Johann Kerbrat: Inside Robinhood's Crypto Strategy (Full Explanation)

Transcript

All righty, guys. Welcome back to Tokenization Tower. We've got uh Johan Kerrot, the head of crypto at Robin Hood, following their wildly successful Robin Hood chain mainet launch and uh the world is flat event. Uh Johan, great to have you here. Nice day in the city. >> Beautiful weather. Beautiful, beautiful view. >> Good to have you here. Uh I'm sure you're busy in the city after the launch and all the crypto happenings at Robin Hood. Early momentum, $3 billion in weekly DEX volume. That stat came in this morning. Over 50 million transactions, over a million addresses, over $300 million in TVL, ton of new developers coming over as well. Um, what a launch. Congrats. Give us a kind of lay of the land internally. How you feel about it? What what your kind of uh

reflections are? Did it, you know, surpass what you thought? Was it less than what you thought? How do you feel? >> Yeah, we we feel really good. Uh, super excited. I think you know for us the idea was really to have an ecosystem that was ready to build for all the developers that want to bring things on chain. Um and actually like a lot of the stats that you just said are already outpaced and so we we passed 105 million transaction this morning. Um and I think it just show like how many excitement there is on the space right now. >> Yeah. Yeah. is and you know I think notably what people find to be quite quite interesting is this kind of barbell of memes and rwas as as your CEO Vlad kind of tweets there's two wolves inside of you um from the bootstrapping

strategy perspective how was it thought about internally to differentiate this from uh other blockchains obviously Robin Hood's got quite the distribution on on the front end side from the consumer perspective but thinking about specifically the you know strategy for onchain um how did you guys think about this kind of you know dual wielded strate strategy um and your edge and kind of being able to really bring a lot of the the tokenized equities and products that you guys have these relationships these licenses on chain kind of talk to us about uh how you thought about the strategy going into it.

>> Yeah, for us uh it's pretty important that we make that chain permissionless and available for everything. So that includes meme that includes RWA that includes like so many more product uh we are integrating deeply with the chain. So we launched a product called rabbit and earn where you can get yield on your stable coin that is on the main app but it's using the chain at the same time. So that's bringing a lot of liquidity. Um the memes are also bringing market makers are bringing defy customers and then the RWAS are more for uh customer across the world that can't access easily US stocks and ETF and so uh you know everything is going to coexist and the fact that we had partnership from the get-go with multiple dexes unis swap arcus lighter uh really helped make sure

that you know we had the the infrastructure to support this trading activity on day one. Yeah. And I mean we keep saying that the these kind of three kind of large trends have emerged as exports of this industry. Per tokenization and stable coins really these three exports of the industry have become not only superior products to the uh alternative in the traditional space whether it be a wire transfer commission free brokerages that all only operate you know 9:30 to 4 or uh options or futures contracts that expire. there's kind of alternatives that are just from a pure product perspective we feel are inferior to the kind of blockchain version when you're thinking about Robin Hood chain and the strategy from this

perspective of these three mega trends and just trying to get behind them and kind of floor it. How do you think about capturing that market share kind of broadly like these three are going to continue to grow? what makes Robin Hood especially positioned or wanting to really get involved in this um more than kind of other endeavors or just kind of how you guys see this uh playing out? >> Yeah, so Robin has 27 million funded account uh that that means that for a lot of his customer right now they they don't necessarily have the access to some of these DeFi product because DeFi is still complicated. Defi is still something that requires a lot of technical understanding. And so for us the idea was how do we bring this better product that you mentioned through DeFi but also make it easy to use, easy to

access, not having to create a wallet, private key and all these things. And so that's what we've done for example with Robin Earn. It's we think the best of the two world. You get the high yield from the DeFi space, but you also get the simple the simple UX and UI and the the kind of security that you're getting with a Robin platform. And I think that's where we see the world moving convergence between TRFI and DeFi. And basically you get the the good of the technology of the blockchain technology of the global accessibility uh from from crypto to help make better product for the centralized platform like like ours.

