Robinhood's Blockchain Success Undercuts Ethereum Holdings

The launch of Robinhood's blockchain has been a major success, with $257.4 million in total value locked (TVL) and $4.5 billion in decentralized exchange trading volume over seven days. However, this achievement is not good news for Ethereum holders.

Rather than rewarding Ethereum with fees, the new chain routes 10% of its protocol revenue back to Arbitrum's network, which uses Ethereum as a base layer. This means that only 0.15% of fees collected by Robinhood Chain end up flowing to Ethereum, amounting to about $1,538.

The recent Fusaka upgrade to Ethereum added a fee floor to make activity on Layer-2 chains pay Ether holders more, but this has not resolved the issue. In fact, closing the gap between Arbitrum's fees and Ethereum's would require significant changes to Ethereum's token economics and developer mindset.