Key Insights:
- The Robinhood Chain public testnet has been released to allow developers and builders to test applications.
- Robinhood stock declined 8.8% following an earnings miss.
- Crypto revenue declined by 38% year over year.
Robinhood Chain has passed the first stage of public development after Robinhood announced the launch of the public testnet for its Ethereum Layer 2 network. The release marks a structural expansion of the company’s blockchain strategy, moving beyond brokerage services into operating proprietary on-chain infrastructure.
Robinhood Chain Public Testnet Sets Foundation for On-chain Infrastructure
According to a company press release, the testnet is now live for developers, who will begin testing applications and building tools designed to function within the new network’s framework.
The company described Robinhood Chain as a “financial-grade” Ethereum Layer 2 built to support continuous trading, asset bridging, self-custody functionality, and decentralized financial products.
Source: Robinhood
However, planned use cases include tokenized asset platforms, lending markets, and perpetual futures exchanges. Robinhood Chain is positioned as a network intended to support tokenized real-world assets and decentralized finance liquidity within the Ethereum ecosystem.
Johann Kerbrat, Senior Vice President and General Manager of Crypto and International at Robinhood, stated in the release that the testnet establishes the base layer for an ecosystem focused on tokenized real-world assets and DeFi integration.
He added that the company plans to work with infrastructure partners as development progresses toward a mainnet deployment.
With the testnet, developers can test applications and network properties before releasing them into production. At this point, the network supports testnet-only assets, such as stock-like tokens used to develop the network.
The company stated that closer integration with Robinhood Wallet is expected in the near future, and that such features are currently limited to testing and development.
Furthermore, the launch follows Robinhood’s earlier move to tokenize nearly 500 U.S. stocks and exchange-traded funds on Arbitrum. That initiative formed part of a broader real-world asset strategy designed to bring traditional financial instruments onchain.
The approach reflects a broader industry trend in which trading platforms aim to oversee both client-facing brokerage services and the underlying blockchain infrastructure. As the Robinhood Chain is rolled out, the company extends its functions beyond facilitating transactions of digital assets by running an Ethereum-based Layer 2 network that can be used in financial applications.
Financial Performance and Reaction of the Market
Building on this sentiment, Robinhood shares declined 8.8% to $78.09, extending a broader downturn that has persisted since early February. The stock also dropped in after-hours trading on Tuesday after the company reported quarterly results that fell short of analyst expectations.
Robinhood reported net revenue of $1.28 billion in the fourth quarter, below Wall Street estimates of $1.34 billion. Despite missing projections, quarterly revenue increased 27% year over year.
Source: Robinhood
Crypto-related revenue declined 38% year over year to $221 million, reflecting extended market drawdowns that began in October. Moreover, the net income for the quarter fell 34% year over year to $605 million. Earnings per share reached 66 cents, slightly above analyst expectations of 63 cents.
For the full year, Robinhood reported record net revenue of $4.5 billion, up 52% from 2024. Annual net income rose 35% to $1.9 billion. Trading volumes showed varied trends across asset classes. Notional crypto volumes across Robinhood’s app and its wholly owned exchange Bitstamp increased 3% quarter-over-quarter to a record $82.4 billion in Q4.
By comparison, equity trading volumes rose 10% to $710 billion, while options contracts increased 8% to $659 million during the same period. Transaction-based revenue, categorized as “other,” which includes prediction markets and futures, reached $147 million in Q4. That figure marked a 375% increase from the prior year and exceeded equity-trading revenue for the first time.
Tokenization, Regulation, and Operational Context
Robinhood CEO Vlad Tenev stated in January that tokenized stocks could reduce the risk of trading freezes due to blockchain-based real-time settlement mechanisms.
Robinhood Chain’s introduction does not alter the existing regulatory context, but it provides infrastructure that could facilitate tokenized securities and decentralized financial products if a more specific regulatory direction emerges.
According to the company, the public testnet is an initial stage of development aimed at technical testing, experimentation, and system validation.
Robinhood has already drawn regulatory scrutiny and public criticism for trading outages during periods of increased market volatility and for its reliance on payment incentives in equities trading. In that model, brokers receive compensation from market-making firms to send customer orders to them.
