A brief interpretation of @RobinhoodAppMessage about planning to build layer2 on Arbitrum:

1) From a technical perspective, Robinhood’s choice to align with Arbitrum’s Nitro is no different from Coinbase’s alignment with Optimism’s OP Stack technology stack. However, Base’s performance has already proven a rule: the success of a technology stack does not equal the success of its underlying chain.

The rise of Base is more a result of Coinbase’s brand effect + compliance resources + user flow, which also provides some guidance for Robinhood’s presence in Arbitrum to a certain extent.

This means that, in the short term, it cannot be proven that the price of $ARB is undervalued (compared to the performance of $OP), but in the long term, once the “US stocks on-chain” scenario targeted by Robinhood is successfully implemented, it could change the awkward situation where layer 2 is seen as a mere technical solution without practical application for Ethereum layer 1, and it could open up an unprecedented path for Mass Adoption in both the Ethereum L1 and L2 ecosystems.

2) Coinbase focuses more on general layer 2 solutions, primarily adopting past transaction-oriented scenarios from DeFi, GameFi, MEME, etc. In contrast, Robinhood might take a different approach this time, moving towards a specialized layer 2 direction, specifically customizing a set of on-chain infrastructure tailored for traditional finance.

Although the transaction confirmation time of OP-Rollup can also achieve sub-second levels, the security of such transactions is still within the optimistic Rollup range of 7-day fraud verification. Robinhood’s new layer 2 needs to handle features like T+0 settlement for stocks, real-time risk control, and compliance requirements, which may require extensive customization at the virtual machine level, consensus mechanism, and data structure of layer 2 to fully exploit the potential of layer 2 scaling solutions.

3) Arbitrum’s technical solution is more mature compared to Optimism: The Nitro WASM architecture has higher execution efficiency, which provides a natural advantage for handling complex financial calculations; Stylus supports multi-language development of high-performance contracts, capable of handling some heavy computation tasks of traditional finance; BoLD addresses malicious delay attacks, strengthening the security of optimistic validation; Orbit supports customizable Layer 3 deployment, providing sufficient flexibility in development features.

You see, if Arbitrum can be chosen, there must be a reason for it; its technical advantages seem to align with the stringent “customization” requirements of traditional finance for infrastructure, unlike OP Stack, which only needs to be operational. This makes a lot of sense, after all, in the face of the ultimate challenge of supporting trillion-dollar TradFi businesses, the maturity and specialization of technology will determine success or failure.

4) The integration of U.S. stocks onto the blockchain and the trading of coin stocks is no longer merely the “token issuance narrative and games” commonly used in the traditional cryptocurrency sphere. It faces not only the “speculative users” who completely disregard whether project products are delivered and whether the experience is smooth in order to speculate on coins, but also the absolute intolerance of users familiar with traditional financial product lines when network gas fluctuations cause congestion and transaction delays, among other issues.

These traditional finance users are accustomed to millisecond-level responses, 24/7 uninterrupted service, and the seamless experience of T+0 settlement. More importantly, they are often backed by institutional funds, algorithmic trading, and high-frequency strategies, which have extreme demands for system stability and performance. This means that the user base that Robinhood layer2 needs to serve will be completely different, and the challenges are very daunting.

Above.

In summary, Robinhood’s layout in layer 2 will be very significant. It is no longer just a new player added to the layer 2 technology stack, but rather a hardcore experiment to verify whether the crypto infrastructure can support the core operations of the modern financial system.

Once the experiment is successful, the digital reconstruction of the entire trillion-dollar TradFi market, including bonds, futures, insurance, real estate, etc., will accelerate. Of course, in the long run, this will directly benefit the application scenarios of the entire Ethereum L1+L2 ecological technology infrastructure and will also redefine the value capture logic of Layer 2.

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