With so many tech stacks, why did Robinhood choose Arbitrum Hair Chain?

Author: Haotian

Here's a quick rundown of @RobinhoodApp's plans to build layer2 on Arbitrum:

1) From a technical point of view, Robinhood's choice to side with Arbitrum's Nitro is no different from Coinbase's original side of Optimism's OP Stack technology stack. But Base's performance has proven a rule: the success of the tech stack does not equal the success of the parent chain.

The rise of Base is more the result of Coinbase's brand effect + compliance resources + user diversion, which to some extent also gives Robinhood a certain guiding significance to inhabit Arbitrum.

This means that in the short term, it does not prove that the price of $ARB is undervalued (compared to the performance of $OP), but in the long run, once Robinhood's target of "U.S. stocks on the chain" scenario runs through, it may change the embarrassing situation of "having technology but not landing" as an extension solution for Ethereum layer1, and will open up an unprecedented grand path of Mass Adoption for the Ethereum ecosystem L1+L2.

2) Coinbase is more of a layer2 or a general layer2 solution, mainly following the past DeFi, GameFi, MEME and other transaction-oriented scenarios, while Robinhood may be different this time, will take the direction of professional layer2, and customize a set of suitable on-chain infrastructure for traditional financial on-chain?

Although OP-Rollup's transaction confirmation time can also be sub-secondary, this kind of transaction security itself is still within the scope of optimistic rollups with 7-day fraud verification, and Robinhood's new layer2 may need to do in-depth customization at the layer2 virtual machine level, consensus mechanism, and data structure to handle features such as stock T+0 settlement, real-time risk control, and compliance requirements, so as to completely squeeze the potential of Layer2 scaling solutions.

3) Arbitrum's technical solution has certain maturity compared with Optmism: Nitro's WASM architecture is more efficient and has natural advantages in dealing with complex financial calculations; Stylus supports the development of high-performance contracts in multiple languages, which can carry some heavy computing tasks in traditional finance; BoLD solves malicious latency attacks and strengthens the security of optimistic verification. Orbit supports custom Layer 3 deployments, providing sufficient development flexibility.

You see, Arbitrum must have a reason to be selected, and its technical advantages seem to fit the strict "customization" requirements of traditional finance for infrastructure, unlike OP Stack, which only needs to be able to run through. This is also very Make Sense, after all, in the face of the ultimate challenge of carrying trillions of TradFi businesses, the maturity and specialization of the technology will determine success or failure.

4) The U.S. stock chain and the currency stock exchange are no longer the "coin issuance narrative and game" that the traditional currency circle is accustomed to, and they are not only faced with "speculative users" who completely ignore whether the project products are delivered or not and whether the experience is smooth for the sake of speculation, but also once the network fluctuates and causes congestion, and there are transaction delays, etc., which are absolutely intolerable for users who are familiar with the traditional financial product line.

These traditional financial users are familiar with the silky experience of millisecond response, 24×7 hours of uninterrupted service, and T+0 seamless settlement. What's more, behind them are often institutional funds, algorithmic trading, and high-frequency strategies, which have perverted requirements for system stability and performance. This means that the user base that Robinhood layer2 wants to serve will be completely different, and the challenge will be very daunting.

Above.

In short, it would make a lot of sense for Robinhood to lay out layer 2. It is no longer as simple as adding a new player to the layer2 technology stack, but a hard-core experiment to verify whether the Crypto infrastructure can undertake the core business of the modern financial system.

Once the experiment is successful, the digital reconstruction of the entire trillion-dollar TradFi market, such as bonds, futures, insurance, and real estate, will be accelerated. Of course, in the long run, it will be directly beneficial to the application scenarios of the entire Ethereum L1+L2 ecological technology facilities, and it will also redefine the value capture logic of Layer 2.