Robinhood Jump-Starts Chain with Memecoins but Will Tokenization Follow?

As of 10 Aug, 93% of accounts on Robinhood Chain had engaged exclusively with memecoins, according to a Sandmark analysis. Accounts that held only stock tokens accounted for 3.6%, while 3.4% had interacted with both. 

Memecoins and stock tokens represent different corners of Robinhood Chain: the former are standalone crypto assets whose value is not tied to an underlying security, while the latter track the price of traditional shares in publicly listed companies. 

The concentration leaves Robinhood facing an early question over whether incentive-fueled speculative activity can provide a lasting base for the broader tokenization business it is trying to build on the network. 

"It seemed like the memecoin narrative was basically over," Carlos Guzman, vice president of research at crypto trading firm GSR, told Sandmark. "Robinhood Chain might be seeing this initial wave of excitement, but it's unclear how long it will last." 

Memecoin dominance 

On Robinhood Chain, the Cash Cat memecoin has around 57,300 holders, compared with about 38,300 accounts holding stock tokens tied to Nvidia, one of the most widely held tokenized equities on the network. 

Access helps explain part of the difference. Though stock tokens don't do not grant holders the same rights as the securities that underlie them, they do share some of the same regulatory contraints. Meanwhile, Cash Cat is a memecoin that is not regulated as a security and as such is much easier to acquire.  

In addition, Robinhood's stock tokens are available in more than 120 countries but not in the US, and users must complete additional identity verification before buying them. Cash Cat, by contrast, rolled out last week within Robinhood's flagship app to customers in select US states without requiring verification beyond the checks already needed to use the platform. 

Analysts said the memecoin activity could help Robinhood attract crypto-native users to the network, providing an entry point to stock tokens and other tokenized products as its broader onchain ecosystem develops. 

"The strongest signal of retail re-engaging with crypto would be seeing meme coin volume rotate into major crypto assets - Bitcoin, Ethereum, Solana - alongside tokenized equity volumes," Juan Leon, senior investment strategist at crypto asset manager Bitwise, told Sandmark. 

Distribution before scale 

As of June 30, Robinhood reported 28.4mn funded customers. As the company expands its onchain offering, analysts said that reach could broaden the addressable market for digital assets, supporting liquidity across cryptocurrencies, tokenized securities and eventually decentralized markets. "Robinhood Chain may be more interesting as a distribution or infrastructure story than as a standalone blockchain-volume story," Leon said. 

That broader distribution strategy may depend first on winning over crypto-native users. Robinhood is "catering a lot to crypto-native users for now," Guzman said, while "building the foundations for […] a bet on like RWAs, stock tokens, and earn products." 

Michael Zhao, senior research associate at crypto asset manager Grayscale, pointed to the same dynamic, noting consistent growth in the number of wallets holding stock tokens. 

"Memecoin-driven network activity appears to have served as an effective distribution mechanism for tokenized stocks," he told Sandmark. "This is not the same claim as 'Consumer demand for tokenized stocks is large,' which remains to be seen." 

Incentives drive usage 

Robinhood launched its blockchain on 1 Jul and has since taken steps to incentivize activity on the network. More than 6mn accounts have completed at least one crypto transaction on Robinhood Chain, according to blockchain explorer Blockscout. 

Among the incentives, Robinhood is covering gas fees through October for users transacting via Robinhood Wallet, the brokerage's self-custodial product, while also trying to lure users in other ways. Alongside its network's debut, the firm released an onchain lending product that allows customers to earn yield by depositing the USDG stablecoin to provide liquidity on the DeFi protocol Morpho. That yield is juiced by activity on the application. 

Despite the draw, Robinhood is trying to attract onchain activity at a time when digital asset prices are depressed and the company's crypto arm is struggling to keep pace with other parts of the business. 

In the three months ended 30 Jun, the firm reported that crypto transaction revenue fell for a third straight quarter to $100mn, a 38% drop year-over-year. Meanwhile, trader engagement notched records across equity, option and prediction market volumes. 

The Base benchmark 

Not only is Robinhood spending to entice people to use its new network, it's not the only company in the space. Robinhood's chief crypto competitor, Coinbase, has poured resources into further developing its own Ethereum Layer-2 network, Base. The exchange operator has announced equity-backed tokens, which would receive dividends natively, but they haven't debuted onchain yet.  

The network averages roughly 226,000 to 264,000 daily active user addresses, but the economics of running such networks can tell a different tale. 

Coinbase recently reported lower revenue from Base, which contributed to an 11% sequential decline in "other transaction revenue" to $47mn in the second quarter. The company said the drop was "largely driven by lower Base revenue." 

Zhao from Grayscale said Robinhood Chain has generated more than $4mn in fee revenue so far. Since the network debuted, it has also come to represent around 12% of weekly decentralized trading volume across Ethereum-compatible networks, according to a Dune dashboard.

While Robinhood Chain is ramping up volume, it is too early to know whether that activity will translate into a durable user base once incentives fade. "Memecoin traders aren't necessarily sticky capital and tend to rotate across chains in search of the best opportunities," Zhao noted. "That said, memecoin activity does not necessarily need to be sustainable for Robinhood Chain to succeed." 

Sandmark has reached out to Coinbase and Robinhood for comment but had not received a response by publication time. 

Reporting by André Beganski