Original title: Why Did Robinhood Choose Arbitrum to Launch a Chain Amidst So Many Technology Stacks?

Original author: Haotian, crypto researcher

A simple interpretation of the news that @RobinhoodApp plans to build a Layer 2 on Arbitrum:

1) From a technical perspective, Robinhood's choice to side with Arbitrum's Nitro is no different from Coinbase's initial choice to side with Optimism's OP Stack. However, Base's performance has already proven a rule: the success of a technology stack does not equal the success of the parent chain. Base's rise is more a result of Coinbase's brand effect + compliance resources + user diversion, which to some extent also provides Robinhood with some guidance in settling in Arbitrum. This means that in the short term, it cannot prove that the price of $ARB is undervalued (compare the performance of $OP), but in the long term, once Robinhood's target scenario of "on-chain U.S. stocks" is successful, it may change the awkward situation of the original Layer 2 as an Ethereum Layer 1 expansion solution with "technology but no implementation," and will open up an unprecedented Mass Adoption path for both the Ethereum ecosystem L1+L2.

2) Coinbase's Layer 2 is more of a general-purpose Layer 2 solution, mainly following the past transaction-oriented scenarios of DeFi, GameFi, MEME, etc. Robinhood's approach this time may be different, taking the direction of a specialized Layer 2, specifically customizing a set of matching on-chain infrastructure for the on-chaining of traditional finance? Although the transaction confirmation time of OP-Rollup can also reach sub-second levels, the security of such transactions is still within the scope of the 7-day fraud verification of optimistic Rollup. Robinhood's new Layer 2 needs to handle the characteristics of stock T+0 settlement, real-time risk control, and compliance requirements, and may need to deeply customize the virtual machine layer, consensus mechanism, and data structure of Layer 2 to completely squeeze out the potential of the Layer 2 expansion solution.

3) Arbitrum's technical solution is more mature than Optmism's in some ways: Nitro's WASM architecture has higher execution efficiency and has a natural advantage in processing complex financial calculations; Stylus supports multi-language development of high-performance contracts, which can carry some heavy computing tasks of traditional finance; BoLD solves malicious delay attacks and consolidates the security of optimistic verification; Orbit supports customized Layer3 deployment and provides sufficient flexibility to develop features. You see, there must be a reason why Arbitrum was chosen. Its technical advantages seem to meet the harsh "customization" requirements of traditional finance for infrastructure, unlike OP Stack, which only needs to be able to run. This also makes a lot of sense, after all, in the face of the ultimate challenge of carrying trillion-dollar TradFi businesses, the maturity and specialization of technology will determine success or failure.

4) On-chain U.S. stocks and coin-stock exchanges are no longer the "coin issuance narrative and games" commonly used in the traditional crypto circle. What they face is not only "speculative users" who completely disregard whether project products are delivered or whether the experience is smooth for the sake of speculating on coins. Once the network experiences gas fluctuations that cause congestion and transaction delays, it is absolutely unacceptable to users who are familiar with traditional financial product lines. These traditional financial users are familiar with the smooth experience of millisecond-level response, 7×24 hours uninterrupted service, and T+0 seamless settlement. More importantly, behind them are often institutional funds, algorithmic trading, and high-frequency strategies, which have abnormal requirements for system stability and performance. This means that the user base that Robinhood Layer 2 will serve will be completely different, and the challenge is very difficult.

The above. In short, Robinhood's layout in Layer 2 will be of great significance. It is no longer as simple as having another new player in the Layer 2 technology stack, but a hardcore experiment to verify whether Crypto infrastructure can undertake the core business of the modern financial system. Once the experiment is successful, the digital restructuring of the entire trillion-dollar TradFi market, including bonds, futures, insurance, and real estate, will accelerate. Of course, in the long run, it will directly benefit the application scenario implementation of the entire Ethereum L1+L2 ecosystem technology infrastructure, and will also redefine the value capture logic of Layer 2.

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