Robinhood vs. Coinbase: Who Wins the Future of Finance? | David Rodriguez & Omar Kanji

David from Blockworks and Omar from Dragonfly join the show to debate Coinbase vs Robinhood, two companies racing to become the dominant financial super app. We break down their business models, growth strategies, tokenized asset plays, and how each is approaching crypto, equities, and infrastructure. Will Robinhood’s slick UX and expanding product suite win the next generation? Or will Coinbase’s onchain infra and stablecoin moat prove unbeatable? Omar & Dragonfly https://x.com/TheOneandOmsy https://x.com/Dragonfly_xyz David & Blockworks https://x.com/EffortCapital https://x.com/BlockworksAdv --- 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24 https://bankless.cc/spotify-premium --- BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🟠BINANCE | THE WORLDS #1 CRYPTO EXCHANGE https://bankless.cc/binance --- TIMESTAMPS 0:00 Intro 2:37 Understanding Coinbase 8:31 Coinbase B2B 13:39 Comparing Revenue, Valuation, & Infrastructure 23:12 Future Growth of Coinbase 28:14 Understanding Robinhood 38:22 Robinhood Competition 45:42 Robinhood 2021 Crisis Explained 48:14 Robinhood Bank 52:02 Tokenized Stocks & L2 55:32 Defending the Coinbase Moat 1:06:19 Forecasting Robinhood’s Future 1:11:08 Forecasting Coinbase’s Future 1:15:31 Closing & Disclaimers --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04David Hoffman?

  Thanks, listeners. We got a pretty timely debate on the podcast today. Coinbase versus Robinhood, two competitor companies that are going head to head into the crypto world. Coinbase, of course, the incumbent, the established crypto native company. But Robinhood coming right into crypto with pretty big announcements right on the heels of this, right on the heels of this podcast. Maybe to kind of just set the table before I introduce our two contestants here. We got Robinhood with the ticker hood at $81 billion at the time of recording. It is up 135% year to date. Hood went public in July of 2021, which is not too far off from when Coinbase went public in April of that same year.

• 0:47David Hoffman?

  Coinbase compared to Robinhood's $81 billion is currently coming in at $85 billion, and it is up just 30% year to date. But all of that 30% increase year to date has just come within in the last 30 days. So while these two competitors, these two financial aspiring super apps are about the same valuation. There has been a little bit of trajectory difference in order to get here. Taking the side of Coinbase, we have David from Blockworks. David, welcome to the pod. David, thanks for having me. And then taking the side of Robinhood, we have Omar from Dragonfly. Omar, also, welcome to the pod. Thank you very much for having me. Okay, so Omar, I have been informed that you are the most bullish person on Robinhood

• 1:31David Hoffman?

  that that a few people on my timeline know. And then David, also, respectively, same thing to you with Coinbase. So we're framing this as a debate because I think you guys all have your domain knowledge in their respective companies. I'm sure your knowledge overlaps. We're not counting points here. We're not actually trying to go for a winner. We're trying to build a productive conversation. So we, as myself, because I'm curious about this answer, but then also the listeners as well, can kind of just get a download on the nature of these two businesses. Because I think who wins or how they win, or really just what the future lies for them, for both of these companies, will shape what our industry looks like. Like I said, just Two days ago, Robin Hood announced their layer two. They launched tokenized stocks.

• 2:16David Hoffman?

  And, you know, really, for the first time, putting pressure on Coinbase, at least, you know, preliminarily, in order to kind of shape what the future of crypto can look like. My take is that it's nice to have two very strong competitors come into this market. And we'll kind of like suss out what the differences between these companies look like as any advantages that each one has. David, I want to throw it to you first. We'll start with Coinbase. Maybe you could just start us off by giving us a sort of like lay of the land of the Coinbase company. If you popped up in the hood and you looked at where Coinbase makes its money, where the coin valuation comes from,

• 2:55David Hoffman?

  and future drivers, just kind of give us the 101 download that we need to start off with in order to understand Coinbase as a business.