Um we started with earn we started also with tokenized assets. Uh our stock tokens product is available in 120 plus countries through the wallet. Um and you know I think it's just a beginning. We'll see more and more of this asset being tokenized and being accessible to all these customers. >> Yeah. And you guys have a unique advantage here when it comes to the tokenized equity space because you guys from what I understand after speaking to the Arcus team there's kind of this just in time tokenization availability of equities in that you know when um you know purpose platforms for example are are choosing to list equities there needs to be you know some market makers and sufficient demand from their users for for spot onchain you need to build out liquidity pools which obviously still exists for Robin Hood chain but

you guys have this kind of uh dynamic where you're able to almost like bring tokenized equities onchain really rapidly due to the uh ownership of them already in in in Robin Hood through the relationship with the DCCC and through all the brokerages. Um could you just explain a bit more on that? What does that actually look like from like the product side? How how does that actually kind of work? >> Yeah, so um when when you go on chain you can actually trade all stock tokens and uh we wanted to make sure that we had deep liquidity without necessarily locking a lot of capital uh for for all the market makers. So we have uh prop amm, we have AMM, we have RFQ, we have all these different system plus the classic pool that are available so that

um if at any point someone wants to buy this stock token, they are able to get it at a at a good price. Um the the other aspect is that Robin has this huge experience with operating a brokerage with operating with market maker in the space and so we're able to use our relationship to also bring more of these people uh within the Robin chain and making sure that there is market for for stock tokens but uh you know at this moment we're still at the beginning um we have a bit more than 90 uh stock tokens that are available on defi and I think the question is more like how do keep expanding not just to US stocks but also to international stocks, private markets and more.

>> Yeah. Yeah. Interesting. Um, couple things here from the community. Are there plans to bring per powered by lighter into the main Robin Hood app at some point, especially in the US? Obviously, we're waiting on clarity here this week, next week. Um, and and kind of you guys did this uh partnership with lighter for the Robin Hood wallet as the official per stex platform. What does that expansion look like into bringing pers uh powered by lighter into Robin Hood core into the the US market? How how important is that for you guys? What are the obstacles there?

>> Yeah, I think right now we're still looking at the regulation. Uh you know, even with clarity uh happening, the per is still another big piece of it and I think we'll we'll take a bit more time. Uh what we really wanted to do was bring a good UX and UI which we built within the Robin wallet. you can interact with all the contracts on lighter. Uh lighter also just launched the the fact that you can use your stock token as collateral which I think is huge. Um and uh you know we'll see what we can do in the future on on the US app. But I think per is something that we're excited about.

We offer it also in the EU for example with our uh centralized exchange bit stamp and I think that's something that we see a lot of customer demand for. So um last year we launched perhaps just for crypto contracts. Now we actually expanding to commodities and to ETF contracts and you know I think there's a lot more that we can do. It's really funny because uh crypto per is kind of a a primitive that crypto invented like it didn't really exist and you start to see a lot more people preferring it to to traditional options. >> Yeah. Yeah. And and you also just see just the growth of the volatility in geopolitics or in macro and this kind of 24/7 being almost it's now it like a year ago it felt like it was kind of a nice to have. It feels like now in the

traditional sense um it feels like a mustave and so that transition I think is is is also going to continue to push towards per as kind of a superior product there. talk to us about the relationship with Arbitum, you know, launching um Robin Hood chain as a standalone chain, using Arbitum's tech stack. Um there's been this rhetoric on X about Ethereum not charging enough for rent. Um and how Robin Hood chain has made, you know, over a million dollars of revenue but paid, you know, a mere one or two percentage of that to Ethereum in in in rent for security effectively. uh talk to us about the tech stack choices and why launching a business on Ethereum just makes sense for somebody like like Robin Hood.

