Robinhood’s Vlad Tenev Claps Back: From Memecoins to Real Assets – The Chopping Block

There's a lot of talk about investor protection and protecting these folks from making poor investments, losing money, but we are now in a world where you can invest in a meme coin to your heart's content, but OpenAI and SpaceX are deemed too risky, which I think is just Just a bizarre, perhaps unintended outcome, not a dividend.

It's a tale of Tuan.

Now, your losses are on someone else's balance sheet.

Generally speaking, airdrops are kind of pointless anyways.

Um, I named trading firms who are very involved.

Alec E is the ultimate.

Dei protocols are the antidote to this problem.

Hello everybody.

Welcome to the chopping block.

Every couple of weeks, the 4 of us get together and give the industry insider's perspective on the crypto topics of the day.

So quick intros first you got Tom, the DeFi Maven and master of memes.

Hello everyone.

Next we got Robert, the crypto connoisseur and czar of Superstate.

Good morning everybody.

Next we've got Tyrone, the Gigabrain and Grand Puba at Gauntlet.

Y.

Joining us today, we have special guest Vlad, FinTech futurist and founder of Robinhood.

Greetings and salutations.

And I'm Steve, the head hype man at Dragonfly.

We're early stage investors in crypto, but I want to copy that that nothing we say here is investment advice, legal advice, or even life advice.

Please see chopping block.

XYZ for more disclosures.

So Vlad, you've got a lot.

We've been talking about the ascent of Robinhood over the last year and a half, quite a bit on the show, but we're very excited to have you here to answer to the community, what the hell is going on with the Robinhood chain.

So we've had a lot of discussions about, I, I don't know if you, I don't know if you're aware of how much the crypto, uh world loves to argue about the minutia of little tiny decisions that were made by some of these individual companies that end up, uh, becoming these larger, uh, sort of melodramas within the crypto.

You're familiar.

OK, good, good to hear.

So first question off the bat, why did you build Robinhood or decide to build Robinhood chain as a layer two instead of as a layer one?

I think this has been discussed on Twitter, as you mentioned, and someone put it well when they said that the decision is really about being an owner versus a tenant, and we thought that having our own chain ultimately gave us control.

Over all the details end to end of operating the entire platform and perhaps that comes at a slight cost of interoperability upfront, but I think over the long run tokenized products including You know, stocks and other derivatives are going to be available on all chains, so I think developers will build bridging capabilities and, and eventually the choice of primary chain will be less meaningful.

But, but we thought upfront having one chain where we can control.

The entire end to end experience from the smart contracts to sequencer mechanics, uh, would be, would be important.

So the question though is, uh, so we've heard now that Stripe is building their own chain.

There's been some reporting in the press, uh, although Stripe themselves haven't confirmed it, and we now know that Circle is launching their own chain.

And these two chains are going to be layer one blockchains.

They're going to be like Ethereum or Solana, as opposed to a layer two, which is what base is, and which is also what Robin Hood chain is.

Does that distinction strike you as meaningful for Robinhood's goals, or it's like whatever, as long as it works, let's just build something and, and get it out there for, for consumers to use?

I think the benefit of a layer two chain is it's slightly easier to have interoperability, meaning there's a lot of infrastructure already, a lot of infrastructure even built by our friends over at Off-chain Labs who develop Arbitram that make it so that we don't have to reinvent the wheel.

Now the argument for a layer one is you You can actually rebuild everything from the ground up.

So I, I don't think that it's an unreasonable option, but when we looked at it, we asked ourselves, what, what do we want to do right away?

What are the things that maybe we want to do 2 to 3 years from now?

We thought a layer two met our requirements.

OK.

So what do you see then?

The, the story for Robinhood's layer two right now is that there's gonna be tokenized stocks that are going to be issued on this chain, and they're going to be tradable through Robinhood, but also tradable directly on chain.

You can sort of, uh, take your tokenized stocks from Robinhood directly into the chain.

Correct me if I'm getting anything wrong here.

At the, at the highest, so that, that's maybe what the V0 V1 of this chain looks like.

At its highest aspiration, let's say, you know, draw forward the timeline 5 years, 10 years.

If Robin Hood chain is wildly successful, what, what does that look like?

Does it become the next Ethereum, the next Solana?

Are there more users on Robin Hood chain than there are on any of these other chains?

Paint, paint a picture for me.

I think first off, when we set to to build the chain, we, we looked at the landscape and a lot of companies were aiming to create some variant of like the number one chain for DGs, right?

The, the, the chains for DG space seemed very crowded.

And, and we didn't really think we had any competitive advantage there to make a, a product that was unique.

Um, maybe, maybe this is debatable, and we do have some advantage there to your point, but I think where Robinhood's advantage is, is in being the place where traditional finance and crypto merge and meet.

So that's why when we looked at business to business opportunities in the past, we launched Robinhood Connect.

Which is an on and off-ramp provider.

So a lot of the leading non-custodial wallets and DA providers integrate Robinhood Connect as the best and lowest cost and most seamless way to convert your fiat into crypto and also turn it back out.

So if you, if you have, you know, crypto non-custodial that you wanted to get fiat, um, we, we provide a really easy mechanism to do that.

So, so it's sort of like.

What capabilities have we built by virtue of having, you know, one of the largest consumer retail platforms.