• 3:02Speaker 01

  Yeah, for sure. So Coinbase has been around for at least this point like 13 plus years. Obviously, it started out as like a Bitcoin fiat on ramp in the United States. And, you know, over the past few years, as it's evolved to a full stack, you know, I would say on chain brokerage with various financial services. Really, the premier US-based exchange in the United States and obviously expanding globally today with Coinbase International, Coinbase Derivatives. Today, the business generates a majority of the revenue from transaction.

• 3:38David Hoffman?

  We got Robin Hood with the ticker hood at $81 billion at the time of recording. It is up 135% year to date.

• 3:46Speaker 01

  Services through Coinbase One and also stablecoin.

• 3:49David Hoffman?

  Which is not too far off from when Coinbase went public in April of that same year. Coinbase compared to Robin Hood's $81 billion is currently coming at $85 billion and it is up just 30% year to date. All of that 30% increase in the day has just come within in the last 30 days. So while these two competitors is to financial aspiring super apps are about the same valuation. There have been a little bit of trajectory difference in order to get here.

• 4:20Speaker 02

  Besides of Coinbase.

• 4:21Speaker 01

  But I think it's done a very good job as of the past few years.

• 4:24Speaker 02

  David, welcome to the platform.

• 4:25Speaker 01

  Through its USDC partnership. David, thanks for having me. You know, I'd say increasing the floor of how much revenue it can generate throughout bear and bull cycles.

• 4:36Speaker 02

  Okay, so Omar, I have been informed that you are the most.

• 4:39Speaker 01

  It is not just a, you know, premier exchange in the United States.

• 4:42Speaker 02

  That a few people on my timeline know, and then David also.

• 4:44Speaker 01

  Relationship with Circle. It is now becoming, I would say, a full stack infrastructure provider for moving the entire world economy on chain. Over the past year or so, they've launched wallet as a service. They've launched more recently over the past two, three weeks during their product announcement, they launched crypto as a service and Coinbase business. What I see Coinbase today becoming is instead of just a front end or like a thin front end for, you know, the economy coming on chain, it's now becoming like the back end. It's more trying to become like the AWS. They will not win the distribution game compared to TradFi and Comet or even a Robinhood coming on chain.

• 5:23Speaker 01

  What they're trying to be is a B2B platform is where I think the company is going forward looking to offer services to help other players come on chain. And they already have like pretty mainstream adoption as custody providers for major ETFs. And they already have over 200 institutions leveraging its crypto as a service platform to tap into Coinbase's backend infrastructure to offer digital asset services to their customer base.

• 5:51David Hoffman?

  Omar, before we get into that same kind of prompt with Robinhood, what comes to mind when you're listening to David give his kind of like lay of the land for Coinbase? He talked about not really actually going toe to toe with distribution. He talked about kind of being a backend. What stood out to you?

• 6:06Speaker 02

  Yeah, I think from all David's comments and everything I know about the company, I think what they have managed to do, so much to his point, is build a best in class crypto infrastructure platform that offers. A fully end-to-end service for retail customers and institutions. And like, if that is the framework for the business, I think it is a great point to leverage all of their institutional know-how and all of their tech that they've built into this next leg of growth for the company, which is going to look materially different than it has the last 10 years. And so I think he encapsulated it really well. And I think they come from a really strong place with a lot of things and a lot of pieces of the puzzle already in place. And now it's just like, what does that go-to-market look like over the next 10, 15 years?

• 6:52David Hoffman?

  From the crypto side of things, Coinbase has always had the golden goose of distribution inside of crypto. And I'm hearing both of you kind of agree that Coinbase is more, is going to keep its, you know, retail trading base, is going to keep its like, front-end on-ramps, you know, that's how I get my money into crypto when I need to do that. But it sounds like you guys are both aligned in the nature that Coinbase is going to refocus itself towards less distribution and more towards this kind of, you know, backend logic, business management, services towards companies, services towards corporations, and kind of being, being like the, you know, the on-chain service provider to whatever that means in a variety of different contexts for the pre-existing institutions out there. Would you guys agree with that kind of encapsulation? What would you change?

• 7:37David Hoffman?

  David, I'll throw it to you.

