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Arbitrum x Robinhood: Tokenized Stocks and Digital Nations #CHAINREACTION
Recorded: July 11, 2025 Duration: 0:50:24Space Recording
Short Summary
In a groundbreaking move, Robinhood has partnered with Arbitrum to tokenize stocks, marking a significant convergence of traditional finance and DeFi. This initiative not only expands Robinhood's global reach but also sets a trend for other financial institutions to explore blockchain technology, potentially reshaping the trading landscape.
Full Transcription
Thank you. Thank you. Thank you. Hello everybody, we're just going to let a few more people filter in and then we'll
get started. Thank you. Thank you. Hello, hello, hello. Welcome everybody to the Chain Reaction, Cointelegraph's daily
show here live on X every single day at 2pm London, 3pm Paris, 5pm Dubai and 9am New York.
I am solo again for the, I don't know, sixth episode in two weeks.
Unfortunately, Zoltan is still swanning around wherever he is.
I'm not even sure where he is anymore.
He was in the French Riviera.
He may have moved on.
And Gareth is having a personal day.
So it is just me again.
But I am joined by AJ Warner of Off Chain Labs.
AJ, can you hear me okay?
Yeah, I can hear you. Can you hear me, Robert?
Loud and clear. Thank you very much for joining us.
We appreciate you coming on.
Thank you so much for having me. I really appreciate it.
Excited to chat.
Me too. I mean, I think that you guys essentially had the biggest news of Cans,
which is where we're probably going to start but before i get into that
um if it's your first time here make sure you like and repost this space so it gets out to more
people uh and make sure you give aj a follow as well because he is an extremely influential person
in crypto and deserves more followers so okay aj let's get into this straight away. The big news was Robinhood tokenizing stocks, and they're using Arbitrum to do it. For anyone that hasn't heard about this, could you give an overview of what it means and what it might look like?
And first of all, thank you again for having me on the show.
Super excited to chat about this.
Robinhood has a very, very ambitious vision.
And I'll talk in a second about why I'm so excited about this opportunity
and have the fortunate privilege to be able to participate in their journey
in such a meaningful way.
But Robinhood, for those who are not familiar,
is probably the largest
like retail focus brokerage app in the United States for people to buy trade equities. They
obviously have also built a crypto trading business as well, but they're most famous for
their traditional equities business. And as part of their global expansion, instead of sort of seeking out brokerage licenses
in every jurisdiction where they intend to grow to, they're actually utilizing something called
stock tokens, which is the equivalent of issuing of stocks on blockchains.
And that is their global strategy for expansion. So what they announced last week was that every user in the EU, basically the, the Robin
had app became available to trade stocks via tokens or tokenized stocks to the EU user
base, um, which is an incredible unlock.
And that's what we call phase one.
Um, and we'll talk about one of the other phases
afterwards but i'll tell you for a second why i'm extremely excited about this because for the
longest time we've been seeing like traditional fintechs and traditional asset managers utilizing
crypto to expand into crypto business and this is probably the first mainstream example of us seeing traditional businesses using crypto to expand their traditional businesses.
So what I mean by that is, if you do a side-by-side of the Robinhood app in the United States and the Robinhood app in the EU, it looks like you're doing the exact same thing.
You can buy, you can sell Tesla stock or any other stock.
But the difference under the hood is where all the magic happens in the United States.
It's a brokerage, a traditional brokerage sort of structure, and it's tokenized stocks trading on arbitrage for for the EU.
And like this is like incredible because, you know, we talk often frequently about this concept of like a defined mullet with crypto rails under the hood.
about this concept of like a DeFi mullet
with crypto rails under the hood.
But the rest of it actually just sort of looking
like a traditional user interface for crypto people.
And that's exactly, or for non crypto people, I apologize.
And that's exactly what Robinhood's doing.
And that's what's really been so exciting about this.
So they are launching this and they launched it live
when they announced it last week on Arbitrum One.
But they have broader visions and expansion plans.