We've gotten really good at onboarding accounts seamlessly.

We've gotten really good at preventing fraud and doing those types of mechanisms.

We have a wide diversity of different assets and products that we offer on the platform and really over time as I look at it.

The goal is for any financial market, any asset, whether you want to custody it or transact in it to be available in Robinhood in the easiest to use way.

And so when we look at the chain.

The thesis is really, can we make this the best chain for real world assets, and, and I think we can start with the assets that we already have, you know, US stocks, you, you can imagine any asset that that we offer on Robinhood pending regulatory maturity to eventually be available in an on-chain form for distribution, predominantly outside the US, but, but I think there are advantages within the US as well.

And then there's certain things that actually aren't easy or, or really feasible today.

For example, private markets that we can, we can make available as well.

And, and that's kind of what we demonstrated at our, our event in Cannes.

We wanted to show that, OK, here, here's something that maybe you did expect, which is stock tokens for public equities.

But then something you didn't expect, which is that the same technology can be used for private companies which have thus far been really inaccessible to retail.

So you infamously were tokenizing, I believe, OpenAI and SpaceX, and there's a little bit of a kerfuffle online after you guys announced this.

So I remember everybody being super bulled up.

Everyone was very excited that, oh my God, uh, Robin Hood is tokenizing socks and bringing them on chain, and now it's, it's gonna even include private companies.

And then OpenAI, they tweeted something basically like, bros, this wasn't us.

I don't know who owns this equity.

Uh, Robert, we didn't agree with Robinhood to do this.

And it, it's almost like, um, I'm, I'm curious what, because I, I, I, I don't know if, uh, Robinhood had an official response to OpenAI kind of raising their hand and saying, hey, uh, we didn't know that this was even happening.

Although it does speak to the structure that you guys are using.

Being able to basically take any financial asset, regardless of what it is or whether or not, you know, the, the, the company itself is, is uh privy to it, of taking it and making it tradable in real time and ownable in real time on chain.

Talk us through that episode and like how should we understand, is this a sign that, hey, private companies want to be private and like they're going to fight back against uh attempts to tokenize their, their, their stocks?

Do you feel like other private companies are going to be more amenable than OpenAI was?

Help us understand what that looks like.

Yeah, I'll, I'll say a couple of things that I think are, are relevant to this.

Number one, When people have tried to do this in the past, you know, other companies try to give exposure or there, there's even, you know, reggae plus in the US that allows limited forms of crowdfunding.

Basically the problem has been that There's an adverse selection issue.

So the companies that opt in to making their shares available to retail, typically are companies that don't have a ton of other options.

Now there, there are exceptions.

Some companies really care about it and they, they want retail to have access, particularly at later stages.

That's been a bigger thing recently, and I could talk a little bit about what we've been seeing on our IPO access offering as well, but IPO access, you know, we, we allow companies to access retail during the IPO, great for retail customers, I, I think great for the companies as well.

And when we launched this in 2021, we had to do a lot of work to communicate with companies, the value of that and.

Nowadays, you know, pretty much the best companies are coming to us and actually giving retail high allocations.

So now companies are starting to see the power of having a diversified and large retail shareholder base as a constituency.

So it's been an evolution.

But when it comes to private companies, the adverse selection is real.

I mean, if you are a company like OpenAI and SpaceX and you basically have the freedom to raise Uh, tens of billions from private market institutional investors, they, they don't want to deal with the complexity a lot of times of doing anything different, particularly if, if, if it's not established or if there's not a lot of precedent.

So tokenization of private companies is a new thing.

Retail access for private companies is a new thing, and when you cross that with companies that have lots of options, you know, you talk to these companies and Their core business is serving their customers and creating products.

They don't want to be innovators in capital markets, but, but we do, and we think it's a huge problem that, you know, you've got these private companies that are Literally changing the world and leading their industries, it's looking like retail might not have access to them until they hit the public markets.

If they do add valuations in the hundreds of billions or maybe even trillions.

So, so I, I think there's a big risk actually if we don't solve this problem.

There's a big risk in The normal people just not accepting these technologies, and that could lead to a whole lot of societal problems that could actually thwart progress if you feel like AI is going to, you know, change the world and possibly lead to labor market disruption and take your job, there's one world where you don't actually own any of that, and You know, there, there can be a tendency to kind of push back against it, but if you own the AI suddenly you're kind of like rooting for progress there.

And, and I think we've seen that play out in the public markets, and, and I think it's gonna play out in, in private as well.

That's why we care so much about retail having access.

Well, actually, one interesting thing that's kind of related, right, is anthropic actually is doing a new round and they are forcing all of their new investors to not use SPVs for, so forget about pure retail investor, like even accredited, but not, you know, not a fund is kind of being kept out.

So I guess like one question I have for you is, how do you think about kind of companies, Not disclosing as much and that being priced differently between the private rounds and sort of like the, the public proxies, because like there's sort of this weird thing, right, where like, the retail investors disclosures for the companies are actually much less than like the private investor who's getting preferred shares.

And so there's kind of always some information asymmetry.

How do you think like that kind of gets resolves itself, because I do feel like that, that always seems to me like one of the biggest problems in like, the derivatives for private companies type of market.

