Robinhood’s big crypto and prediction market moves: what’s really changing?

Robinhood is making big changes to how people trade, but not all of them are about crypto. The company just launched its own blockchain network called Robinhood Chain, which runs on top of Ethereum’s tech. This network is meant to help people trade things like tokenized stocks and use decentralized finance apps. Right now, tokenized stocks are available in over 120 countries, but rules vary by place. Users can trade these stocks anytime and even use them for lending or borrowing through Robinhood’s new decentralized lending product, Robinhood Earn. This lets people lend a dollar-backed stablecoin and earn about 7% interest per year, with insurance to protect against hacks or smart contract failures. But here’s the twist: Robinhood’s next big money-maker might not be crypto at all. Prediction markets—where people bet on events like sports or elections—are growing fast. In just six months, over 12 billion prediction contracts were traded. If Robinhood takes just one cent per contract, that could mean over $123 million in revenue in a single quarter. That’s almost as much as what Robinhood made from crypto trading in early 2024. Prediction markets are risky, though. They face legal hurdles, and big events like the World Cup can cause spikes in trading that don’t last. Still, Robinhood is betting that prediction markets will keep growing, especially if they move beyond just sports.

Robinhood isn’t just adding new ways to trade—it’s building the tools to run those trades itself. The company is creating its own infrastructure, like Robinhood Chain for crypto and Rothera for prediction markets. Rothera, a smaller platform tied to Robinhood, saw over $900 million in trades in just one week. If Robinhood routes more of its prediction market activity through Rothera, it could keep more of the profits instead of sharing them with third parties. This is similar to how Robinhood Chain gives the company more control over crypto trading. The idea is to own the pipes that power the trades, not just provide access to them. The company is also expanding in other ways. It’s launching crypto trading in the UK, entering Canada through an acquisition, and getting licensed in Singapore. Plus, it’s rolling out new trading products like perpetual futures in Europe. These let people trade gold, oil, or even stock indexes with up to 10 times leverage, all day long. Robinhood is even testing AI tools that let users automate their trades. The company says this gives regular traders access to tools usually used by professionals. But AI trading can be risky—mistakes or sudden market changes can lead to big losses, especially in crypto. So, is Robinhood becoming more than just a crypto app? It’s trying to. By building its own trading platforms and adding new products like prediction markets and AI tools, the company wants to rely less on crypto’s ups and downs. But success isn’t guaranteed. Prediction markets and AI trading are still new, and rules around them are unclear. If these products don’t bring in steady money, Robinhood’s growth could slow down.

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