of go away from whatever local currency they were they were using. So that's kind of what I see will will be needed to to happen. But on our side at the Robbie, we are really focused on uh our stock token. Uh we initially launched 200 in in June. Now we we are uh three times that number and we're also focusing a lot on um how to bring uh private markets into this world as well and and so that's something that you know we we're excited about.

>> Gotcha. So you're you're trying not to like get ahead of the market but let the market tell you and like what what products it wants and kind of follow that and and create access there. Um, yeah, I'm I'm excited to see what happens here because like like you said, like you are giving access to these products to a lot of people who haven't had them. You're abstracting away a lot of the complexities of web 3. Um, so I think I do think a lot of people are watching where Robin Hood goes on these things. I'm not going to ask you if you're launching your own stable coin. Um, but I will say uh I'm curious about your vision of the future for digital assets in crypto as infrastructure because in the world that a lot of people have been describing this tokenized world where all these

different kinds of assets are settling on chain, the the infrastructure of of crypto is a really vital piece of that. But not everyone agrees on what that future is going to look like exactly. And I'm curious your thoughts on this. Do you think everyone is going to have their own Ethereum L2? Uh some people are trying to get their own L1s and trying to lock capital up on there to get more control and influence over those things. I'm curious your view like Robin Hood crypto's view really on what that future looks like, what the optimal outcome is and where you see the market going on that.

>> Yeah, this one is interesting. I think you know we sit on the stable coin, we sit on the layer one, layer twos and and you know there's still a lot of question. I think to to my point earlier, the reason why we wanted to focus on building an L2 was we didn't want to rebuild what has been built. Um, I think, you know, I've I've worked at uh a blockchain company before. Having the right security, having the right decentralization, having the right uh system in place is extremely difficult. And uh you get that for free by using something like Ethereum or or another chain that is already up and running and where you have a ton of people that are just

focusing on that aspect on decentralization and and security. Um, I think what you see with some of these newer one and uh that are popping up is they're not very decentralized. And you know, maybe it's fine. Uh, at the end of the day, I still think that it might be better to have a a blockchain that is transparent uh to power some of my payment systems than anything happening on a on the internal ledger that I have no idea what's what's going on and and you know um things can be edited or modified and you know the public is not aware. So I think it's great to have this transparency but we have to be realistic that it's very different from the other world where it's not decentralized. Um anyone like the person that control that one validator running

can just change anything and you know we won't know. So that's that's kind of like where we we focused on. But I think the reality is that it doesn't really matter any like you know the same way that we have I don't know many tens of uh stable coin at the end of the day what customer want is to be able to go to a merchant and pay with their stable and the merchant most likely will adopt you know all the system uh that already exist and they will just do the conversion uh on their back end and you know they will just accept the payment.

that's the best experience for the customer and that's the best experience for the merchants and then we who is the issuer and where is the the name and the revenue coming and all these things that's more for like you know the the background um and and you know the big companies that are fighting for for issuing stable coin but I think for the customer impact it's really like how do we make it easy and so that's where we are focusing on you know if you use our Robin wallet or Robin app and you want to transfer assets or you want to buy something we are just going to allow you to do it between all the different uh chains for example and if we have to cross swap between two chain we will do it for you and you will not have to really understand uh what happened

behind the scene and I think that's what you will see you know in the future like if you have tempo and arc and wre to send a payment [laughter] stable coin you know the the payment will happen and if there's three or four bridges in between you know we we will us optimize and make sure that um it works for the customer. The one thing that we're are focusing on though is with all these hoops, how do we make sure that the customer is not footing the bill and paying like more in gas fees and and thing like that, right? So um on some of the products that we launch on Robin watt for example if you swap on SA we cover the gas fee for you so that you don't have this experience of you know you start with 10 bucks you're doing a

few trades and then at the end you lost uh 10% in fee because you you had all these fees every swap and I think that's what we really need to focus on. So, you know, if uh if you're playing at a merchant and you're starting from ARC and they're using tempo, how do you make sure that the $10 uh dollar of stable coin is still $10 stable coin at a merchant level? >> Gotcha. Yeah, it's really helpful to hear your thoughts on that because I'm I'm glad to know that that consideration of decentralization and the importance of it is is something you guys are thinking about, but then also abstracting away all this nonsense so customers can just use the products. Um, that makes a lot of sense. Um I want to kind of pivot a little bit more towards another topic which has gotten a lot of

