From Retail Investor Brokerage to Financial Infrastructure Reshaper: A Deep Dive into Robinhood's Strategic Evolution and Future Chessboard

On June 30, 2025, Robinhood's stock price surged over 12% during trading, reaching an all-time high. The market's enthusiasm was not driven by an impressive earnings report, but by a series of significant announcements made at the Cannes event in France: the launch of a stock tokenization product, the establishment of a Layer 2 blockchain based on Arbitrum, and the provision of perpetual contracts for EU users. This series of initiatives marks a fundamental shift in the market's perception of Robinhood—it is no longer just a "retail investor trading app" aimed at young people, but is attempting to become a potential "disruptor of financial infrastructure."

This article will deeply analyze the evolution of Robinhood's business model, the logic of its core strategy, and explore its potential impact on the industry market from three dimensions: "past, present, and future."

I. The Past: Rapid Growth and Transformation Pains from "Zero Commission" to "Diversification"

1. Original Intention of Starting a Business and User Positioning

Robinhood was founded by two Stanford University graduates with backgrounds in physics and mathematics, Baiju Bhatt and Vladimir Tenev. Their original intention was "financial democratization," aimed at providing ordinary people with the same investment opportunities as institutions. This idea resonated after the 2008 financial crisis, coinciding with the millennial generation's distrust of big banks.

They seized the wave of mobile internet and launched an app designed specifically for mobile devices in 2014. Its two major innovations are:

• Zero-commission trading: Breaking the traditional brokerage fee model and significantly lowering investment thresholds.
• Ultimate user experience: A simple and even "addictive" interface design, such as the confetti animation after a trade is completed, gamifies complex financial transactions, attracting a large number of young people with no investment experience.

2. Establishment and Controversy of Core Business Model

Behind the "zero commission" is Robinhood's carefully constructed diversified revenue model, the most representative and controversial of which is PFOF (Payment for Order Flow).

PFOF is the cornerstone of Robinhood's "zero commission" model. In short, Robinhood bundles user orders and sells them to high-frequency trading market makers, who earn small profits through the bid-ask spread and pay a portion to Robinhood as a return. This model generates substantial revenue but has also sparked long-term regulatory controversy, centered around whether it sacrifices the best execution price for users in favor of its own interests.

Based on PFOF, Robinhood continues to expand its business landscape and has constructed three major revenue pillars:

• Trading business: quickly expanded from initial stock trading to options and cryptocurrencies.
• Interest Income: By launching margin loans and cash management services, idle user funds and leverage demands are converted into stable interest income.
• Subscription Service: Launched in 2016, the Robinhood Gold subscription service offers value-added features such as instant deposits and pre-market and after-hours trading.

3. Growing Pains: Crisis and Reflection

Rapid growth inevitably comes with growing pains. Robinhood's development history is filled with various crises:

• Technical and Risk Control Crisis: In March 2020, on a historic day of surge in the U.S. stock market, the platform experienced a complete outage, leading to a collective lawsuit by users. In the same year, a 20-year-old user committed suicide due to a misunderstanding of the options account balance, exposing the serious shortcomings in user education and risk warnings behind the "gamified" interface.

• The GME Incident and the Trust Crisis: The GameStop incident in early 2021 was a turning point for its reputation. At the peak of the retail investor battle against Wall Street, Robinhood suddenly restricted users from buying popular stocks like GME, which was accused of "pulling the plug" and betraying retail investors. Although the official explanation was to meet clearinghouse margin requirements, the label of "robbing from the poor to give to the rich" has been deeply engraved on its brand.

• Ongoing regulatory pressure: From the fines imposed by FINRA due to PFOF issues to the SEC's investigation into its cryptocurrency business, regulation has always been the sword of Damocles hanging over Robinhood.

These crises have exposed Robinhood's Achilles' heel: an unstable technology platform, flaws in risk control mechanisms, and potential conflicts between the business model and user interests. It is these profound pains that force Robinhood to seek new growth stories and strategic directions to shake off the label of "Meme stock paradise" and rebuild market trust.

II. Now: Comprehensive Layout of Cryptocurrency - Robinhood's Strategic Ambition and Business Logic

1. Core of Strategic Shift: Why Choose RWA and Stock Tokenization?

Robinhood bets on RWA (real-world assets) and crypto technology for the future, based on profound financial drivers and strategic considerations.

In terms of financial drive, the cryptocurrency business has become Robinhood's most profitable business. In the first quarter of 2025, cryptocurrency trading contributed $252 million in revenue, accounting for 43% of total trading revenue, surpassing options for the first time as the largest source of trading revenue. More importantly, its astonishing profit margin; according to analysis, the market-making rebate rate for cryptocurrency order flow is 45 times that of stocks and 4.5 times that of options.

On a strategic level, this move helps Robinhood upgrade from a controversial "retail investor brokerage" to a "bridge connecting traditional finance and the on-chain world." This not only effectively sheds the regulatory shadow of PFOF and the cyclical label of "Meme stocks," but also aims to tap into a trillion-dollar market that far exceeds its current business - the digitization and tokenization of vast assets in the real world.

Robinhood believes that blockchain technology can be utilized to achieve:

• 24/7 round-the-clock trading: Breaking the time barrier of traditional exchanges.
• Near-instant settlement: from T+2 to T+0, significantly reducing counterparty risk and operational costs.
• Ownership can be infinitely divided: allowing high-value assets to be fragmented, lowering the investment threshold.
• Improve liquidity: Create a broader market for traditionally illiquid assets.
• Automated Compliance: Embed regulatory rules through smart contracts to reduce compliance costs.