• 7:39Speaker 01

  Yeah, I would directionally agree. I think they're going to try to walk and chew gum at the same time. Like, I think they're still going to try to grow their distribution. You know, they already made a buy for launching tokenized stocks. I believe I saw something like a couple of weeks ago, talking to CFTC or the SEC about it illegalizing the US. I think they're going to try to grow their distribution platform, or grow their distribution as like a centralized exchange and like a brokerage, or an on-chain brokerage firm. I do think, though, that the revenue composition of the business forward-looking, though, is largely going to come from the backend infrastructure service that they're going to provide for businesses. But I, you know...

• 8:20Speaker 01

  I think I'd be bearish if they didn't continue to try to grow their distribution. I just think that it might be an uphill battle compared to the likes of Robinhood or the JP Morgans, Bank of Americas of the world that are inevitably going to come on chain.

• 8:32David Hoffman?

  Maybe you could shine a little bit more light on that part of the business, David. What does that look like, that B2B service? What are some of the products there? What can you say about the margins? What can you say about the growth? What can you say about really just the aspirations that Coinbase has in that sector?

• 8:46Speaker 01

  Yeah, I think it's very early still to know what the margins are going to look like. They just launched crypto as a service to through, at least publicly announced it. They came with 200 plus institutions that are using it.

• 8:58David Hoffman?

  What's crypto as a service? What is that?

• 9:00Speaker 01

  Yeah, so they're going to be offering the ability for fintechs and like financial institutions to offer digital asset trading, custody services, and maybe potential other financial services that they're already messing around with. Let's say like the Morpho integration with, you know, taking out mortgages or taking out loans through Morpho on the backend.

• 9:23Speaker 01

  TBD on exactly what that looks like, but at a high level, they're going to be offering digital asset custody, trading solutions. So what I imagine is Coinbase is like the backend exchange and then JP Morgan wants to offer digital asset trading for their customers or Morgan Stanley does. And what you don't know is like you're trading and you're buying and selling or even custody your Bitcoin or ETH, whatever asset on Morgan Stanley or on that front end. But in the backend, it's actually Coinbase's exchange infrastructure, custody infrastructure, even payments infrastructure. So they launched Coinbase Business, which I think is more of like a mom and pop or, you know, proof of sale or POS offering for merchants. They obviously like launched their announcement with Shopify.

• 10:09Speaker 01

  One of the more interesting things I think that they launched two weeks ago that I think was under discussed is I think it's called the Coinbase Commerce Protocol. Effectively, what it is, it's like a generalized payment solution that's launched on base and getting into the more technical details of it, it actually looks like it has the opportunity to just into mediate Visa, MasterCard, where it's going to allow large, big box retailers, the Amazons, Walmarts of the world that have these huge ecosystems, to effectively become their own coin, their own credit card issuer, and they're going to be able to tailor their own logic to know like how their user base is going to be allowed to use chargebacks, or like different rewards systems for users that are inside their economy

• 10:50Speaker 01

  or their ecosystem. But TLDR, it's still very early to know exactly what this looks like, but I think that they have the distribution with businesses, the brand, and also the know-how to know where they need to grow their business lines as like an infrastructure player.

• 11:06David Hoffman?

  Omar, I'm seeing you nod your head. What did you like about that? What'd you agree with? Give us a little bit more color.

• 11:11Speaker 02

  Yeah, I think it was all very well said. I would say like just going back to one of the earlier parts with respect to is it purely going to be an institutional platform? I think to some of the stuff that David spoke about, they're still very much leaning into base as the ecosystem for retail going forward. I do not think that's going away anytime soon. Like I think they fully intend on building that out based on everything that they've said, all the product launches that they have planned, all the protocols and things that they're incubating over there. It is certainly like a big part of their business going forward. And then the other thing I would add is, on the stablecoin front, USDC distribution is something that is obviously bootstrapped with Coinbase Commerce, what

• 11:53Speaker 02

  David just talked about, but getting USDC into the pockets of a number of people around the world, leveraging base, leveraging the Coinbase wallet, all of these different pieces of infrastructure that they've built over time is like a big part of their strategy as well. And I think Similar to what David said earlier, it's not truly going to be transaction revenue as like the primary monetization vector for the business over time. There will be this B2B component. There will also be this heavy consumer payments angle. There will also be business payments that go along with it. And then if you tack on base and the whole consumer ecosystem, it starts to give you a better sense of what like the business looks like five years out. And then the last piece I would add would be they're still trying to

• 12:38Speaker 02

  integrate the whole on-chain economy into the Coinbase platform as well. And you see that with the Dex integrations that they have or that they're working on to integrate all the range of Dex tokens. And I think their view is just to make everything that you can trade on-chain tradable on Coinbase, the platform. And like, that's what the business ends up looking like, in addition to all the B2B stuff over time.