>> Yeah, so I I think we wanted to focus on what we are good at which is bring good UX UI focusing on the financial product we wanted to build um and less about rebuilding something that already exists. I think you know to get to the level of security and decentralization that Ethereum has it will take a long time. Lot of decision has to be made. they started as proof of work then moved to proof of stake. Um you have multiple foundation working on it and so I think for us that was really the interesting part that we could benefit from the security and the decentralization that Ethereum has also get access to the liquidity of the EVM kind of ecosystem.

Um and then the choice on the what L2 to use was really about the technology. I think with arbitum we're very excited to be able to use some of what they've published in the past like stylus for example that allows you to code in any language. Um we also get extremely fast blog time. We were you know really focusing on that because a lot of our uh products that we are building are financial products. So speed is very important. We wanted to have low gas fees because uh when you see excitement we don't want the customer necessarily to charge more. So you know if you look at last week for example there was a lot of uh buildup on the chain and we made sure that the gas fee will will stay low. So um having this L2 gives us a lot of choice on the decision that we can

make and a lot of um kind of autonomy of what we want to build but we're also benefiting from all the the work that arbitum and and the Ethereum uh projects are doing. I think on the rent uh you know it's kind of how it was set like Ethereum by default was was set like that. Um I don't know if it's necessarily unfair or fair. I think you know at the end of the day where I see it is that we're at the beginning. Uh we only launched three weeks ago. Uh so if you think about the fact that we can bring tens of million of customers into the chain, bring more utility, bring more projects that people actually use, not just um volatility. I think you're actually thinking about a very long-term

source of revenue for both projects and I think that's how you you change kind of being a side project to being like one of these major projects that uh will will be here for for a long time. >> Yeah. Yeah. I think so. I mean, you know, that is always subject to change as well, right? You're in the early earliest days of you know, we're we're only 10 years into Ethereum, >> 5 years into rollups and L2s. Um, Ethereum's main mo is to grow, right? >> Is to grow the L2s, is to grow the users, is to just grow because at the end of the day, the >> what the Ethess has kind of boiled down to is an economy of scale thesis, right?

You know, keep the fees as as as low as possible on L2's economies of scale there. Same thing with with the L1, try to uh optimize the L1 for maximum throughput, privacy, etc. And then you know if when you have billions and trillions of dollars operating every day you know transactions happening at scale across L2s and and on the L1 there's enough of a fee generation there to theoretically turn it into a deflationary asset or at least kind of maintain uh you know a steady state. Just curious like what you think about the latest developments from Ethereum ETH Labs institutional Ethereum. There was kind of this uh reckoning of the uh organizational structure that started a year and a half ago. People were up in

up in flames about Vitalic tweeting about anime while the price is down another 10% and no one's doing anything. feels like this kind of turnaround has been successfully executed from a organizational uh perspective, from a focus perspective, getting a lot of the DAC companies, Tom Lee, Joe Luben, Joseph Shalom really get more involved and use their capital to fund uh different initiatives. How how do you feel about ETH's position relative to one two years ago? >> Well, I I think it's it's such a wide project and it's also such a big ambition, right? the when you think about what east wants to achieve uh in term of goal they want to be the blockchain that runs most of the infrastructure of tomorrow um and so you

will always see some divergence of opinion and I think that makes sense um I think seeing some of his lab splitting and creating new uh structure is actually also exciting you know a lot of innovation comes from competition comes from group of people focusing on different problems and and spending time on that. So, um, overall, you know, that wasn't really something that we we were worried about when we were discussing which chain to use or which L1 to use. Um, and I think overall it's a good thing for for the network. Uh, we we are talking to all these groups. Um, they want to help uh Robin Hood succeed. They also want Robin to succeed because it will benefit from uh it will benefit the the underlying assets. And so I I think