So I mentioned that
this was phase one uh there's a couple of phases but the ultimate vision is that these tokenized
stocks should be things that are transferable freely uh from their users in the robin hood app
to take them anywhere they want on chain so you can you know positive as collateral in a lending
pool you can use it to swap out a dex You can really think about it as like the merger of traditional finance and DeFi. As part of this announcement for additional
phases, Robinhood also announced that they're going to be launching the Robinhood chain,
which is very exciting. I'm sure we'll talk about why they want to be launching their own chain,
but what's really unique, I think, sort of from an Arbitrum perspective, and I think
why, one of the reasons why they chose Arbitrum, is because the Arbitrum platform is actually
quite unique in the sense that it has, you know, there's many ecosystems that, you know,
have very high-performance blockchains, and there's many ecosystems that have very highly regarded
and adopted technology stacks to launch your own blockchain.
Where Arbitrum sits sort of uniquely is that it has both.
We like to say it has a top five blockchain by economic activity, which is Arbitrum 1.
For many people, they just call that Arbitrum.
And then it also has the Arbitrum Orbit stack, which is adopted by many.
So Arbitrum allows Robinhood
to use the same tech stack, work with the same team, work with the same technology,
work with the same infrastructure providers and tooling, start in a public chain and migrate
to their own chain as they're ready. So I'll pause there because I've been talking a lot.
I'm sure you have a lot more questions, but that's a very high level of what they're doing.
That's a great answer. They're exactly the sort of answers I want.
Don't ever cut yourself short.
I'm happy to just listen.
Okay, so I have a bunch of follow-up questions.
I think I'm going to start with Robinhood building their own chain.
I think that's one of the points that is particularly interesting to me.
Now, when I admit I'm a bit of an arbitram amateur like
i've been in the space a long time and arbitram has crossed my paths a path a lot um in 2021 and
2022 there was a lot of talk about uh gaming on arbitram which uh i happened to be in that area
at that time so i saw it a lot then um but when I heard that Robinhood announced this on Arbitrum and then they're building their own L2, I was confused.
And I looked into Arbitrum and I saw you personally writing
about the build and migrate model.
Now, for me, and I admit this is a naive question,
how is building on Arbitrum and migrating away from it
a good model for arbitrum yeah so
so that that's that's a great question let me sort of walk you through because it's actually
the fundamental tenet of what we think is the vision for both like the scaling roadmap and
the natural evolution of how blockchains are going to be adopted by large institutions.
And one place to start, I think that's really important to understand here, is the structural
economic advantage that L2s have versus L1s in answering this question.
So you might, I'm sure you're familiar with like BASE and a lot of other large institutions
launching their own L2s.
And one of the main reasons why they choose to launch L2s versus L1s is that it is very
cost effective and efficient to launch an L2 and get it off the ground.
L2 and get it off the ground. You don't have to bootstrap a validator set. You don't have to
You don't have to bootstrap a validator set.
bootstrap, launch a token for staking or, or some of these complexities have asset inflation issuance.
It's very simple. You can launch a chain. You can choose to launch a token or not launch a token.
You can collect fees in ETH and you basically just have to pay a portion of transaction fees to Ethereum layer one to inherit a security.
And this model is really important because if you look at how revenue is created on an L2,
the business model basically operates in a 90 plus percent gross profit margin business. And
I'll just walk you through exactly what that means.
Just so you can do when your users can understand it.
If you have an L1 and there's transaction fees, and this is true for Solana and
it's true for Ethereum and it's true for other L1s, all of the transaction fees are
passed through to validators and stakers.
That's you inherit your security because they're staking their economics on the correctness of the blockchain. If you launch an L2, you don't need to do that. So let's say you have a transaction fees. And for just for illustration, let's say the transaction fee is $1 per transaction. You have to pay about seven cents to Ethereum for security, right? But now you have 93 cents and all of these different blockchains, what you can do is
you can internalize those earnings at 93 cents, right?
So if you're a traditional enterprise and launching a token and all of this
stuff is not core to your business, if you have your own blockchain, you can
essentially earn 93 cents on the dollar and the arbitram dow does this on arbitram one right so
to answer your question of why it's beneficial for arbitram for robinhood to launch their own chain
you sort of have to take a step back and understand the realities if you're robinhood or you're an
institution of that sort of size and magnitude, you have your own users, right?
The benefits of being on a public chain is really usually about composability and easiness to attract users.
Robinhood doesn't have those sort of issues or concerns.
They have their own user base.
What they're doing by launching their own chain is turning operating expenses into revenue.
their own chain is turning operating expenses into revenue because they now have the ability
to internalize sort of that 93% gross profit margin business.