Yeah, I mean, I think that The way it typically works in private markets with these rounds that are 30 to 40x oversubscribed is if you're a SPV or some kind of institutional investor or private wealth, or, or you know, you're you're part of the private wealth groups at these big banks and you end up getting an allocation.

You're not doing a ton of diligence, right?

And there can be, you know, if you, you imagine a company that's 4DX oversubscribed, and you've got people clamoring to, to get into the deal, they're not gonna spend time allowing each SPV participant to do deep diligence for the company.

And I think for a lot of these investors, That's OK, you know, they, they, they look at the fact that SoftBank may be investing or Altimeter or one of these top funds, and they're happy piggybacking off of, off of that diligence.

So I'm generally a big proponent of disclosure, but I think there's a lot of people that would say, I understand the risk.

I'm, I'm willing to take it.

I use chat GPT as a product or I'm, I'm aware of the space industry.

I see the publicly available information, and I fully understand that, you know, it's theoretically possible that this investment can go to zero, and I want to make it anyway, and I think as a, as a believer in free markets, I think people should be allowed to make that decision for themselves and You know, in the US where we have accreditation standards, we've been pushing for some reform there.

And I, I think a lot of the basis for these types of accreditation rules are antiquated.

They're pre-internet.

It's really when there wasn't a ton of information available about these companies.

Now you have AI and you have a ton of information out there, easily accessible on social media, and we have the tools to digest it and make sense of it.

And so I think, I think they have to be revisited and it should go much more toward a disclosure self-certification regime.

Because again, if you also have to impose restrictions.

On companies to do idiosyncratic things for for retail shareholders, then the risk is they don't want to do that, and they're happy just like dealing with very concentrated small set of large money managers, and, and you end up With, with the same problem that we set out trying to solve in the first place.

Totally.

So let's let's square that with, you know, the current rules because a lot of what you discussed before was that, you know, these products will be available XS and not focused on the US, you know, A is that because the current rules in the US are too limiting.

And, you know, as you look to launch this, how do you envision this sort of XUS offering and structure, you know, are you planning to like KYC and geofence this and say these products are strictly not available to users, you know, in the US, are you planning to make the blockchain itself permissionless and the assets on them permissionless?

What do you envision the structure is, you know, based on the current rules, I, and, you know, obviously I know that you hope the current rules evolve, but what's the structure that you see this going live?

Yeah, it depends on regulatory maturity in each market.

High level, what we expect this to look like is Robinhood would get exposure or positions to a variety of private companies, and then we would package them up and make them available to retail.

Either directly where, where applicable or in other vehicles that may be diversified, depending on what's permissible in different markets.

So right now I think there's a, there's a good analog with stablecoins, right?

Stablecoins are sort of the original tokenized asset, and the way it's evolved is in the US where capital markets and financial rails are relatively Robust.

People are using ACH debit credit to move money around, but stablecoins have become a great delivery mechanism for US dollars outside the US.

And, and I think you'll, you'll see the same sort of situation for tokenized versions of US equities.

In the US, where capital markets are pretty robust, the, the uptake might be a little bit slower, but outside of the US, where access is a little bit more challenging, the tokenized versions will develop into the I think the leading vehicle for exposure to US assets, and, you know, it, it's hard to make predictions about how the US exactly will shake out, you know, tokenization isn't broadly permissible as a retail vehicle today, but that might change, and, and I think if it changes, the, the biggest and most immediate sort of like visible improvement in, in quality of life for retail investors will be.

Exposure to private assets because tokenization solves the liquidity problem.

It used to kind of be a problem even if you were able to get your hands on private assets.

You have restrictions for how to sell.

Pricing was a little bit unclear.

There have been marketplaces and different secondary markets that have tried to form, but they had to build their own market.

And they had a, they had a hard time getting enough volume of buyers and sellers, but, um, suddenly you plug in, you know, the global crypto networks and the liquidity problem becomes much less severe.

So, yeah, I, I think that's going to be the, the biggest change if, you know, regulations mature and it's, it's allowed to happen.

Yeah, I think, uh, I mean, I hear you on tokenization being kind of an access story.

I mean, stablecoins, I think, being a great example of that so far.

I think I look at other companies in the crypto space that are also going on chain to sort of accelerate, go to market, and, you know, improve access for financial services that might otherwise won't be able to.

Like I look at Coinbase basically offering Bitcoin lending through Morpho, through their wallet product or, you know, Phantom.

Um, offering hyperliquid perps through through the product directly, and they are able to sort of accelerate their go to market through this kind of self custody model where, you know, they're interacting with a Defi application on chain, but, you know, they themselves are, you know, just a wallet or a provider.

Is that something Robinhood is looking at all, or have you thought about, or I mean, how do you think about those companies kind of kind of approach to this?

Well, we have the Robinhood wallet, which has been growing in an accelerated way, and we're continuing to invest there.

The Robinhood chain obviously is another component, and yeah, we think that You know, with tokenization, particularly overseas, but you know hopefully eventually in the US, we can offer all kinds of financial products that have fundamental utility, starting with stocks and private markets, but eventually extending to the wide breadth of what we have available.

We want to make those available on chain in a permissionless way, and I think we have an advantage there because We're kind of the only financial services platform that has large scale in both crypto and traditional assets.