for us um our main focus has been making sure that what we've been building is easy to use for developers especially on this ecosystem. Um when we see issues and when we see that something is not the most optimized for example when we build our stock token uh product we we made some suggestion um to kind of update the underlying protocol to make sure that we could support all the corporate action that we we have um and having this relationship with the labs was was very important. So um overall you know I think for us what we we want to make sure that we are thinking 10 20 years from now uh like I said we are 3 weeks in so a lot of what we've built today is going to uh change in the

future and we need the Ethereum uh foundation and labs for that to to make sure that it's successful. >> Yeah. Yeah. Most definitely. And you know I think that the this tokenization kind of happening is also only in its you know infancy in terms of stable coins have been around for seven eight yearsish. Um you know tok to tokenization's in like year two or three in terms of like actually you know happening but it's been talked about and iterated on since 2017. Um you know you guys notably have the stock token offering that you've mentioned here a couple times. One of the cool things that we've been kind of opining on is that as this tokenization kind of thesis continues to grow, assets come on chain, there's like select uh primitives and

winners and DeFi protocols that have positioned for this dexes, per dexes, lending markets, vaults, etc. And so, you know, through the growth of Robin Hood chain, kind of, you know, pushing tokenization forward, you know, I'm curious from your perspective, how you see this from a, you know, business, uh, logic perspective, from Robin Hood, and also as an investor, if his thesis is correct, we're going to get, you know, tens of trillions of dollars moving on chain in the next 5, 10, 15 years, who benefits the most? Who are the winners here? Who do you think about as leading this kind of charge from that perspective? How do you how do you think about like making business choices and maybe investing personal capital as like a way to think about uh the second and third order effects of trillions of

dollars coming on chain? >> Yeah, I I think there's a combination of things here. I think the customer is going to benefit a ton. Yeah. Uh you know, if you think about your current position right now, it's hard for you to access international exchanges. It's almost impossible for most people to access private equity. Um, if you have real estate, it's also very difficult to to buy, sell, to to trade. Um, arts, I don't even want to start on this. I don't even know how you get a painting. Um, so all of this with tokenization will be simpler. On top of that, you're going to have a lot more flexibility and competition. Uh, right now, if you have a brokerage account and you want to transfer to another brokerage account, takes at least three, four, five days, uh, sometimes even more. on chain, you

can do everything in a few seconds and move your stock tokens from one wallet to another or for for a different platform. Same thing with collateral. If you want to use your portfolio to get a loan, good luck if you don't have, you know, $10 million plus and even if you do, it takes a lot of time. You have a lot of people that are opinionating uh taking a slice of the fees and the cut. So, I think the customer will actually benefit a ton there. Um I think the the the people that are building on it and are starting to think about it, we're also just uh getting in a place where you almost be at a disadvantage not using the tokenized version of it. So yeah, >> right now using stable coin versus wire you know you can't send a wire on

weekend. You you have so many limitation use stable coin you can actually do that immediately. And so I think that's where you're going to start seeing institution and companies and you know people just starting to move to tokenization because it's just going to be either you do that or you're just being left behind basically. >> Yeah. Yeah. Agreed. And you know speaking of of that there's been some uh a little bit of a of a fabricated battle between Bass and Robin Hood chain over the last couple of days on on on the timeline. Um you know Bass notably pivoted away from social. I think you guys have potential plans for more Robin Hood social type of uh social uh community trading and obviously Coinbase

having their uh you know tokenized asset uh you know push with circle as well bringing that into base. You know I'm just curious what you think of this uh competition rhetoric around Bass and Robin Hood um and how you anticipate these kind of ecosystems growing in parallel. Yeah, I think competition is good for the for the customer at the end of the day. Uh you know when we launch crypto trading on Robin Hood, we cut the fees compared to uh Coinbase quite a bit and so at the end the customer is benefiting from it. Um I think on base or on the Robin Hood chain we are such in a early stage here that you know I think the the debate is a bit too early at this point. uh you know we are 3

weeks in um they are a couple years in I think if I remember correctly and if you look at the results so far is that very very very small fraction of the population is holding tokenized asset and I think you know what I want to focus on is making sure that the entire globe can actually own assets and that we will have more assets hold you know tokenized format that in the current format that that we have today. So um I think you know my focus is more on growing the pie versus getting market share. Um ton of respect for what they did. I think the the social experiment that they try is interesting. And you know I think it's normal to try new things and maybe sometimes they fail.