attention in the digital asset space which is regulation. Um and I want to ask about this in the specific context. You guys had uh done some things around tokenizing private company shares like OpenAI and SpaceX and the idea was to try to unlock access for for retail investors but obviously there's a lot to that. Um, so I'm curious about your thoughts on this because I've heard Vlad say that we need to re-evaluate accredited investor rules um and push for changes there, but I've also heard people saying that we could like get around that by just creating perpetual futures contracts for some of these things. Uh, and I'm curious what your thoughts are on this. Like what do you think is the path here? Do we need to change regulation or can we just build different kinds of products to kind of get the same product result without

dealing with regulation? What are your thoughts on that whole that whole tangle there? Yeah, it kind of depends on the region you're thinking about. So, uh in in the US you do have this accredited investor role which I I think it's just a antiquated rule if you think about it. Uh basically what it says is that you need to have 100k um sorry 200k in income or 1 million um in in net worth before you can invest into a private um equity deal or anything like that. Um and and so the reason why we think it's a bit antiquity is it doesn't really mean anything. It doesn't mean that you know what you're doing. It doesn't mean that you understand the risk. It just mean that you know you you're a little

wealthy and and you have the chance to basically uh participate in some of these deals in the EU where we launched the giveaway that you mentioned on on open air and SpaceX. Um it it's a bit different. You have to do an assessment and we are going to ask you a few question like basically asking you do you understand that there's a risk do you understand that you could lose your capital in this investment in a private company? Do you understand that there are limited disclosure because they are private companies so they don't have to do all the you know the earnings and all the things that you see on on public stocks. Um, and so we think it's a bit of a better model, right? Like the the person doesn't need to be wealthy, doesn't need to have already a lot of

money in their bank account, but they can invest if they want to uh in the in the asset that you know they are offered to. And the reason why you think it's becoming a bigger problem is that in the past company were going public a lot sooner than they are today. If you look at, you know, Google, Microsoft, they went public, you know, way before some of the big giant that you see now, waiting longer and longer because they are able to raise more and more private private capital easily. Um, but the the counter aspect of that is that the people that cannot invest in this company are usually the one using them.

Um, they are the one contributing to their growth and contributing to their success. And the only time that they are able to use to to invest in them is when they go public when the valuation is already extremely high and basically they they are used as exit liquidity to some of these venture capitalists. So we we think it's a bit of a broken system and and we do think it needs to change in the US. I don't think perpetual is a solution because technically perpetual are not legal in the US. Um so you know people that are going on hyper liquid or all this sort of platform they have to use a VPN they have basically zero customer protection and so yeah I I I think we clearly need a change of of

regulation um and at least adapt a system that is a bit more permissible where you can just prove that that you understand what's going on. The second aspect though that is difficult is that even if you're accredited investor, it's very hard to get in some of these deals. Uh you know VCs are taking larger and larger check because they're raising larger and larger funds. The the complexity also also of having a lot of people coming in in your cap table is very complicated. Um, and so we do think that a tokenized version of this equity could could reduce a lot of this complexity for for the end user and actually give them access uh sooner to to the type of asset that they are looking for.

>> Gotcha. Yeah, there's a lot to that. I'm not going to unpack all those things because obviously there's a there's a lot that goes to those things, but I do think a lot of people see what you're saying, right? That there's there's room to improve. There's other ways to do these things. Um, so I do hope that that conversation continues and we get policy that that is better fit for purpose there. Um, to that end, Congress in the United States is considering the Clarity Act and there's been promises from lawmakers that this might be signed into law by like end of this year, beginning of next year. I'm curious if you think that well from your business perspective, right? Does this unlock things that you want to bring to market that you're not able to or do you already have the clarity that you need

to do the products you want to do? like what what is the next phase of your business that the Clarity Act might unlock for Robin Hood crypto? >> Yeah, I mean so it's it's a super important bill. I think uh you know the US has been very slow to adopt any type of regulation. Um the EU went faster than them with the Mika framework and you know I'm I'm French so I can uh usually complain about the EU being extremely slow and for once they were faster than than the US. So it tells you how slow things have been. Um but you know I I think the the reason why this bill is extremely important is is on a few point one is we still have a very fragmented uh state-by-state regulation.