• 12:59Speaker 01

  The last thing that's a kind of the call option on Coinbase is like also Coinbase Ventures, right? They're like one of the largest VC firms in the entire industry. You know, that's very much not discussed today. And like, we already see how well Circle did when it IPO'd. The industry or, you know, Wall Street clearly wants crypto equity exposure. I have to imagine a lot of their VC portfolio is in based in tokens, but I'm sure a good amount of it is also in crypto companies that plan on IPO-ing in the future. So there's a world where like that, that VC book that other competitors don't have is worth a lot of money in over the next five to 10 years.

• 13:39Speaker 02

  Yeah, I guess it's hard to ask you to give a valuation on what is fundamentally a VC portfolios. Like, really can't really do that. But if you had to do that to compare that to Coinbase's like revenue, how do you compare apples to oranges here if we're trying to compare sizes?

• 13:54Speaker 01

  Yeah, I mean, I would not actually, I don't know, Omar, you might, you might be more versed in that subject, but.

• 14:01Speaker 02

  No, to your point, there hasn't been enough disclosure around like the size of their holdings and what they're marked at to like really have a good sense. Like we all have a good idea on the names that are in there. But we have no idea the amount of money. And so, so it's really hard.

• 14:16David Hoffman?

  We don't know how much they raised?

• 14:17Speaker 02

  I, my understanding was that it's all balance sheet capital, but I don't know if there's any external LPs. I'm not sure. So.

• 14:23David Hoffman?

  I don't believe there is, but I don't think that they're even publicly disclosed. Okay. So it's a true dark horse. So maybe we could just like fairly guess somewhere in hundred million dollars of like total investment into this thing. I think we're just kind of like blindly throwing darts here. It seems maybe around there. And then, you know, in the optimistic scenario, you know, you get a 10x, 15x, 20x over the longest of terms, it starts to come in at like one to two billion. These are just my rough napkin maths. Maybe Omar, you would disagree. But if it's a one or two billion dollar valuation, I don't think that's moving the needle too much on what is currently an 85 billion dollar valuation on coin stock. That's my logic. Omar, check me on that.

• 15:02Speaker 02

  Yeah, no, I think that sounds like reasonable. I'm sure if we dug around the financials, we could see like what they have it booked out on in like some of the disclosure there. So, um, but you know, off the top of my head, saying that it's between like worth one to five billion, somewhere in that wheelhouse, depending. That's probably high to be quite honest. Um, like probably skews closer to a billion, but, um, uh, yeah, I mean, it sounds reasonable. Um, yeah, unclear to me, to be honest. So.

• 15:32David Hoffman?

  Not true. We'll treat that as a cherry on top. Let me go back to kind of the backend infrastructure angle and then we'll turn to Omar to lead the Robin Hood section. It sounds to me that like Coinbase is packaging up their, their strategy is to package up their software, package up their exchange, package up their, you know, I don't know if it's, if this is right, but USDC on base as a Visa competitor, along with some of that, that logic. Uh, and really, you know, start duplicating some of the efforts that they have already made building Coinbase in the first place. And then, you know, allowing fidelity to like slot that right into the backend of their brokerage or really any sort of, you know, entity who's like, oh, you know, Crypto is real. We are, we now need to serve crypto to our clients. Do we need to build

• 16:15David Hoffman?

  an exchange or can we just like hook in some, I don't know, SDK, I don't know if that's the right technical term, but just like allow some sort of integration of what is effectively the Coinbase backend, but it's whitelisted for fidelity customers or TDM air trade customers. And that's a very good distribution strategy, as I understand it, rather than going like in the trenches, going individual customer by individual customer, they're just going to brokerages and getting all of their customers in at once. I would imagine those, they're charging those customers lower fees in order to make that work, but on an aggregate basis, when you add everything together, then if you just acquire all of the trading demand of every single brokerage that integrates Coinbase in the backend and their software

• 16:57David Hoffman?

  products, sounds like a pretty strong arena of growth to me. David, check me on that.