And I think that is one of the things that is really misunderstood about the value proposition
of launching an L2 versus launching on a public chain or launching on their own.
So just to continue hammering the point, and I'll answer your question in a second, it
sounds like this economic structure would not be good for Arbitrum because now we just
lost Robinhood.
The reality is for how Arbitrum as a platform is structured is if Robinhood uses the Arbitrum
tech stack to launch their own chain, the Arbitrum DAO gets a 10% revenue share under something we
call the Arbitrum Expansion Program. So our whole thesis is acknowledging and recognizing
that these large institutions are ultimately going to want to have their own economics,
the value proposition of doing so when you have your own users, and the ability to turn
operating expenses into revenue is critical for them, that they're going to do it. And for us,
it's a question of what is a reasonable sort of economic relationship for us to be able to enable
this while also ensuring that we can capture value that we create and have a very scalable business.
When we think about the Arbitrum platform, we want to be able to serve the entirety of
the developer and enterprise journey.
And the reality is the end goal for a company like Robinhood is they are going to launch
their own chain.
But again, we're able to have them on Arbitrum 1 until they're ready to build their own
chain, work with them on this migration strategy,
keep them in the family, and obviously have this profit share.
The other component, and then I'll just stop in a second, is MEV.
So if you are a business like Robinhood,
and Robert, are you familiar with MEV, or should I explain it,
do you think, to you and your
users for a second uh just just an uh like an entry level yeah yeah sure so so mev is basically
called like maximal extractable value or minor extractable value depends on who you're talking
to and at a high level it's basically like the payments associated with ordering on a blockchain
every blockchain sort of has different architectures for this.
But this could be potentially millions of dollars a day.
And if you are on a public blockchain,
the concept of MEV is really sort of extracted from you and your user base.
And what the L2 model works, helps to do is internalize the MEV.
And Robinhood or anyone launching their own chain can decide on the policy
for how they want revenue associated with ordering to both be collected and distributed.
So again, it's a similar point to the turning operating
expenses into revenue point that i mentioned earlier but it's more around sort of you know
what might be for example for robin hood a core business point which is how do we ensure that
um we can manage the the economics associated with ordering on the blockchain
okay so i mean my gut reaction to what you just said is that 10 percent with
someone like robin hood could be no joke like that that's not nothing um and you you mentioned
the dow and i think this is important to bring up um the more i read on arbitram the more i realize
that the arbitram doubt is absolutely paramount.
Could you talk a little bit about the Arbitrum DAO and how it works?
Yeah, sure, definitely.
And, you know, I spend most of my time working at Offchain Labs, which is the core contributors and initial developers of Arbitrum.
But I also have a second role in a personal capacity, which is on the committee of what we call the OAT.
You can think of it as almost like a board of directors for the operations of the DAO.
But what makes the Arbitrum DAO so unique is the power that it has today and the power
that it has had since day one of its launch in 2023.
And at a high level, the two most important components of this is its power over the purse
and its power over the technology.
And what I mean by that is if you look at the Arbitrum DAO and that, you know, just that
93 cents illustration and example that I shared earlier, all of those
funds flow directly into the DAO's on-chain treasury. So what that means is, in order to
have funds removed from this treasury, which belongs to the token holders, it requires a
token holder vote to deploy those funds.
And token holders in theory can vote to do whatever they want.
They can vote to burn.
They can vote to distribute.
They can vote to buy back.
They can vote to invest.
And that's a very critical power.
In addition, the Arbitrum DAO also controls a massive component of the Arbitrum Token Treasury.
Currently, I'm just looking at it now,
it's about 30% of all tokens.
And again, in order to move these tokens out,
they have the ability to, you have to vote on them.
And what's critical is that this allows us,
like this forms the basis of what I like to call this concept of a digital sovereign nation, where we take the funds that are generated, the revenues that are collected and distributed and deposited into the Arbitrum DAO has done, the Arbitrum DAO, in order to support the RWA asset class and the proliferation of that on Arbitrum, has partnered and worked with many of the largest asset managers.
And they've been buying money market funds to diversify their treasury and also have this dual mandate of growing the ecosystem as well.
mandate of growing the ecosystem as well. They established a gaming fund in which, you know,
the structure of it's a little bit more complex, but the highest level way of thinking about it
is the Arbitrum DAO is the LPs. And they have a team that's working to grow the category,
both sustainably and through investment into the best games that are building in crypto.