If you look at tokenization, it's where those two intersect.

So you still need a traditional financial services company to custody all of the Tradfi assets in order to mint and burn them and deliver them on chain.

So there's kind of two axis of vertical integration.

There's the blockchain one where you can offer customers better pricing if you own the chain, the wallet, and kind of everything in between, but also if you own the custody layer of the traditional assets, it again gives you not just more control but more ability to offer lower pricing and better economics to customers.

So actually, I have a question for you.

What do you think happens to like transfer agents, DTCC, etc. in a world where like, 10% of stocks move, 25%, 50%, because like, it's kind of an interesting question of like, if this structure ever gets to higher volumes than the current underlying, like, does that, does that like flip the, the kind of story on like how, how you currently, Deal with kind of being a broker, dealing with transferations, dealing with the whole like ecosystem of people whose websites have uh uh no 2FA.

Yeah, um, my guess for how this shakes out, uh, will be that It it'll be similar to an ADR or like an ETF custodian, where you'll still have the traditional assets that are custodied at a tradfi custodian, and you'll have traditional trading of those assets on public exchanges, whenever you can get a better price there.

At least this is how our, our system is designed as we outlined in our event in Cannes.

But then there's also gonna be secondary trading of the tokens as well, and at first the value prop there will be the tokens can trade when the traditional markets aren't open, so weekends, holidays, um, And, and over time, we'll we'll see it expand from there.

So, Vlad, I, the 24, going from 24.5 to 24/7, like that story about, OK, stocks can trade now on weekends and when markets are closed, totally makes sense to me.

And I think that that feels kind of inevitable, especially given the way that Robinhood's core products have always evolved in that direction of making everything easier for retail.

This private market story is the one that I find really fascinating and and I heard from your answer that you think that the private market side is actually in the long run, the bigger story than just, OK, things are maybe more efficient on the public market side.

What strikes me, you know, being being ourselves investors into private companies, there's long been this kind of push and pull between private markets and public markets, which is that of course, companies are are being private for longer and longer.

You mentioned, you know, look, you might lose your job to OpenAI.

Maybe at least you can own a little bit of open AI stock.

But it's very clear private companies, despite the fact that they they they might want the rules of going public to be easier and for it not to be as much of a cost.

They also really don't like, and I feel like they've become smarter and smarter about this since the er the Facebook days.

They've become smarter and smarter about not allowing secondary market transactions, not allowing SPVs to trade, like so there's a lot of things that I I'd imagine even just in response to this um adversarial game, essentially that's being played with private companies of saying, hey, as long as there's enough SPVs out there.

Robinhood can find one of these SPVs to go take tokenize its ownership in this private company and then allow retail to get access and to get liquidity.

What do you think is the endpoint of that game?

Because at the end of the day, the company has the ability to say, hey, we don't like what you're doing, screw off or we're taking you off the cap table.

Yeah, two things.

One, I think it's important for the tokenization mechanism to work well without necessarily the opt-in of the company.

That, that way you, how, how, how can you, how can you do that?

Can you do that?

Well, I mean, we demonstrated that by by these things that you've outlined, like if you get indirect exposure in an SPV as an institution, you can then have the traditional assets in a bucket essentially and, you know, tokenize them or otherwise make them available to retail by by other vehicles.

So, so for example, when you're in the public markets, it, it would just not work if every company had to Approve every shareholder or every transaction.

So, obviously if, if the company had to approve that in the private markets for tokenization, tokenization wouldn't work.

So I think it's important for the mechanism to, to work without having the companies actually be in the loop and not just because They, they might not want it, but also because They, they probably don't want the extra work or the, the extra steps.

I, I think a lot of it is that they actually don't want it.

I think they actually do not want a liquid price to be set every day.

And I'm sure you probably understand the reason why, because before Robin Hood was public and post being public, I imagine you feel very much the pressure of public markets and the, the fact that there's a stock price that moves every single day.

In response to what you're tweeting, what you're saying, what you're doing.

Private markets very much love the illiquidity of markups, and they love the opacity of not being, not being able to say like, oh, hey, we're actually, the company's worth less than it was yesterday.

Yeah, I mean, a lot of people bring this up as an argument, like, oh, when you were private, you probably would have not wanted this.

Um, I think there's lots of private companies, each have slightly different things that they care about.

For me in particular, I, I don't think I'm a great example because I would have been fine with it, clearly, but there's also lots of companies that are interested in doing this, and it's not.

Simply companies that can't raise money other ways, but it's companies that understand the value of retail.

So the optimal scenario would be, you know, we, we work with companies and they understand the value of what we're doing.

And they make it available to retail at earlier and earlier stages, culminating with retail actually being a vehicle for company formation.

So you have companies being formed at seed with retail investors being a big component of the cap table from the earliest possible stage.

It sounds very crypto inspired.

Yeah, sounds like, but, but, but in this model, but, it's the company's opting in.

In this where they're, they're giving you because they're excited about it because they think that having a ton of retail on the cap table is a good thing.

You know, they're making themselves available while they're still public, private, versus companies that are being permissionlessly taken public while they're still private against their will, right?

So as I hear this, it's opt-in, not we can do it against it sounds like some are opt-in, some are, hey, we're doing this, guess what, opening eye is too important for it not to be accessible to retail.