• 17:03Speaker 01

  Yeah, I agree. I mean, I think maybe not one to one parallel, but like looking at AWS's business, it's extremely high margin. Amazon built AWS largely for their internal purposes in the early 2000s and they realized like, look, like every startup in the world, every business in the world is not going to want to have their own on-prem server or on-prem, you know, compute. And why not try like white label it or why not try to offer that as a service? And I think the same can be said for, you know, backend infrastructure for crypto. Yeah, some firms will want to bring that in-house. I imagine maybe Robinhood might be one of those folks that want to do that because they have the chops to do it. Maybe some fintech and tradFi firms might want to bring that in-house as well. But I

• 17:47Speaker 01

  think a large majority of businesses that want to come on chain will not. They will outsource that because it's cheaper. They don't have the technical experience. And the reality is like, custing crypto is extremely risky, like, right? Like even the largest centralized exchanges in the world have gotten hacked before, ala like five bit. And other centralized exchanges and other like major protocols before Coinbase has proven that they have like a trusted insecure brand, um, uh, secure, like, uh, you know, security as a, as a crypto business has been operating for 12, 13 plus years. Um, and they know what the friction points are because they have themselves been moving more on chain as a business over the past, you know, decade. Um, and I think they know exactly what the

• 18:28Speaker 01

  innate pain points are to offer a really nice package service to other companies in the future. So I have to imagine long-term, it's gonna be very hard, high margin business. Um, but yeah, I think it's akin to AWS, maybe not exact parallels, but that's how I have my mental framework for. So Coinbase to me, like a thesis for Coinbase, if I can sum it up in one sentence, is the entire world moving on chain. Like it is the pure play of the on-chain economy growing.

• 18:56David Hoffman?

  Yeah, I also enjoy the notion of, uh, if Coinbase is integrating things like Morpho or Dex aggregation directly in their front end. Well, that too can also get packaged up, put in a piece of software, integrated into TDMA trade. And if it's providing a value to T, like to Coinbase's customers, then it can also, you know, provide a value to, you know, any generalized broker brokerage that integrates Coinbase. And then Coinbase uh, just becomes the conduit for, you know, TradFi customers and assets and logic to, you know, touch the chain, uh, pretty seamlessly, uh, with that Coinbase brand. Okay. So that's, I feel like this conversation is pretty young in the Coinbase world. Like there's starting to be some brewing conversations about it, but like, there's a lot of work to be done. It's a big sector of growth that Coinbase is just at the starting line for. Feel like

• 19:40David Hoffman?

  we've covered that pretty well. There's other parts of Coinbase growth there. Uh, go ahead, Amo. What do you want to say?

• 19:45Speaker 02

  No, the, the only thing I would add to the Coinbase infrastructure plan is like similar to what we discussed, there's always this option, which is like buy versus build. And a lot of the time companies don't want to build this stuff internally because they don't have the expertise. You end up having to hire, you end up having to go outside the organization, bring the talent in-house, and then ultimately you end up trying to build a product, you have to test that product, and that's like a whole time lag, especially when crypto, crypto is relatively time sensitive today. And so a lot of companies do want to outsource this and use an infrastructure provider. That being said, I think one of the big challenges for Coinbase with this play,

• 20:24Speaker 02

  and not to push back on it, but I do think that there is an inherent tension between Coinbase's retail business and this exchange infrastructure as a service business. Because ultimately, the profits that they do make from the exchanges of business, exchange as a service business, end up going back to funding their operations, which then they use to fund incentives to then try and bring customers into the retail side of their business and get them onto base and the whole range of transaction activity. And so, you know, some potential customers of Coinbase or even Kraken's institutional offering, they definitely think twice, I would say, about who they're going to give their business to.