Maybe sometimes they will actually succeed. Uh but at the end of the day we we're at the beginning of blockchain and so a lot of this new development and new ideas um you know it's still experimental and will take some iteration to to get through. But on our side, we're mostly focusing on creating financial products. So our first earning product um per spot trading these kind of things. That's what we we we are really good at and that's where we think we can bring value to the customer. So that's why we've been focusing and uh you know we we don't really spend too much time on the Twitter battle on this one.

>> Yeah. Yeah. Yeah. you know, but you guys have uh kind of established these relationships with these DeFi protocols uh that you guys announced at the world is flat event. Um several, you know, Morpho on the vaults and lending side, um you know, lighter on the per side, Lei on the aggregation and crushing API side, chain link layer zero. you know, when it comes to looking at primitives for building what you guys are trying to do in the space, you know, aside from kind of the commercial side of things, what are the key key kind of operational, technical, founder, like what are the uh considerations that Robin Hood makes when it comes to uh selecting the infrastructure, the partners and

understanding what is going to be best for your needs? >> Yeah. So, uh Robin is a public company. uh we are licensed across the world in different uh shape or form. And so for us it's very important that whoever we work with they they understand that aspect and they work with us to make sure that whatever product we we build is compliant with the rules that we we expect. Um the second thing is we want to create experience that are unique to our customers. So when we launched our lending protocol with Moro, what was very important for us was to get this stable rate um and also a very easy to use UX and UI uh we also wanted to create an insurance program around it.

And so for that it requires like deep uh discussion and deep partnership. It's not just we can plug with the API that is available online. And so um a lot of this discussion that we had with all these partners was really to try to find a way to to get to a spot where we can build a product that our customer are excited about. >> Yeah. >> Um and that is kind of unique from from the competition at the same time. >> Yep. Love it. We got a Maggie wants to know if you have a cash cat NFT. >> Uh I don't think I I do yet. I've heard that there are some being built but not for me at this [laughter] point.

Um, so thinking about like this broader transition from like I, you know, you could call Robin Hood a fintech company into onchain. We just had Paul from Moro on half hour ago and he's like a lot of these fintexs that I'm speaking about, it is just this secular trend of moving a a majority of the operational happenings on chain, whether it be the bookkeeping, whether it be the assets, whether it be the trading experience. How do you think about now that you've kind of uh opened Pandora's box three weeks ago? How do you think about the strategy and the kind of transition from all of the happenings that Robin Hood has offchain kind of going onchain? What is that actually look like? Is because you can't obviously it's not going to be

everything but what is that you know transition look like from a product perspective? Is there certain things that you guys will have start to slowly move on chain and kind of pilot program see how it goes and then go? What are those avenues just kind of Yeah. >> Yeah. I I think we're in this transition period where we are going to find how do we bring a better product to the customers and if it's through the onchain technology then we'll bring it. So that's what we've done with with earn. We felt like that was a better way to do it than than going the traditional route. Um also for us the international expansion has been a big focus. uh we want Robin to be available in the in the world. Y and going and getting licenses in every single country will take a long

time but actually using our wallet is allowing our customer to still have access to this UI and UX that we've built but also get access to new ways of trading and getting exposure to to assets. Um overall I I will say uh I don't think we are you know at the spot where next year the entire Robin trading activity is happening on chain. I think that's a bit of a of a dream. But I think if we can find ways to bring stuff that we haven't done yet, for example, international um equities or 247 trading that is still not available on Robin Hood. We only do 245 um or if we can offer, you know, better solution like we've done with the earn product. Uh we will do that. And I think the chain is