2. "Trinity" strategic combination punch: How to achieve the goal?

To achieve this grand goal, Robinhood has implemented a "trinity" strategic combination that goes from the application layer down to the infrastructure layer.

Stock Tokenization is the "stepping stone" of its RWA strategy. By launching US stock tokens in the EU market, allowing users to trade 24/5 and receive dividend support, Robinhood is conducting a large-scale market education and technology validation. This move aims to bridge the interface between traditional assets and the on-chain world, enabling users accustomed to traditional investments to "smoothly" enter the crypto ecosystem.

The self-built L2 public chain (Robinhood Chain) is its most strategically ambitious move. By constructing its own Layer 2 public chain optimized for RWA based on the Arbitrum Orbit technology stack, Robinhood is transitioning from an "application" to an "infrastructure provider". Having its own public chain means mastering the rule-making power and ecosystem dominance. In the future, the issuance, trading, and settlement of all tokenized assets will be completed within this closed-loop ecosystem, thereby building a strong technical and commercial moat.

Broker-as-a-Platform is building a "crypto-driven all-in-one investment platform" through a series of acquisitions (such as Bitstamp, WonderFi) and product launches (such as perpetual contracts, staking services, AI investment advisor Cortex, and credit card cashback for buying cryptocurrencies). This platform integrates trading, payment, asset management, and infrastructure, covering the entire lifecycle of users from deposit, trading to asset appreciation, aiming to maximize the lifetime value (LTV) of a single user.

3. Comparative Analysis: Robinhood vs. Coinbase & Traditional Brokers

Compared to Coinbase, Robinhood is a "on-chain broker", aiming to "transform the old world with blockchain" and bring vast traditional assets onto the chain. Robinhood's advantages lie in its large retail investor user base, exceptional product experience, and a more aggressive and focused RWA strategy.

Compared to traditional brokerages, Robinhood serves younger and more active retail investors, with revenue more reliant on trading commissions (especially in cryptocurrencies). Robinhood has surpassed Schwab in account numbers by more than two-thirds, but the average assets per account are only about 2% of the latter. This is both a shortcoming and a growth opportunity for the future. Its currently launched IRA retirement accounts, credit cards, and other products aim to enhance user asset scale and stickiness, while attacking the territory of traditional brokerages.

3. Future: The "First Entry Point" for Reshaping Financial Order? Opportunities and Risks Coexist

1. Potential Impact on Financial Market Landscape

• Squeeze the liquidity of altcoins: When investors can trade blue-chip tokens with real value support on compliant and convenient platforms, the demand for high-risk, fundamentally weak altcoins and Meme coins may be significantly diverted.

• Reshaping Stock Trading Rules: 24/7 trading will completely break the pre-market and after-hours restrictions of traditional exchanges, having a profound impact on global liquidity allocation, price discovery mechanisms, and even market maker strategies.

• Accelerating the entry of traditional financial giants: Robinhood's aggressive layout will become a "catalyst," stirring the entire traditional financial industry. Its exploration will force traditional giants like JPMorgan Chase and Goldman Sachs to accelerate their layout in the field of asset tokenization, triggering a new round of fintech arms race.

2. The Opportunities and Valuation Restructuring of Robinhood

If the strategy is successful, Robinhood will face tremendous growth opportunities. It has the potential to become the core hub connecting tens of trillions of dollars in real-world assets with the crypto ecosystem, while capturing the dual era dividends of "intergenerational wealth transfer" and "the popularization of crypto technology."

Its valuation logic is undergoing a qualitative change. It is no longer a cyclical brokerage simply influenced by trading volume and interest rates, but a composite company that combines SaaS (Gold subscription), fintech (platform effects), and infrastructure (public chain value) attributes. This multidimensional business model will greatly expand its growth ceiling, and the market will adopt a new model for its valuation.

3. Unshakeable Risks and Challenges

Robinhood's grand blueprint is not a smooth path, as it still faces three core challenges:

• Regulatory uncertainty: This is the biggest bottleneck for the implementation of its strategy. Although the current political climate in the United States seems more favorable to the crypto industry, any changes in regulatory policies could pose a fatal blow to its business.

• Execution and competition risks: Initiatives such as building a self-developed L2 public chain, integrating Bitstamp, and achieving global expansion will test Robinhood's project management and execution capabilities at every step. Meanwhile, competition from crypto-native rivals and awakened traditional financial giants will be exceptionally fierce.

• Inherent Vulnerabilities in Business Model: Despite the increasing diversification of the business, its revenue structure will still highly depend on highly volatile trading activities in the short term, especially in cryptocurrencies. How to establish more robust and predictable revenue sources while pursuing disruptive innovation is key to achieving long-term healthy development.

Summary: A new and old financial derivative blueprint is being drawn.

Robinhood is making a bold bet centered on RWA and cryptocurrency technology, attempting to move from the margins of the financial system to the center, becoming a "institutional designer" and "infrastructure provider" at the intersection of new and old financial orders. It aims at the fundamental reconstruction of the entire asset issuance, trading, and settlement system—transforming the closed, expensive, and inefficient rules of traditional finance into an open, programmable, and composable new financial logic.

The success or failure of this transformation will not only determine the fate of Robinhood itself but will also significantly influence the evolution path of global financial markets over the next decade. For investors and market observers, Robinhood is no longer just a stock ticker; it is an "infinite blueprint" for observing the future of financial forms, full of limitless possibilities. Volatility will continue to exist, while institutional frameworks will be tested.