I, I think there's a slight nuance here, which is it, it depends on who the customer issuing stock is.

So I think if you're talking about early stage, the customer of what what's really capital as a service is the entrepreneur.

It's someone creating a new venture, they want to raise capital, and that that capital is primary in nature.

And obviously if you're an entrepreneur raising capital on a primary basis.

It's opt in.

As you get later and later stage, the customer base shifts and it becomes senior executives and employees and early investors seeking secondary liquidity.

And, and I think it's worth debate how much freedom employees and early investors should be given to sell their stock, right?

I mean, people have different views in them.

Obviously some companies Lock that down quite acutely, others don't, and in the cases that they don't.

Investors can sell their shares without the company being in the loop, right?

Without the company opting in.

So, every case is a little bit different.

Hopefully you guys can appreciate the nuance, but do I believe that contractually every employee and early shareholder should be, should require the company's opt-in?

I, I wouldn't say that.

I mean, That's sort of a, a legal decision that the company can make, but I, so I, I'm less focused on, OK, who are you getting this from?

Is it an employee?

Is it some early investor?

I, I, I trust that at edge of the cap table, there's somebody who the founder doesn't really care if they get liquidated because, you know, whatever, it's fine.

But there's also people they don't, they do care about.

There's people they do care, and I'm sure Robinhood is not probably getting their arms around those shares anyway.

The, the, the question I want to get at, which I think is more interesting, and it's kind of very much what you pointed at.

Which is, Robin Hood's story has always been this kind of Promethean story, which is that we kind of bring the flame from on high down to give retail investors access to any financial asset, any stock, any financial instrument that normally you're not allowed to to touch, now you're allowed to touch them.

And part of what this story does, I, I think I, I appreciate the virtue of the story, and it's very aligned with the kind of crypto ethos.

But, uh, at the same time, it also collapses the distinction between public and private companies, because the whole point of creating this entire regime of all this shit that you have to do when you're a public company is to make it so that there's this big boundary between public and private companies and Presumably it's all grounded in investor protection and clarity in markets and blah blah blah.

And the idea is that, OK, if the company's private, we don't really have to worry about that.

We can more or less let them kind of run amok and just get away with murder, uh, relative to if they're a public company, then OK, everything has to get precleared.

If retail is getting access to all of these stocks, like not all of them obviously, but like attractive companies that people are interested in, and you can buy it alike for public and private companies.

This from a social perspective, doesn't it kind of erode the entire meaning of the regime that we've built around public and private companies?

Like, what do you think the regime ought to be instead in in the world that you're trying to enact?

I don't think it erodes it.

I, I don't think anyone sat down and constructed a system where, you know, 80% of Individuals in the US can't have access to these types of appreciation opportunities proactively.

I think it's kind of evolved incidentally, right?

Um, it's a, it, it started as investor protection.

It started as removing, making it easier so that companies could operate and get started without disclosure environment, without disclosure environment uh requirements, sure, but what's happened was What's happened in the past few decades is it's gotten harder and harder for companies to go public.

There's just more onerous requirements on that process.

Simultaneously, private markets have become easier to access for a lot of companies.

There's more VC firms, more private equity, so access to capital has become easier that way.

And The combination of those two things has led to less companies going public, or when they do go public, it's sort of like a very high valuations.

And I think collateral damage of of these things were that retail investors don't have access to these opportunities.

So I think we can probably address some of the concerns while also giving retail investors access to these great opportunities.

Actually, so, so to, to, to what you're saying, there's actually this very funny thing, crypto crypto microstructure that's happened repeatedly, that sort of reminds me of this.

So like, I, I sort of view what you're describing is like this like inevitable tug of war between the, the private and public markets over like, who gets to like have a first earlier allocation.

And in crypto, oftentimes what what you see is like private rounds in crypto.

We have some retail syndication when there's sort of like a bull market.

So we saw these platforms like Echo or Legion, where like, you could, companies would raise private rounds and then like syndicate some fraction, like Angel list SPV style to to purchasers.

And then somehow that stuff grows too quickly, relative to like the, the true growth rate of the companies, and then you see this flip, where everyone tries to go fully private and like stop syndicating.

So, I think the interesting thing is crypto sort of replays this type of thing at like a faster time speed, right?

It's like, you know, you can see 20 public market cycles in like, an hour of crypto sometimes.

And there's kind of this interesting question of like, if you cross the chasm of this, will there kind of be like a back, you know, like to Hai's point, like, what, what, what, what is sort of the the reversal?

Or do you think this is like a true one-way function, like there's no, there's no inverting it.

Yeah, it's really hard to predict how this will shake out.

What I'll tell you is, in crypto, I think the difference is that we haven't been allowed to connect crypto assets to companies, to company equity, and things that have fundamental utility, as I like to call it, and what you see happening is, as a result of that, downstream of that, you have a lot of activity in Uh, meme coins, because, exactly because they're disconnected from fundamental utility, because that's what's allowed, and, you know, there, there's a lot of talk about investor protection and protecting these folks from Making poor investments, losing money, but we are now in a world where you can invest in a meme coin to your heart's content, but OpenAI and SpaceX are are deemed too risky, which I think is just a bizarre, you know, perhaps unintended outcome of The absolutely, absolutely it is.

