Robinhood Tokenization May Undercut NYSE Liquidity, Galaxy Warns

The Robinhood Plan tokenize shares on its new blockchain compatible with Ethereum could avert the volume of trading from traditional stock exchanges such as NYSE, and according to Galaxy Digital to undermine their main revenues from trading and market data.

At the ETHCC conference this week, CEO of Robinhood Vlad TENEV Detailed plans for “Robinhood Chain,” compatible with Ethereum Layer-2 at the orbit of the arbitrator. Blockchain allows users to trade with tokenized shares derivatives directly onchain and move trafficking on assets outside the traditional hour of stock exchange.

TENEV explained that the new engine token acting in the Robinhood chain will provide users tokenized derivatives of their assetsAllows them to to do or interact with a decentralized application.

Robinhood by offering users close to the “packaging” token with actual shares modified by an American broker, with 24/7 trading, planned to trade with 24/7. This initiative uses Robinhood Recent acquisition of Crypto Exchange Bitstamp.

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Robinhood tokenization brings onchain assets

On Friday, Galaxy Digital said Robinhood tokenization Move removes assets from traditional market channels and brings them onchain, directly challenges concentrated liquidity and activity that provides major tradfu exchanges, such as NYSE, their advantage.

“This directly challenges the deep concentration of liquidity and activity that provides the main exchange of tradf (eg NYSE) their competitive advantage,” Galaxy Digital wrote.

The platform architecture reflects the Rollup models, such as the Coinbase base, which provides Robinhood complete control of its sequencer and the ability to capture all transactions fees. Galaxy estimates that the base generates more than $ 150,000 in the daily sequencer fees for Coinbase.

By operating the sequencer for the Robinhood chain, when checking the tokenized assets, it focuses on the monetization of each layer of trade storage – from “Offchain to Onchain Utility”, the report said.

In particular, the dismissal of tokenized assets exceeds trading with 24/7. Programmability could enable use, such as the use of tokenized stocks as a collateral in defi protocols, or dividend automation, properties that traditional shares cannot match.

As Galaxy noted, if the existing stock exchanges cannot correspond to the usefulness of tokenized assets, they risk becoming a “less functional version of the same assets”, which pushes multiple traders on blockchain -based platforms.

Related: “Everything is sorted” – Tokenization has its escape moment

The risks of volatility remain

However, a 24 -hour business model could present the risks of volatility for retail investors who can awaken sharp prices outside regular hours.

In addition, regulatory uncertainty remains a challenge. While Robinhood chips are only available to EU users, the US Securities and Stock Exchange (SEC) Commission (SEC) has not commented on the model.