going to be the solution for a lot of these products that we we still don't have. And that's why we wanted to really create this backbone that we can use for for all these new products now. >> Yeah. Yeah. Love it. And then from the business perspective as far as revenue and kind of like business lines, obviously you know you guys make a ton of of um revenue from options trading from trading on the platform from the earn features uh other kind of business lines. when it comes to Robin Hood chain specifically and kind of the onchain business lines um you know you guys have this now that like this kind of business line of this transaction activity that happens on the chain which likely insignificant or certainly insignificant to the broader pie of Robin Hood but what are the business lines that you see

as potentially forming from this kind of new extension and how do those kind of relate to this broader customer first product first efficiency thesis How do those kind of go together? Sometimes they can be uh contradictory, but sometimes they can be kind of like a match made in heaven. How does expanding the business for using, you know, Robin chain, how does that tie into this kind of thesis? >> Yeah, it's it's a balance act. Uh you know, I think so, for example, the gas fees, right? Um there are times where we could increase them because there's a lot of volume, a lot of activity, but we are actually deciding to not do that.

And and in the case of uh a couple of weeks ago, we actually decided to decrease them uh to make sure that we could uh make sure that we can have as much volume as possible. Uh we are very much at the beginning. So we want adoption. We want product market fit. Um but also we are worried about spam and bots activities and everything. So we can't make it completely free as well. Um so it's a balancing act. Also internally we want to make sure that we can show that the chain and the defy program is also something that is beneficial for the group and not just um a loss. So uh you know we we are looking at all these aspects but I I think right now we are mostly into the optimization for adoption versus optim optimization

for pure revenue from the chain side. >> Yep. Yep. And then just kind of thinking about Robin Hood and and kind of the uh stock hood and the growth that you guys have seen uh you know it's been one of the you know better performing fintech assets or kind of tech uh assets when you think about you know broader here so just you know outside of crypto um how has the Robin Hood thesis changed from the investor perspective obviously not financial advice here but thinking about the you know the ownership of Hood as a equity stake in Robin Hood ood Robin Hood itself has expanded a lot and changed in the last couple years. You know, I think that there's this very super apt vision that is, you know, kind of forming that Vlad talks about. How

how has the Robin Hood thesis changed as the as AI has has become far more prevalent as as crypto and, you know, tokenization has become uh far more prevalent? You know, what is the updated, you know, view of what ownership of Hood really is kind of a bullish expression of? Well, uh I think the the super app vision is is actually there. Uh you know on on Robin you can buy stocks, options, futures, prediction markets, crypto. Uh you now have also a credit card. You also have a banking.

>> Yeah, the platinum card today. >> The plat platinum card today which I think is really really cool. Uh we also offer agentic trading. We have MCP available for you to to use. Um so so I think that's really that vision that we wanted to have one application to answer all your all your financial needs also at a different stage of your life. I think that's something that is very important because you know the the youth is not necessarily getting education around finance when they go to school when they go to high school but they actually need to start thinking about retirement as soon as they get out of high school which is a kind of this like crazy world where uh you have to think about when you're going to be 60 when you're still trying to understand what you're going to do after after high

school. So um Robin Hood is really trying to push there on the education aspects on the you can open your your IRA on on Robin Hood for example and it's really about helping you think about uh your journey for for finance not just uh you know trading and and getting some return on on some assets. Um, and so I think that's what we've been doing for for the longest time now. And that's what we've been very good at. And we're seeing this very good diversification between all the businesses that are making at least nine figures or more. And I think that really shows that Robin Hood has been able to to grow into a diversified company and not just a pure trading company.

>> Yeah. Ladies and gentlemen, Johan Kerrot, the head of crypto at Robin Hood, thanks for joining us today. Congrats on the successful launch. It's been an amazing >> amazing run. Fun to watch.