Well, actually, speaking of like kind of you were talking about like the idea that access is sort of limited.

How do you feel about, you know, like the digital asset treasury companies, because they're sort of, they're sort of like this perfect hybrid of like all the things you said, where it's like, They're vehicles that are encapsulating assets that are not in a company format, but now you can buy them as a stock.

I'm kind of curious, like, what's your, your sort of like, how do you feel about these kind of weird wrappers, because there are also actually for private stocks, there have been a few ETFs that like, uh, or sorry, closed-end funds that are like, oh, we own a bunch of striped stock.

If you buy our ETF you basically own pro rata share and like whatever closed-end striped stock we bought.

So like, how do you view these kind of weird Vehicles that exist and like what what do you think about the, the fact that they've grown so much in the last year?

Yeah, I mean, without actually talking too much specifically about different investments, I tell you that You know, I, I believe in free markets, so that if someone lists an equity or other type of instrument or even a cryptocurrency, and it's compliant with the rules of the law, it, it should generally be accessible for retail, and I, I think that The the beauty of free markets is that you let the market decide, right?

Like market, if, if a product is attractive to consumers, over time, the fundamentals do play out, and you, you end up sort of like Getting to a market solution to to some of these questions.

So I, I wouldn't necessarily give you like a bull or bear analysis of every treasury company or closed end open end.

I mean, if you did, it would be hilarious because you, you, I, I would restrict you to one emoji only for your review.

Yeah, but, but I think that, you know, it's um From my perspective, we want to allow access to all types of financial assets and transactions, and we think Robinhood can be the place to do that safely in a compliant manner, also with a great user experience and at low cost.

So, you know, what we have when we have the opportunity to list stuff, we'll, yeah, I'm realizing that we can't get you to actually talk shit about digitalize the treasury, so that's fine.

I, so what, what an interesting, an interesting thing here is that So Robinhood traditionally was basically a a a a place to trade, uh, mostly US equities.

And over the last couple of years, more and more of the business, the, the revenues and the earnings have been attributed to crypto.

And at the same time, one of your biggest competitors is Coinbase.

Coinbase has been a traditionally a crypto business that now is talking about uh starting to add equities, kind of in almost like this sort of convergent evolution is that there there maybe is some kind of deeper um structural shift taking place where the the the newer generation, sort of, you know, gen.

Uh, millennials, Gen Z, and, and then Gen Alpha, that the places in which they're going to trade are ultimately going to look more and more like the union of crypto and traditional finance.

How have you thought about the way in which Robinhood is a business?

I have to imagine that you probably weren't expecting crypto to be as explosive as it ended up being in the, in the growth of your business.

How have you changed your perception of what Robinhood is supposed to be with how much crypto has grown as a portion of your business within the last few years?

Yeah, I think the, the underlying thesis for Robinhood has remained consistent, right?

We, we want to be a financial super app that helps you handle all of your financial needs.

So custodying any asset, conducting any financial transaction, and you know, you point out crypto as a percentage of our business has become significant.

I think last quarter we had Just under a billion in revenue, crypto was, you know, 20 to 30% of that.

As crypto technology becomes more and more infrastructural and Robinhood becomes more global, I think the delineation between the two will blur.

So for example, if, if you have a tokenized stock transaction or we're custody stock tokens or private tokens.

Do you put that in the crypto bucket or kind of the tradly bucket?

And, and I think the, anytime you categorize stuff in this way, you, you end up having to deal with these edge cases.

For example, technology as a sector is becoming less and less relevant as every company now.

I mean, it's kind of silly to think about non-technology companies because even they have to use technology.

So I think over time the distinction will become less material, and if you're a customer of Robinhood, You know, you, you'll probably be using crypto more and more without it being front and center in your experience.

Of course, if you want to buy Bitcoin, it's very clear that you're investing in crypto as an asset, but if, if you're getting a tokenized asset, crypto is really an infrastructure technology, and it's sort of a delivery mechanism to the, the instrument that you end up wanting to get.

Actually, and, and sort of related to, to this question about the juxtaposition with kind of Robinhood starting with stocks and adding crypto, Coinbase going the other way is, you know, I think the other difference I guess between two businesses has been like the institutional slash infrastructure side of like owning the full stack of custody and Staking and and other aspects in order to support institutional usage versus retail usage.

Do you view that as things become the everything market for both crypto and non-crypto, that you'll, you'll have to own more of the infrastructure directly than kind of like public markets, you can never really own the full stack, right, but in crypto, it's kind of weird, single entity can kind of own the full stack for their end user.

And so like, do you see yourself owning more of that?

How do you like view that?

Cause like, I do feel like that's a big shift, right?

If, if say tokenized socks dwarfs the volume of your traditional stocks.

Yeah, I think that I see our business evolving with 3 arcs, right?

One arc is sort of like short term, then we have a medium term one, and then sort of a 10 year long term arc.

The first one is really just Being the number one platform for active traders across all assets, crypto, stocks, options, futures, every asset that we offer.

The second arc, which is sort of like building right now, is us being number one financial super app for our customers.

So all of your wealth is, is in Robinhood and all of your transactions go through Robinhood.

So the first two arcs are like retail only.

Basically we, we think we can do that.