So uh in New York you have the New York DFS with a bit license uh that that we have but they have certain rules that are different from other states and so some of our product are not available in in some states some of our product are available in other states. Um an example is taking where you know for now we we're available everywhere in the US but five states stable coin is considered uh different ways depending on the on the on the state as well. So in Texas you have different rules applying to stable coin and the the rest of the US. So, I think having a federal uh bill and a and a federal law will allow to basically

have the same rules apply to everyone in the US and not have this like state-by-state uh problem. And I think it will just make us being able to build much better product and also the experience to the customer much better because right now if they if they move from one state to the other, they lose access to some product and I think it's just a terrible experience for the user. The other aspect that this bill will bring is a bit more clarity. Um, and I know the the name is Clyde, but it will bring Clyde to um some of the rules around what is a crypto asset, what is a security um and that will allow us to support more easily or faster some assets versus other um and I think that's pretty

important also for for the customers that they they know exactly what they're getting in when they invest in some of these assets. Um and then there's another aspect that is important is how do uh clarity define DeFi and what is permissible or not in in DeFi compared to uh the centralized marketplace and and exchanges. So you know now that the government is back from the shutdown like we we hope to see more progress happening on it. Uh but I think you know it's really important for us he will level the playing field for all the crypto companies and also put us back in a competitive spot compared to the rest of the world.

>> Gotcha. Yeah. And I think that the fragmentation is the piece of this that stands out for me. Um because I know like I I want to kind of come back to this concept of the super app. Um I know that's a directional goal for for Robin Hood and yet the the jurisdictional fragmentation means that certain products and services are only available at certain places. you can't put these things all together in one one place. Um what does that road map look like in terms of like you know let's say the clarity act comes through. How how do you plan to like combine put all these pieces together and and what does that look like? What are the next steps I guess to get from where we are now towards that super app final state? What what are your thoughts on that?

>> Well I I think you know the super app is just starting for us. So so right now you can already have your retirement account. We have our uh advisor system strategies. Um we have our brokerage account, we have our crypto accounts. Now we have even contracts and futures coming in. So you know it's already >> prediction markets too. Don't forget that >> right. Yeah. [laughter] I call it >> there's so many things >> and so it's already kind of a super app but I think you know for us the idea is really that Robin can support all your financial needs. Um and that's why we started to roll out uh our banking app also uh that is kind of uh a bit more of a private banking but for everyone and

and so really you know the idea is that if you can like the product and like the interface and all this thing it's a lot faster for you to just have everything in that super app than having to go in different app for for some of your financial needs. So um personally for example the the credit card that we launched initially I was like ah it's another credit card you know why why are we doing this and then I got it and because we get this 3% cash back on on everything I don't have to constantly think about all the categories and where do I get the most point I just use it and slowly you know I started to realize that I actually just use this one in my in my wallet um and I think that's the idea we every product that we launch we

try to make it so much better that you start to really just think about that product and not the the competition and by default you kind of created this super app that you know you just have to reopen Robin Hood for anything that you think about for for your finance. I still think we are, you know, far from, you know, the global super app where everything is within Robin Hood, but, you know, slowly we're getting there. And I think it's it's really exciting as a as a user and also and of course as an employee. [laughter] >> Yeah. Something I've been really impressed by and excited by is the way you all are incorporating AI tools and and different AI um products to help your users, to empower your users. Uh,

and I'm curious about your thoughts on this as it intersects with Robin Hood crypto. Um, because that intersection of AI and crypto is something we're very interested here at Mac or interested in here at Milk Road. Um, and I wanted to know what your thoughts are like AI applications specifically for like retail investors on the Robin Hood crypto platform. What's that intersection look like for you all? >> Yeah, we we started to roll out some of this actually. So, for example, we have our digest that are on the crypto detail page. I'm sure if you go on Bitcoin or Ethereum uh you will see a little section that tells you what's happening and why the market is moving. I think that one has been one of the most used feature uh on my own app because you know things are moving so quickly like