So we have this like fundamental basis for where we can build and
capture value that is created by Arbitrum beyond simply the economics of the transaction fees.
There's a lot more nuance. I'm happy to answer any follow-up questions, but I want to kind of
keep it at a high level for the listeners. The second is the technology. So you can't upgrade
the Arbitrum public chain, which is Arbitrum 1, without approval arbitrum public chain which is arbitrum one without an approval of
token holders which is very important because in l1s you have this concept of forking l2s don't
really fork they have a different construct for upgradability and to have that in the hands of
of token holders requires transparency time delay for upgrades to have that in the hands of token holders requires transparency, time delay for upgrades to ensure that people are confident in the future direction of the protocol if they keep funds on it.
So that's a very high level. And we should probably like send out some documentation around this to people who are interested,
or feel free to DM me if you'd like to learn more,
is it's the power of deciding the future state
of the vision of the protocol
is all in the hands of the community.
It's all in the hands of the token holders.
It's not top-down mandate from a foundation
because the foundation is not the
source of all the power it's it's actually the community you are uh flirting with the
philosophical here and i can't help but get into that um because it's an area that really
interests me so it it feels as if arbitrum has has achieved a level of decentralization that perhaps other L2s have not.
Do you think that's the case?
Do you think that your model is the one that really all L2 should aim for in terms of decentralization and giving everyone in the community a role in in the development of the network or could
my only I want to throw an extra thought into this my only concern with this sort of model
is that you end up a little bit with like a camel is a horse designed by committee where
you don't have the sort of the strong leader with the strong vision that takes you where you want to
go but kind of everyone chips in and you've got to hope the wisdom of crowds plays out you know i
mean a hundred percent so i think you're both of those things i think what you said at the end is
is still true and i'll talk about sort of the evolution of arbitram and how we've thought about
um different mechanisms to sort of balance these components so i think the most important thing to
say here is first of all just in terms of of Arbitrum's level of decentralization,
I think Arbitrum is unique for two reasons.
So it was the first, you know, from a technical level,
it was the first roll up to reach what we call stage one.
I think the community would largely acknowledge
that it's been the furthest along historically ever since launch
from both the security and decentralization perspective.
It launched fully functional proofs on day one, you know, et cetera. But I think almost more importantly and structurally, because I think
a lot of sort of other platforms have either both caught up on some of the decentralization
components or, or have very similar philosophical ethos, at least from a technical perspective.
or have very similar philosophical ethos, at least from a technical perspective.
I think from a community ownership perspective is where you see the largest difference.
So what I mean by that is I actually think I could be wrong, but I'm fairly confident
that Arbitrum is actually the only L2, for example, that streams all of its transaction
fee revenue directly into a treasury wallet controlled on chain by token holders.
fee revenue directly into a treasury wallet controlled on chain by token holders.
And just from what I understand, the other ones all stream it into a multi-sig wallet
controlled by foundations associated with projects.
To me, there is a fundamental distinction there.
And the fundamental distinction is really about the source of power and what you are actually giving
to token holders.
If the token holders don't have an ability to control the future direction of the business,
I think the value of what they're contributing to is much less meaningful, right?
So if you don't actually know what the revenues are, or you don't have the ability to direct
what the revenues are, or direct what the spend is, or direct operational budgets, it's a much more limited role. In Arbitrum, you cannot
get funds out of the Arbitrum DAO's Treasury Rule without a token holder vote. It just doesn't work.
So if you think about that power, in order to justify an expenditure, you have to have broad mandate and approval.
And that's a very, very critical distinction, right?
I think it protects against a bunch of principal agent problems that might be associated with
sort of giving foundations too much power unchecked without proper checks and balances
in place.
And I think, again, it's very important for foundations to be able to operate.
So the Arbitrum Foundation does have a token allocation, but instead of it being sort of
the entirety of the community pool, it's 7% of the token supply invested over four years.
And again, the Arbitrum Foundation is doing a fantastic job.
I think the Arbitrum Foundation, should they need more funding, would have the ability
of the community to give them more funding.