• 21:07Speaker 02

  And we've kind of seen some of the infrastructure providers, whether it's on the staking side or the custody side, go and pitch directly as opposed to getting the bundle from an exchange itself, who they're going to compete with for those same customers. So that's the only thing I'd say in unlike the things to just think about for anyone that's looking at that side of the business, because there is a tension and Coinbase, it does compete with all of these platforms. Like they rightfully should. It's one of the highest margin parts of their business for those customers.

• 21:36David Hoffman?

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• 22:20David Hoffman?

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• 23:04David Hoffman?

  Download Binance today and get started in minutes. Binance is not available in certain countries, including the United States. Check its terms for more information. So David, we could talk about USDC income into Coinbase. We could talk about base on-chain revenues. In terms of just like kind of understanding the future growth of Coinbase, I feel like we've laid down the backend to TradFi thesis pretty well. What's worth adding to that list of growth venues for Coinbase before we wrap up the Coinbase side of this conversation?

• 23:33Speaker 01

  I mean, they're making 60% of Circle's revenue, right? And like, it's still very early. It's very early days for stablecoins.

• 23:41David Hoffman?

  How locked in is that? Is that just a permanent part of the Circle deal? Is that going anywhere?

• 23:47Speaker 01

  I believe, and I might be misspeaking slightly, but I believe that it is up for renewal at the end of 2026. But Coinbase pretty much has say in any material changes to the contract. So for example, that partnership Circle did with Binance to hold, I think they had to hold like 1 billion USDC on Binance's Dallachy, and then they had like a revenue share agreement with Binance. Circle had to go to Coinbase to get their approval in order to allow that to happen. Obviously, that's in the contract, that's in the terms of like this current contract, but my understanding is like it's effectively perpetual contract.

• 24:27Speaker 01

  But there is room for negotiation at the end of 2026. Again, might be misspeaking there slightly, but I think the power is definitely in Coinbase's hands. So look, it's very early days for stablecoins. That is not to say the stablecoins of today are going to be the stablecoins of tomorrow. Obviously, we probably talk about like global USD, which is Robin Hood's consortium stablecoin. We can talk about PayPal USD and even JP Morgan trying to tokenize deposits on base and what have you. It's like every fintech company or every bank that is anyone will try to get into the stablecoin game. And over time, that will be a low margin, very highly competitive business. But Circle is the largest regulated USD stablecoin in the US economy today.

• 25:11Speaker 01

  And I don't see that changing anytime soon. And if anything, you know, stablecoin and USDC mark cap is probably going to 10x over the next two to three years. I'd be surprised if it didn't. And even with future rate cuts, like that is going to be a large, a material revenue driver for Coinbase. So, you know, that's also, I think, like a major thing that I think everyone has already baked into. You know, moving on to the valuation today, but everyone's already cognizant of that revenue share agreement. And it just like, it's a really stable, I think, income stream for them to continue to, you know, build out base, build out their trading infrastructure, build out their Coinbase, their crypto as a service offering.

• 25:50David Hoffman?

  As I understand it, Circle pays the operating expenses after Coinbase takes their 50% cut. So like Coinbase feels like they got a really sweet deal, taking a lot of, it's all profit for Coinbase. And they don't have to pay for any of the employees or any of the, anything else. That's my, that's my understanding. Is that correct?

• 26:09Speaker 01

  I believe that's correct. I mean, they definitely, they max extracted on that one, for sure.

• 26:15David Hoffman?

  Yeah, like the rough, the rough calculation is Coinbase gets all of the interest income of USDC held on their platform. And then it's a 50 50 split on the rest. On the rest. And to your point. They get 100% of everything that's on their platform and 50% of the rest. That is a sweet deal. Yeah, that's like the rough calculus. There's nuances to like where USDC is held and Circle has a portion that they retain on their own, but it's relatively small. But that's, that's the mental model for how to think about it. And it was funny because at one point Circle had flipped Coinbase last week, um, which is counterintuitive when one company makes more off the product than the other does. Right, that is, yeah, I don't think we've ever seen it before. Right, right, right. David, there's base revenue from, from transaction fees.

• 26:59David Hoffman?