Without actually Vertically integrating completely and serving businesses and other institutions, but what happens is by virtue of us building these capabilities, things like 24 hour trading, rock bottom margin rates, tokenization, we build products that are attractive to businesses and institutions.

You know, if you're an institutional investor, you also want 24 hour access to markets.

You want crypto and traditional assets in one place.

You also want the lowest possible margin rates.

And so that plants the seeds for compelling B2B and institutional offerings, and I think if you look over a 10 year horizon, our business XS could be even bigger than US and business and institutional could also be even bigger than than retail, which I think makes the opportunity.

I, I mean I get excited when I think about what we can do in the long term because we're just like At the very, very beginning, and I see multiple ways that we could 10x this business and we can kind of pursue multiple of those vectors simultaneously.

So, you guys are now in a position of both being a contributor to the crypto ecosystem with Robin Hood Chain and all the stuff that you guys are doing there.

You've also, you in some sense also been on the other side of like, OK, you're working with Arbitram and you're getting a sense of what we as an industry have built.

And I'm sure you probably have some.

Sense of like, hey guys, this this part of what you guys built kind of sucks and like we really need some improvement.

We have a lot of founders who listen to the show, a lot of entrepreneurs, a lot of builders.

I'd love to just get, you know, Vlad's feedback.

What do you feel like the crypto industry should be doing better?

What have we underdelivered on and what would you like to see more of from builders in this space?

Well, I, I think that I don't really view it as, oh, I'm a, I'm a customer of the crypto industry.

I, I do think that we're a very active participant.

I mean, we're one of the largest companies in crypto, if you look at market share and sort of like volumes and revenues, particularly in the US and the thing that I felt was missing.

Was that crypto and the financial system have basically been two separate worlds with like minimal connections in between, stablecoins being kind of a recent counterexample of, OK, they are, they are starting to, to merge, but my approach to that wouldn't be, hey, You guys should should go fix that, like we're, we're in the arena trying to improve that and you know, leveraging our capabilities and the things that we're, we're great at to make that better.

Surely there is some, some like time component to that.

Like there was, OK, hey, Robin Hood, we're doing this, this arbitram L2 now.

Maybe you wanted to do it several years ago.

I'm sure there are things where you're like, man, I would love to do something today, but the tech isn't there or this products suck, or there's not enough liquidity.

I mean, even, you know, the kind of stuff around these private market assets or we can also talk about some of the prediction market stuff that you guys are doing.

Feels like maybe now is the time.

What is the thing where you're like, I wish now were the time, but we're not there yet.

And part of the context for this is that we spend almost every episode bitching about the industry, so that's why we're trying to get a little bit of that.

Feel free to talk shit, yeah, yeah, yeah, I, I unchained.

Yeah, I think that, I mean there, there's been some talk about.

AI agents and whether AI agents are gonna be paying each other with crypto to to conduct transactions.

I think there's also real world AI, right?

You're talking about robotics, medical devices, things of that nature, and our, our real world AI.

Agents gonna be paying each other in crypto and kind of what what that looks like.

So, I think, I think we're probably one step away from both of those things and two steps away from sort of like an intersection of crypto being used as a, as a tool of agentic commerce.

OK, so taking the AI point that you just made, one of your, I don't know, side quests is you're working on this company called Harmonic.

Which is, if I understand correctly, you're, you're building a foundation model that can basically verify mathematics using uh lean and theorem proving in order to uh verify the answers that it's generating something like this.

That's right.

What, what's the, first of all, how do you have the time to do that as you're running a company?

What's your, what's your level of involvement there?

And um tell us the story of like why, why, why this, why that?

Yeah, so, um, I'm chairman of the company.

Again, this is an entirely separate company from, from Robin Hood, so I don't have an operating role, but I am the founder and I care about, care about it quite a bit.

And actually, uh, a couple of weeks ago, Harmonic announced that our model called Aristotle reached gold medal level performance on the International Mathematical Olympiad.

So, uh, if you guys are familiar, this is a very, very hard.

Mathematics exam, and off the shelf models like GPT-5, Grok, the others get like Barely even one complete question, right?

Like they, they do very, very poorly, and part of the issue is that, you know, usually these problems require a spark of creative genius, and if you don't find it, you're not going to solve the problem.

The other is that They require like 10 logical steps, and if one of those steps is wrong, then your proof is wrong and, and you don't get the answer either.

So, you have to be both creative and you have to make sure that every step is correct, because hallucinations in this case kind of compound.

So it's a great demonstration of the technology, and in fact, We were, um, We, we did this in a formal way.

So you mentioned lean, uh, the, the theorem prover.

So we produce formal proofs of, of all of these results, which means a human doesn't have to validate it.

You can pass it into the lean kernel, and the, the lean kernel checks that every step of the proof, and the, the result is correct.

And now you might ask like what's the application of this?

We, we call it mathematical superintelligence.

The, the application of this is that You can only use AI to just create output and answer your questions, but you can, you can use AI to validate that the output is correct up to a very, very high standard.

So you think about all this computer code that AI is generating right now.

It's kind of turned the job of an advanced software engineer from writing code to verifying.

AI generated code, and if it's like a front end UI it's pretty easy to verify.

You could just look at it and make sure that it looks like the spec and and what you intend, but if it's a backend system, or if it's a smart contract, particularly if the consequences of failure are losing hundreds of millions of dollars, humans have to have to verify it, and I think that kind of creates the market for for formal verification.