But again, they have the ability of the community to give them more funding. But again,
they have to earn that. And I think that's a critical distinction. And they're very well on
their way. The point that you raised, though, about the camel and the horse is true. And I
think that this was historically a criticism of Arbitrum, which was it was, you know, too
decentralized, there wasn't enough leadership, There wasn't enough sort of top-down perspective and thought.
And I think what we've done actually,
and this is part of why I joined what we called the OAT in April,
is we are trying to find this balance.
And what I mean by that is is arbitrum needs the operational efficiencies
to move quickly to operate to be ambitious to have vision in order to win right it's very hard
on a bottoms-up approach to sort of accomplish all these things at the pace which you need to
write the competition is fierce and um time is now. That being said,
it is critical in my opinion to ensure long-term sustainability that the source of power for both
the technology and the treasury still remains in the hands of the token holders, right? So what
we've tried to do with this concept we have which are like aaaes or arbitram aligned
entities is find the balance of how do we ensure that the contributors to arbitram have what they
need in order to operate effectively and efficiently but the power still remains with
the community it took us a while to get there um but i think sort of that journey of allowing the community to recognize the power that it's given has allowed us to make sure that we can maintain that balance to get us to where we are today, which is an extremely improved model of operational efficiency with sufficient sort of oversight and corporate governance.
of oversight and corporate governance?
I think that makes a lot of sense.
I mean, it's kind of an awful question to ask
because there isn't an answer.
Nobody has struck a balance of figuring out
the right level of decentralization.
And there was a lot of talk last cycle
about whether you should be fully decentralized or not.
And centralization was seen as the enemy
and people took that to its logical extreme,
which I think ultimately is probably a mistake.
But striking the right balance is much easier said than done.
We've kind of fallen into something that I wanted to get onto a little bit later.
But hey, we're here.
So you wrote a paper and I'm purposely calling it that not an article because it's too comprehensive and academic.
And I've put it in the title of today's space.
You called Arbitrum a digital sovereign nation.
Can you speak a little bit about that thesis?
I know you've touched on a lot of it already, but why do you call Arbitrum a digital sovereign nation?
Yeah.
So for those who haven't seen it or are interested,
it's pinned to my Twitter profile, actually.
And, you know, Robert, like you said, it's too long.
Probably that's my writing style,
but it's probably better if you don't want to digest the whole thing
to just put into chat GPT for a summary.
But kidding aside, the reason I call Arbitrum
a digital sovereign nation is because
I look at the structure
of what it has
and it reminds
me a lot of sort of
if you look at some commodity rich countries
and how they've managed
to turn
their
assets, their natural
resources into more diversified businesses.
I think Arbitrim is best positioned to do that from the perspective of digital communities.
And it's actually really critical.
And there's some very critical ingredients in order to be able to accomplish this.
The first is, and I think, you know, I've been pretty vocal about this.
I think one of the biggest struggles in blockchain economics and crypto, early stage crypto projects
is this lack of a concept of retained earnings. You know, let's put crypto aside for a second.
From my perspective, if you're an early stage company whether it's a crypto project
whether it's an equity whether it's a startup anything it's very hard to grow without reinvestment
in that growth and one of the things that happens in this industry is instead of investing in growth
we see things like token buybacks or staking distributions, et cetera.
And sometimes you need it for economic security. And I'm not going to criticize that because
obviously that's how these systems work, but sometimes it's done because it's viewed as the
right thing for the project. And the problem that I have with that framing is that there's never
been a good example to my knowledge of an early stage company succeeding that didn't reinvest in growth.
Like imagine in 1999, if Amazon was just streaming all of its revenue from book sales back to its shareholders.
like it would never be the amazon of today and um in order to do that though and that arbitram
Like it would never be the Amazon of today.
has this and this is why i was harping on this before all the revenues have to accrue back to
the token holders because if you don't have that mandate nobody's going to that mandate of control
nobody's going to actually vote to invest in growth they're just going to take the money back
if they don't have confidence that the future of this vision will actually
belong to them as well.
And when I think about Arbitrum, and we have this tagline that you've
probably seen on Twitter called Arbitrum Everywhere.
Our thesis around this is we want Arbitrum to touch every possible business
in the way that we want to use blockchain technology.