  Coinbase is a Bitcoin custodian. Any last subjects that are worth touching on for sources of future Coinbase revenue?

• 27:06Speaker 01

  Yeah, I mean, I think there's so many different, um, there's so many different revenue streams that are non-material today that will, you know, I think will be in the future. Base revenue, obviously, being, being one of them. But I think if the listeners today were going to take away something, I think it's look, they're still a, they, they, they have a high, uh, stable revenue stream come from stable coin rewards with their partnership with Circle. They make a material amount of their revenue from trading fees. I don't see those two changing for the foreseeable future. But there's all these other things, largely their infrastructure as a service offering for, you know, the blockchain economy growing or bringing on fintechs and traditional banks and blockchain economy.

• 27:48Speaker 01

  Like, that, I think, is going to be a, just a more material portion of their revenue over the next three to five years. And I think will, over time, become the majority of their revenue, uh, if my thesis is correct. So that's, that's a yes. But yeah, there's a bunch of other service lines that, uh, are not, you know, staking rewards, right? Like, they're the largest institutional staker in the entire industry at this point. Uh, I couldn't even tell you how many tens of billions of dollars they have under their, their management, but...

• 28:14David Hoffman?

  Yeah, as I really understand all of this revenue sources, uh, it doesn't seem that competitive with Robinhood. It seems pretty differentiated as a product line. Now, I think we can kind of extrapolate into the future and be like, yeah, eventually these two giants will like butt up against each other. As it stands today, it feels like the product lines and where they get their revenue are pretty, like, at harmony, at peace with each other and not actually going toe to toe. That's, that's my understanding. Omar, check me on that take.

• 28:41Speaker 02

  Yeah, you're right. But I'm happy to go into it whenever when we talk about Robinhood.

• 28:45David Hoffman?

  Yeah, let's do it. Yeah. So give us, give us that same kind of lay of the land. What's the current state of Robinhood? Where do they get their money from? And then we'll touch on vehicles for growth.

• 28:53Speaker 02

  Yeah, maybe just like going back in time to, to kick it off.

• 28:57David Hoffman?

  Sure.

• 28:57Speaker 02

  So Robinhood is founded at a similar point in time to Coinbase back in 2013. And it was founded by Vlad Tenev and Bajubat. And they both had met at Stanford. And initially, they were working on HFT software that they were selling to institutions. Over time, that ended up pivoting. And they ended up building a retail-first platform. And they had like two key insights that had driven a lot of their decision-making at that time. They were of the view that the world was going to be mobile. And that retail users didn't want to pay fees. And that was the core premise of the business at the time. Which was, we are going to build a really slick intuitive user interface that people can use to trade on their phones. They can get all of the relevant information. And they don't need to pay fees.

• 29:42Speaker 02

  And the world's youngest generation, which is like a big part of the Robinhood story. It, this is going to be the way they live. Everything will be mobile first and native. And that is what they want to do. And so the Robinhood story, story started back then. And over time, it has just been a compounding growth story in terms of users. And so like, if you rewind the clock a little bit, if you go back to like 2017, they had 2 million users. If you go up to like 2020, they had 12 and a half million funded accounts. And then if you go to today, it's a business that has like 26 million users. And for context, the US population is roughly 340 million people. And so they're just like under 10% of the US.

• 30:24Speaker 02

  Um, but it has been like a story that has been built on the back of like, what does the next generation of investing products look like? And that's the way they started. And that's the way they've built their business over time. And as, as Robinhood today, so the way to think about it is there's $256 billion of assets on the platform across these 26 million roughly funded accounts. Which means there's roughly 10,000 Dollar balance per account on the platform is like a very simple way to think about it. The platform itself does like $3 billion of revenue. And the bulk of that, so like half of it comes from transaction based revenue.

• 31:05Speaker 02

  And then the vast majority of the rest comes from interest income. Now, like interest income isn't to be construed the exact same way as it is with USDC. But it tends to be the large chunk of that is margin based interest. Then there's some cash sweep, there's a range of other interest products, but largely Robinhood operates off of a trading fee based model, which they, similar to Coinbase, are trying to diversify over time. And I think for the listeners that aren't that familiar with the story, um, the big thing that they did to have no trading fees directly was a concept called payment for order flow.