days like today I have no idea why suddenly at 9:40 everything dropped you know instead of having to go on X and trying to understand what's going on and having like 20 different opinion I just went on the app uh on the Bitcoin page and I was able to understand u well I'm not sure I understood but I was able to to get at least what's going on [laughter] Um, and so I think that's kind of the tools that we are starting to build more and more. They are not going to necessarily uh replace what you're doing, but they are going to just help you become a more savvy investor and having access to more information that you could not have access if you were just doing it by yourself and and dealing with, you know, all the asset that you have on the

platform. The the other thing that we announced during our Vegas event was how we can use AI for the more administrators that create their own kind of algorith algorithm and uh their own indicator. how you can use plain English to translate that into things happening on your charts, uh better indicators, better uh filtering of stocks and you can go from just you know a few uh words of English telling you like you know give me all the I don't know the assets that are moving more than 5% and that are on the clean energy space to very complex things where you can actually see the AI agent coding for you in real time. uh the new indicator

um and I think that's the type of tool that we're going to keep developing um and and bring to not just stocks but to all the platform that we have on Robin Hood including including crypto. Um and the other thing that I'm excited about is you know some of these new assets that are more crypto uh focused but with an AI uh lens where you know for example GPU is a big uh is a big question right now like how do we have enough uh GPUs and chips and you see more of this asset uh being allocated or or actually being used to kind of reallocate the resources of of GPUs. Um there's also this question of uh data model training uh where you know how do you reminerate uh the data that you use

to train your model and I think you know crypto can play a big role there. So uh a lot of things going on on the space uh but I think for us the two focus that we have is the product feature that I mentioned and also how do we use it internally. Um so for example uh our engineering teams at Robin Hood are very involved in using AI and a lot of our code is now uh reviewed by AI produced by AI and so I think it really makes human like almost superpower as an X engineer I know how much time I will you know be stuck on a bug or something just because I missed a semicolon or I I forgot to check one thing like the AI really tells you like everything and um

is able to kind allow you to focus on the more complex problem that you're trying to fix versus just like the small needs here and there. >> Gotcha. Yeah, it's it's interesting to hear the the the internal and the userfacing applications of this because there's there's so many applications for AI um and it unlocks so many things. Um I'm curious to hear your thoughts on this and I don't I don't really know if you're going to have a good answer to this so it's okay if you don't but I'm just I'm thinking about this a lot myself so I want to hear your thoughts on this. We've gotten to a point where about the estimates are that about half of activity online is non-human. In other words, it's bots, it's AI, but it's not a human being conducting the the activity online. And so the the

projections are that in in the years ahead, a lot of people are going to have aentic operators or robots or or other things doing financial business on their behalf. And I'm really curious if Robin Hood has started to think about that at all in terms of like, you know, you're very oriented towards being really accessible and um user friendly for human customers. But as we see more AI and aentic operators start becoming customers and users of some of these things, especially things like crypto, um have you thought at all about that and in terms of how that might evolve your business or or or do you have any thoughts on that at all? I guess.

>> Yeah, I mean I think this one is an interesting one, right? I think you will start seeing more and more of this usage for for like the more basic things. Um you know you you just want to make a reservation and they ask you for a credit card number um or you want to buy tickets or a plane ticket. You know, why do you really need to have your little time uh spent on trying to understand the uh one of the airline website that is completely broken by default and you're going to just uh lose a few hair trying to just book a plane tickets or to change it when you can have an AI agent doing it for you and the result is exactly the same and you know you didn't spend a few minutes of your time uh

actually doing the buying and you can just enjoy your family instead. I think that is going to develop a lot and so we we want to make sure that some of the tools that we have um adapt to it and we already have uh Robin connect we already have our API for crypto that allows you to kind of use uh this system and connect them together. Um I think there's also the question of like more advanced uh investment and on that part you know there there are things that we're definitely thinking about but we still think that we kind of want the user to be in the centerpiece there and and basically how do we use AI to kind of give them superpower and faster decision and basically also level them

to more advanced trader or high frequency traders um without necessarily like replacing them completely from uh from the space. So um it's definitely something that is is moving quickly and I think what's exciting about is that the combination of crypto where you have fractionalization and instant transfer on a very small amount uh plus AI can actually solve a lot of these issues um that that you have on a on a daily basis. So you will see agent paying each other and and interacting between each other to for service uh done without necessarily having to to waste the time of actual human >> right but I do like that take of still trying to center the humans because hopefully we still have a role to play