And the way we do that is by making the technology
stack as flexible as possible. That's why we invest in making sure Arbitrum One is a top five
blockchain by economic activity. And we have a stack, the Arbitrum Orbit stack, which is one of
the most, if not the most adopted stack anywhere. And we make it extremely flexible. You have
Arbitrum Orbit chains like Robinhood and Converge, which are the chain being launched
by Athena and Securitize that are settling to Ethereum.
We have chains like Apechain being built for Yugo Labs that is settling to Arbitrum 1.
We have chains like Blackbird, the restaurant loyalty program that are using the Arbitrum
tech stack and settling to base.
Same with DGEN chain.
And our whole thesis is we want Arbitrum everywhere. We want it to be able to support the ecosystem everywhere.
And the reason for that is not just because we earn the revenue share and the 10% profit
shares and the transaction fees.
That's what we call like, I call that the revenue derived from the natural resources.
But because if we have a mandate to have Arbitrum everywhere,
we can build these business lines that are controlled and operated by the Arbitrum DAO
to capture on the success of having our business everywhere.
And what I mean by that is we can use the Arbitrum Gaming Ventures as an illustrative example.
That's a fund, like i discussed earlier like the
dow is essentially the lp of this fund and if you're a fund investing in a category what you
want is as broad of a mandate as possible for where you can deploy capital because then you
will now see the best opportunities and have a higher probability of success. So if Arbitrum technology stack is minimally used,
that means that the sort of addressable market
for which they can invest is going to be minimal.
They won't be investing in many games.
But if Arbitrum's technology stack is being utilized everywhere,
by all gaming teams, everywhere,
then we've just expanded the success likelihood of the AGV, which again will accrue a
lot more value back to the average token holders. So that's how we really think about this relationship
between investment at the application layer. I think the best example I like to give,
and it's not a perfect analogy and some people might not even like it,, um, if you look at like Dubai and the Emirates more broadly,
their success and the vision of what they are today is not a function of just selling oil.
It's, it's the ability to sell oil and then redirect the proceeds into things like real
estate technology and other emerging verticals.
And that's really where you're seeing the power of what these sort of nations have done.
So like, that's a very high level version, but again, the critical components of it are
high gross profit margin businesses, internalizing the revenue compounding on growth and finding
diversified revenue streams that are derived as a function of your ability to have
your natural resource utilized everywhere like at the very highest level this is so interesting i
want to move on but i keep being dragged back by thinking of more questions no worries happy to
come on another time again if you'd like i mean i'm very very passionate about this yeah well i can hear that and that's partially why i why i want to ask more questions um so i'll ask one more question on this
you're talking about like for example the the gaming um projects and and you you know some get
funded how do you well it's again i guess it's a reiteration of the committee question. But how do you evaluate the success of what you're funding?
And moreover, how do you react to those evaluations?
You know, you mentioned Dubai and stuff, and they've invested in a lot of things, including gaming.
And they presumably have a small group of people that will evaluate how that funding has gone and whether it was worth
investing in and then they can you know keep evolving their strategy how can that happen
with so many people involved so that's the the answer is that it's not so many people involved
the way it's structured is there is a team a small core team called the arbitrum gaming venture fund
that submitted their business plan has not an allocation of funding from the
arbitring DAO. They have an oversight committee of five that has been approved by the arbitring
DAO. And from there on out, they operate like a traditional venture studio. They don't come to
the token holders for approval of every investment, right? That's what I mean by that balance of power
and operational efficiency, right? They would have no funding if it wasn't approved by the Arbitrum DAO, if the Arbitrum DAO didn't
believe in their business plan.
And the Arbitrum DAOs actually questioned their business plan historically until they sort
of started seeing some of these early results.
But they now have the ability to operate and function like a traditional venture studio,
which is critical, right?
I totally agree with you.
If we put up every vote and said we should
you know invest one million dollars out of the dials treasury into this game it would turn into
chaos um we have a committee in place and a core team in place that that's doing this and we have
the same thing for sort of the treasury management component there's a core team in place that got
funded and approved their business plan by the arbitrage from Dow. And they're doing things like buying treasuries.
And they just deployed, for example, on behalf of the arbitrage from Dow,
7,500 ETH into DeFi.
So around 20 something million dollars and additional $10 million in stable
assets. Again, these are assets controlled by the arbitrage from Dow.
The compensation structure for these teams are, you know,
aligned with that they can be operationally successful.
But it's not about going back to the DAO and asking them.
