Is Robinhood Chain Over?

One of the most talked about topics this summer was the blistering success of Robinhood Chain, which, after launching on July 1, quickly became one of the leading blockchains for onchain activity. However, in recent weeks, this activity has largely pulled back, and many are now wondering if Robinhood Chain was simply just a flash in the pan. 

The weakness on Robinhood Chain in September is perhaps best observed amongst the three largest Robinhood native tokens by market cap, PONS, CASHCAT, and AI, respectively. After repricing in late August and early September, all three tokens have been in a downward chop over the last few weeks. Since September 1, AI is down 34% and CASHCAT is down 23%. Granted, PONS is still up 20% from September 1, but at its current price of $0.526, it is down 45% from its high of $0.96. Amongst the ecosystem leaders on Robinhood, there is notable weakness, especially when compared to how the rest of crypto performed in the latter half of September. 

This weakness has extended far beyond just the top three tokens on Robinhood Chain, and it can be observed in the chain’s bottom line as well. Daily network REV is back at levels seen before Robinhood Chain’s ‘mania’ in late August and early September. To be fair, part of this decline is due to Robinhood increasing gas limits onchain, thereby overstating the decline from the top. Regardless, Robinhood Chain is showing the classic telltale signs of an onchain ‘bust.’ 

The reason that this onchain weakness is concerning is that healthy and sustainable speculative activity may be the key for Robinhood Chain’s long-term success. Although Robinhood Chain wasn’t created to let users trade memecoins, memecoins have been incredibly effective in bootstrapping the desired goal of Robinhood Chain, becoming the main onchain hub for real-world assets (RWAs). Robinhood Stock Token TVL rose alongside onchain activity, increasing from $48.0M on August 30 to $140.6M on September 1. But, as the ‘trenches’ have cooled off, so has the growth of Robinhood Stock Tokens. As of October 1, Robinhood Stock Token TVL is $145.8M, nearly flat from where it was in the beginning of September. 

The reason for this stalling of growth is simple. The biggest driver of Robinhood Stock Token adoption has been speculative onchain activity, particularly in memecoins paired with Robinhood Stock Tokens from launchpads like LONG and Pons. The effect of onchain activity on Robinhood Stock Tokens can be best observed through LONG volume. Measured over 7-day periods, when LONG volume was rising, stock TVL would often follow and rise alongside it, giving way to a correlation of 0.86. However, when LONG volume was flat or falling, this correlation fell to -0.03, and over most 7-day samples, stock TVL was flat if LONG volume was declining. 

This phenomenon can perhaps lead insight into the next phase of Robinhood Chain, or at least where incentives are aligned. If Robinhood is seriously committed to making Robinhood Chain the onchain hub for RWAs, then they may have to lean on onchain market participants to make this happen. Robinhood has yet to show a lever they could pull to grow Robinhood Stock Token TVL that’s more effective than memecoins. Given that Robinhood seems culturally aligned with memecoins, it may make sense for them to continue supporting and incentivizing this activity as a means to continue bootstrapping Robinhood Stock Tokens. Until Robinhood shows that they have other levers they can pull to grow RWAs onchain, I expect them to continue leaning on the ‘trenches’ as it’s a win-win for both sides. Because of this, it’s hard to proclaim that Robinhood Chain is ‘over,’ rather than gearing up for its next adoption phase. 

— AJC 

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