in the future. Um I I I I know we're we're coming towards time but I got to ask you some questions about DeFi because I think a lot of people are really curious about this. Robin Hood wallet is a way for users to get some access to DeFi now. Um but you know towards this idea of the super app and integration. What do you see about bringing more functionality and more access to DeFi into the main app into the the the more like more centered in Robin Hood crypto in general? What's your long-term like view in terms of like access to DeFi for Robin Hood crypto users? >> Yeah, I think you know so far we saw kind of two different needs. We had the the most simple products that we wanted to really cater to our user base and to the feedback loop that I mentioned. Um

those are on the main app and for the people that are really advanced and want to do a lot of things on DeFi. We felt like it was difficult to to fit everything in the main app. So that's why we we created a wallet. Um but I think you're going to start seeing a blur between the two world more and more. You know like tokenized assets are coming into DeFi. So you will see stocks on on your wallet and you will see uh more DeFi products on on the main app. Uh but I I think for now at least you you still have a a segment of customer and advanced traders that are like the more u defi focused and and they need kind of to have their own tool for for the wallet. Um but for us like we definitely see you know defy is becoming

bigger and bigger by the day. um we see more and more volume and LTV on on the different protocols and you know at the end of the day I think that's kind of the world that we want uh crypto to to be uh if if everything is centralized on crypto there's not really a point to it so uh it's something that we want to support and we want to bring more and more user to with the right kind of um UI and UX and so our our wallet has been really if you look at them between the main app and wallet they look very similar because we wanted to make sure that when someone is on boarding on the wallet, they're not completely lost uh from from day one. Um and so, so that's what we've been really focusing on is

making the experience uh easier to really get into the DeFi space. >> Why do people invest in real estate? Because it spits off cash flow. But I'm not here to manage rental properties. That's why I'm looking at Figure Markets. Their new democratized prime product backs your money with real cash flowing assets and returns up to 9% APY. It's the first real world asset borrow lend pool built for everyone, not just institutions. Ready to lend like a bank and get more than the 5% A is offering you. Download the Figure Markets app today and get 9% on your idol funds. Go to milkroad.com/figuremarkets.

>> Right. but then still like making sure that there's access there for for the users who do want that and and want to get exposure to that. Um, yeah, that makes a lot of sense. I'm interested to see how this evolves cuz centralized players in in DeFi, there's that mullet that's happening, right? Like the the CFI in the front, DeFi in the back. Um, so I'm kind of watching closely on that, too. Another thing I want to ask about, um, you guys recently invested in Lighter, which is a, uh, a DEX on a per deck on Ethereum. Um, and you're expanding into Perpetuals derivatives. I'm curious about what brought about this partnership, this investment, and how you see this evolving because there's a lot of talk about purpose contracts just being a crypto thing, but then obviously you can make a purpose contract about anything. So, there's a

big like kind of like blue sky future there. I'm curious your thoughts on that partnership and and where that's going in your mind. >> Yeah, I mean, look, I I I think uh you know, for us, we we do see burps as a pretty important evolution to to futures. uh even though it's not permissible still in in the US, we think that you know in the in the rest of the world it's something that people are adopting more and more. Um and we really wanted to be part of this. Uh to to my point earlier like we see DeFi as becoming a bigger and bigger uh opportunity for customer and for companies and so we felt like it was a good um way for us to get into the the DEX side of things. And um you know I

think the the light team is extremely talented. Uh we really like the fact that they use also zero knowledge proof to verify um what's going on their on their platform and you know when you see issues like we've seen um during Black Friday a month ago uh being able to really have this verification has been helpful and I think you know it shows that there's a lot of value into the idea of things happening on chain where you can have everyone uh transparently look at what's going on and verify what's going on. So, so we think it's a great team. Um, and for us, you know, the idea of per is, um, something that we're really excited about. We launched it in the EU. Um, and right now it's

mostly on crypto assets. Uh, and it's mostly limited to, uh, 7x in leverage. So, you know, compared to what you can see on some of these decks, uh, it's it's pretty uh, dame, but we think it's the right uh, type of product for a more centralized user base. And you know, we think that we can keep pushing raven into the modifi space with some of this investment or some of these products that we're going to launch uh in the in the future. >> Gotcha. Well, I guess we'll have to pay attention to the future and [laughter] see where that goes. Um Johan, I'd like to ask a little bit of a personal question here as we're getting towards the end of this. Um there is a a pantheon of players that are already in the the crypto space and in finance, right? So, and there's people in finance