That's where we probably were with Arbitrum a year ago.
And a lot of the work we've done has been to move out of that into more practically operationally efficient systems.
But yeah, if you talk to the Arbitrum Gaming Ventures team, you don't have to know that it you know if you talk to the arbitrum gaming ventures team
you don't have to know that it's funded by a doubt you have to know this is a great team to
work with it has capital to deploy and invest and has the ability to help your game succeed
and that's that's really what we need yeah that that makes a lot more uh sense to me and i can i
can see why that would be more effective um okay i will i will try and move
on uh the best the best i can uh well we've mentioned a lot of things uh so far in this space
i mean rwas obviously gaming and then arbitram is also plugged into so many other areas like ai
and dpin um over the next 12 months what are you most bullish for with Arbitrum?
Yeah, so it's a great question.
For me, I think a lot of people know Arbitrum for gaming.
A lot of people know Arbitrum for Node, Infra, D-Pin type stuff.
What Arbitrum is most known for has been historically DeFi.
And it has a ton of volumes across DEXs, across perps, across lending protocols, and everything.
So what's happening now, and Robinhood is probably the pinnacle of this to date, is the convergence of TradFi and DeFi, I think, are happening on Arbitrum.
And we see, and again, this was part of the strategy of why we deployed so much money into buying these money market funds from the DAO up front, because we wanted to make sure that
we're aligning with these large institutions to have them prioritize Arbitrum as part of their
strategy. And what you're seeing is, is that the convergence of TradFi and DeFi is happening
on Arbitrum. We have the traditional DeFi rails, and then we have traditional asset
managers, Franklin Templeton, BlackRock, WisdomTree, Standard Charter. Yesterday, I didn't even know
about this in advance. HSBC announced that they're running test pilots on Arbitrum for
certain products that they want to launch. Arbitrum is known as the home of DeFi. It's
known as the best place for the convergence of TradFi and DeFi.
Like, you know, Stephen, our CEO, likes to say,
nobody says they work in centralized finance when you ask them what they do.
So we shouldn't be saying we work in DeFi.
What's going to happen is that all of this is just going to be finance.
And Robinhood is the best example of using crypto to power traditional financial rails.
And we're going to see more and more of that and i think arbitram especially because of this sort of arbitram one
arbitram orbit barbell strategy of a best product for a public chain and a best product for a stack
um is really best situated um for the entirety of this journey and and and um we're really excited to continue to see all the progress on on that yeah that's it's funny the um it's again the the mullet thing moving blockchain
to the background um i mean i've seen it uh said for a long time i think for me realizing i don't
have a financial background but realizing that um finance was just you know defi would just become
fi essentially um when you know larryFi would just become FI essentially.
Yeah.
When, you know, Larry Fink of BlackRock
was putting in his investor letters
that like the size tokenization is going to grow to.
And then I realized, ah, yeah, I mean,
perhaps I've underestimated just how significant
this is going to be to traditional finance.
I have one question.
It's not the nicest of questions questions but it seems to have had
a nice resolution um we've just published an article on gmx uh i was hoping you could just
kind of give us an overview of what happened there yeah um i don't have all the details myself
um but i'll i'll sort of tell you from sort of what I understand. And again, I don't want to speak on behalf of the GMX team, so I'll probably keep it a little bit high.
So GMX has two versions.
There is GMX v1 and GMX v2.
And GMX v2 launched about two years ago at this point.
And that's the overwhelming majority of economic activity on GMX is on the
V2. Unfortunately, there was a vulnerability in GMX V1, and there was approximately $40 million
that was sort of moved out of the protocol. The good news is that in GMX, they've treated risk security at the utmost priority.
They had a $5 million Unify bounty up since the beginning in perpetuity.
The funds have been returned and a $5 million bounty was paid to the user.
So again, it sounds like a great sort of, I mean, not great's the wrong word, but, you know, obviously a positive resolution.
But, you know, GMX has been a stalwart and a pillar of the Arbitrum community.