So yeah, we're we're excited to build that.

I think the applications aren't just math, but it's really also all software and uh even hardware too.

So you think this is a better path to building software engineering agents like what Anthropic is doing, you're like, hey, having this foundation of the improving and this mathematical undergirding is necessary to get to real AGI.

I think it is a better path, and, and also it's inevitable, right, because if you're in a world where AI is producing voluminous content that's too That that's just too much for any one human to read.

We need another way to actually make sure that it's correct.

Two things, we need to make sure it's correct.

Also, it doesn't have to be in languages that humans necessarily understand, because humans aren't even reading it anymore.

So I, I think the entire substrate changes and you have to think about How can humans really, really quickly verify that it's doing what it's supposed to be doing without having to like go through a line by line.

So I actually have two questions for you related to this, which is, One of sort of the aesthetic criticisms of formal verification is like, you know, you dropped out of math PhD, you, you got probably got into it, you know, as a similar dropout.

I like, you got into it because there was some aesthetic beauty to some proofs, right?

You're like, this particular area, I was just like such a beautiful theorem or like, how concisely, succinctly it was proved.

And somehow math has always historically had this like trade off between aesthetics and computation, they've never kind of like coexisted.

But oftentimes maybe the lean proofs that are generated might look like, you know, those, you know, the, the, the coloring theorem proofs that are like really ugly relative to like the like indirect ones that we have.

So how do you think about like preserving aesthetics?

Have you, have you, have you seen Aristotle's lean proofs?

I've seen one, like I haven't seen like the compendiums.

Yeah, I, I mean, I find them very beautiful actually, and, and so the thing is converting from a lean proof to natural language, it is actually a pretty straightforward problem, because you, you could almost even do it mechanically, like you, you could look at the functions and lean and, and their descriptions, and you can, you can very easily go from Something that has more detail to a more descriptive sort of like English exposition of it.

I think it's particularly easy for Berlin relative to other formal languages in the past, which, which I think in part has led to it being popular not just for AI but for mathematicians that are trying to formalize stuff.

So that, so there's that.

The other way is the difficult part, getting an informal proof.

And formalizing it is is actually a lot of work, and there's a huge formalization initiative right now being run by this professor Kevin Buzzard in the UK at Imperial College.

He's trying to formalize Fermont's Last Theorem.

And this is an initiative that's like gargantuan in scale.

It's sort of like hundreds of mathematicians, multiple years to to formalize this result by hand.

So you can kind of tell the difference in difficulty that way.

Well, I guess the last question that I wanted to kind of go to is like, what?

Non-Millennium Prize problem, would you want solved?

Would you want kind of You know, Aristotle or successors to solve, like, like, Millennium Prize problems like an easy answer, right?

It's like, OK, yeah, obviously, like people have said these are, you know, Riemann hypothesis and Pisa equal to NP are worth thinking about.

But what is your sort of pet problem and like, which, which thing do you think would be like, if you, if you solve it, you're like, I've succeeded.

OK, so not the Riemann hypothesis.

Don't, yeah, it's too, it's too obvious, right?

Like I feel like it's too obvious because I do like that one.

I think like a benevolent HA 9000 would be pretty cool.

If we wanna, I, I would love to build like the logical core and the control center for a spacecraft and obviously not have it go haywire and, and, and try to take over.

I don't know if that's the example you want to give people like proof of proof of it's a benevolent.

Benevolent.

Obviously we need a good control systems that are ostensibly benevolent, ostensibly benevolent.

OK.

But will, will it be able to trade stocks on Robinhood or will any of this outcome of this work to the moon is going to be much more literal now.

Well.

I, I think that the initial goals were obviously quite separate, but I think there is overlap.

So, for example, smart contract verification.

If, if you think about a smart contract, it's a relatively self-contained piece of code running on solidity or rust or what have you.

There's certain things that we want to make sure that You know, hold, like the smart contract doesn't, doesn't halt, and you can't double spend and all those sorts of things, and actually the consequences of, of that failing could be hundreds of millions of dollars as we've seen.

And right now, if you're a smart contract firm, you're basically forced to go through this manual auditing process where you pay some firm, you know, hundreds of thousands, even millions of dollars to comb through it.

So there are examples in the crypto space where I think formal verification, once it becomes practical, could be very, very powerful.

You could look at any query where you actually have to do complex mathematics, you know, if you're, if you're computing margin or options pricing.

So there are lots of examples in our industry of software where the consequences of failure can be, can be quite severe.

So I think financial services along with health care, automotive, aerospace, robotics, they're they're all sort of like ripe for formal verification.

Well, I'm sure we've now lost the vast majority of our audience is totally lost, uh, but I will say, Vlad, I'm very excited to be able to buy tokenized zero DTE options on harmonic and bring them on chain as soon as they're ready.

So, um, we're up on time.

Thank you.

You're not just buying the option, you're getting a proof that the Black Shoals price was computed correctly.

Oh, good, good, good.

Yeah, that's right.

You get a lean proof alongside your purchase.

Vlad, appreciate you coming on and sharing your perspective with us.

It's great to have you.

Excellent.

All right, till next time.

Thanks everyone.