who are getting into crypto, right? So there's all these asset managers, there's banks, there's DeFi native projects, there's L1s, there's retailers, there's all kinds of places where um people are are using digital assets and doing crypto. Why Robin Hood? You know, you guys are a relative newcomer here. Why did you want to be at Robin Hood working on Robin Hood crypto and not in another part of the ecosystem? What's the unique vision here that made you so excited about this role and this opportunity? >> Yeah. Um that that's a funny question. Um, so I've been in crypto for for a very long time. You know, I started back back in France. I had this small company and when Bitcoin came up, we were like, "Oh, Bitcoin is going to change

everything. People will stop using their credit card and they will use Bitcoin. I will go to merchants and I will show them. I will demo and send them Bitcoin." And you know, we were all waiting like 10 minutes [laughter] before the the confirmation will happen and be like, "Cool, it'll happen." And you know at the time like people would look at me and being like yeah okay that was cool you know I'm not going to use Bitcoin for payments and and so uh I you know long story short I moved to the US for different reason and at the time I was starting to see more and more this usage of payments where I was like hey crypto is really the solution but again nobody was really working on the actual problem. everyone

was trying to launch our own protocol or whatever and no one was focusing on the actual usage and Robin Hood came out during that time. Um I started to open my account. It was just for for brokerage. Um and I realized how easy it was to to use Robin Hood and how they were making it accessible. My previous brokerage I was paying like I forgot like five or six bucks every time I was doing a transaction. It was really killing me. And so when they they reached out for me to to join, I was like, what better company is that? A company that can make it easy to to trade any type of financial instrument to also bring crypto to the masses and actually focus on making crypto useful.

And so that's kind of how I joined when you know we were still at the very beginning of our crypto journey. So yeah, it was a interesting journey. But I think what I love right now is that you know we have 26 million plus customer. Anything that we launch on crypto is used by million of customer the the the minute we we talk about it and we get this feedback loop that is instant like every time I tweet something I get you know 20 people telling me like when are we doing this when are we able to do this and I think that's what I I really love and you know the idea that we can bring more of these crypto products into their end is is really exciting.

>> Johan thanks so much for being on the Milkro show. I feel like I learned a lot. I feel like I have a much better understanding of Robin Hood crypto and what you guys are about, where you're going. Um, where can we send people to find more of you and your work online? >> Yeah, uh, it was super fun to be here. So, thanks for having me, John. And, uh, yeah, my Twitter is right here on the screen. Uh, John Krat and, you know, feel free to send me a message and we can chat more about Robin Hood. But, um, you know, our our event also uh, to catch a token is available on on Twitter and on different pages. Uh definitely recommend to watch it. Vlad was pretty awesome there and kind of explaining the entire vision of Robin Crypto in general.

>> Yeah, that's a very famous chalkboard now. So [laughter] >> we still have it in the office. So [laughter] >> well uh it was great to have you on, sir. I I hope we can do this again and uh best luck with everything. We'll we'll talk again soon. Thanks for being here. >> All right. Thank you. See you soon. >> And thank you all for joining us. We hope you all learned a lot today. Uh so until next time uh stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milk Road Show. Thanks for being here everyone. Bye. If y'all are making swaps or trades right now, highly recommend you check out Milkroad Swap. This is a DEX that we built in partnership with Cow Protocol. Why did we build it? Not to make money, just honestly so we could

have a place to do our swaps for the lowest fees that we could find. This is the fees on Ethereum, Arbitum, and Bass are only.15% fees. Uh this is a huge difference from uh other centralized exchanges that charge half a percent or even up to 1.2% fees on their swaps. Also, you can swap on Salana all at swap.mmillgrow.com. Check it out today. You won't be upset. And you can join me in my favorite place to make swaps on chain. Want insights on what's moving crypto markets and [music] how we're trading each event? Subscribe to our channel and join the Milkro Daily and Pro Newsletters and start investing [music] like the top 1%. This show is for educational purposes only. Nothing

we say is financial advice. Investing is risky. Never invest more than you can afford to lose.