Their culture of building and shipping and their prioritization of decentralization and focus on security is something that is, you know, best in class and you know only have the best things to say about them but i'm happy
sort of that this uh this unfortunate chapter seems like it's positively resolved yeah no i
don't i don't think that like it comes across as insensitive or anything it is kind of a great
resolution to an unfortunate situation you know we see these i mean weekly we publish stories about
this sort of thing every single week and and these
sort of hacks and exploits are commonplace but uh you know a bounty was offered up it was accepted
funds returned that's about as good as you can hope for uh in this space and kind of everyone
learns and and everyone wins in a way um so yeah i think that i think that was positive i am going
to start um bringing us towards the end of this episode
because we are going to run out of allocated time.
But I think, like I said to you at the start,
I don't have a strong background with Arbitrum,
but I imagine a lot of the listeners here feel probably the same,
hearing your passion, that it's a good time to be in arbitrum and i certainly am
more interested in arbitrum coming out of this space than when when i went in which is exactly
what you're you know you're hoping for what do you see as the next big frontier for for arbitrum
obviously this robin hood partnership is is colossal um what's you know what's your eyes on now so um i'm obviously not going to share
specifics because for for obvious for obvious reasons um but i'll give you the highest strokes
and and some just general comments i think our team um and the team that i work with both in
the partnerships and business development side the engineering and the product teams that are
contributing to arbitram um as well as the community and business development side, the engineering and the product teams that are contributing to Arbitrim,
as well as the community and token holders, community members,
DAO delegates, et cetera, have never been satisfied,
have always been hungry, have always sought the right opportunities
to help grow, foster, develop.
And that doesn't change.
We don't take our foot off the gas.
We keep trying to particularly,
I would say, solve the world's hardest problems that can be accomplished with blockchain technology.
That's what we like to do. Robinhood's a great example. They're going to have global expansion
happen more effectively and efficiently because of this. So we see over the last 12 months,
and I would say even the 10 days since Robinhood was announced, an immense amount of demand for Arbitrum as a product.
And we're going to do our best to absolutely serve builders, developers, and enterprises however we possibly can.
So you're going to continue probably to see us focus and prioritize this category, I would say, of the convergence of DeFi and traditional
finance. I think that if you want to sort of get a better sense and understanding of Arbitrum,
I would not just look sort of at the announcements of partnerships. I would look at
and understand the technology choice reasons for why they are choosing Arbitrum. I think that's critical.
I would look at the structure of Arbitrum as a business as well.
And I guess most importantly, in a shameless plug,
if you want to work with us or you want us,
you know, somebody who might like, please reach out.
We are going to continue, I think, to positively impress on the, you know, the nature of how we're looking to hopefully grow this ecosystem,
this community, the business, and really solve real-world problems.
I love it.
And no problem with the plug at all.
I love connecting people with companies.
And if this space can help the right person find the right role, then yeah, I'm all for it.
And yeah, I mean, I agree.
I think Robinhood, it's interesting.
You guys didn't really need social proof as such.
But Robinhood does act as wonderful social proof as a partnership.
It's unbelievable.
And it caught the attention of the space, which I think the space has got a little numb to major partnerships since the last cycle, because a lot of the last cycle major partnerships were empty.
They were just substance-less and people were a bit jaded.
But this one, people realized it isn't, and it really did catch the attention.
I mean, every outlet was running stories on it.
Everyone was talking about it on every space, which is great to to see and that's obviously what what you guys are hoping for um so yeah i
mean aj firstly thank you very much for coming on uh you've given us some unbelievable answers um
anyone listening click on that link i've put at the top of this space that is the thesis and it
is a fascinating read it really is so make sure you give that click
make sure you give aj a follow make sure you give off chain labs a follow they're a listener at the
moment with the nice gold tick and of course arbitrum as well and aj um yeah we'll have to
have you back on really appreciate you coming on thank you so much for having me i really appreciate
it and i hope everyone enjoys the weekend yes uh that is it for another week of the Chain Reaction.
It is Friday, so we are done.
However, while I've been on this space,
I have just confirmed Monday's episode's guest.
It will be another video episode,
and we will be speaking with the legendary VC, Tim Draper,
to discuss all things crypto and all the markets
and a new initiative that Tim Draper is working on. So thank you very
much for listening. Thank you. I see so many regular listeners that are here every day.
We very much love and appreciate you. If you enjoy the space, make sure you like and repost it so
more people can learn about Arbitrum and what those guys are up to, which is a lot. And have
a great weekend. So we will see you again Monday. Thank you very much for listening. We'll see you
again Monday.
Bye-bye.