• 31:44Speaker 02

  And what payment for order flow is, is market makers will pay you for pricing sensitive flow effectively. Which is I'm a retail order, I put in, ordered by one Bitcoin. They give me a quote and they will pay me for that quote. They'll go execute it and they'll execute it across a range of different venues. And there tends to be a spread in there, which is why they're paying you for that flow. And Robinhood gets a portion of that, Robinhood gets what they are paid for that flow. And so like, that's kind of how the business model works, which is payment for order flow. And that's how they make their revenue. So unlike Coinbase, which is direct fee, um, that it gets executed on the backend. It is just slightly different, but there's still a revenue model associated with it.

• 32:26Speaker 02

  Um, and, and so that's like roughly what like the business looks like today. And if you were to just like, kind of break out, okay, like of the, of their transaction based revenues, like where does crypto fit into this whole piece of the pie? Today, the half of their business effectively is options with, you know, if you look back to 2024, it's like 760 million, I think is the number. And then if you look at crypto, crypto $630 million roughly. And then if you look at traditional equities, just like buying Nvidia or SpaceX or Tesla, that's 177 million. And so like, that's the way to kind of think about the business. Historically, crypto has been like relatively small.

• 33:10Speaker 02

  Like if you go back to 2019, I believe they made like $10 million off of crypto. And so like the crypto story has been a relatively new in the broader Robinhood story vector for growth, and it's been something that they've leaned into really, really heavily in recent years. But the Robinhood story for most people out there is, has been one of traditional financial products. And I think like, that's probably the easiest way to think about Robinhood's revenues and broad business today. But there's like a huge other component, which is like part of my like whole thesis on, on the business, which I'm happy to get into, but I'll just like pause there and talk about it.

• 33:52David Hoffman?

  And I think that was great. I want to talk about the two big events that Robinhood has had this year. The one just happened, how the, to Catch a Token, that was a crypto event. And then maybe three months ago, they did more of a, like a traditional finance event where they introduced Robinhood Banking, the Robinhood Credit Card. So that's kind of like their more, you know, more, you know, tradFi, not crypto, but you know, retail forward, you know, retail banking and trying to, it looks like become a full stack financial company. I'm guessing if we're going to talk about venues for growth in Robinhood, they're going to come from these two announcements, which is like very convenient that we have these two like announcements to talk about. So I'll throw it back to you and give us your broad thesis and then we'll go into those individual announcements.

• 34:35Speaker 02

  Yeah, so like my thesis on it is Robinhood is building the multi-generational financial super app for our generation. And they were brilliant in the sense that they went after the youngest cohort of customers with their initial product back in 2013. And if you like, just think about it, 10 years ago or 12 years ago, all of us were much younger and you know, we probably had a lot less money and, and you know, we were probably starting out our careers. And they went right after this cohort of customers that was young, didn't want to pay fees, but was on their phone. And over the last 12 years, they've managed to grow with them. And at the same time, they've added cohorts sequentially of younger and younger and younger customers.

• 35:20Speaker 02

  And if you like, look at the population of Robinhood's customer base, 75% is under the age of 44, roughly. And so like, you have this platform that skews really young, that's really active on their phones, and that trades a lot. And what does this generation want to do? They want to do everything off their phones. I don't want to go into a bank branch. I don't want to go deposit checks at the teller. I don't want to go to an ATM to pull out cash. I want to literally do everything from my phone. And so Vlad, what he's trying to build is like, stage one of Robinhood was like, I'm going to build like this great active trading platform, which they continue to do and we can talk about. But like, the next arc for Robinhood is like the all-in-one super app for your everyday needs.

• 36:02Speaker 02

  And similar to what David mentioned earlier, it's like, this is where Robinhood Gold comes in. And for people that aren't familiar, that's their subscription program. And through Robinhood Gold, and they have a Robinhood Gold card, what this allows you to do is use Robinhood for your day-to-day spending, and that comes with a 3% cash back, which can be redeemed in the app. It allows you to get matches on retirement accounts. It allows you to get a cash sweep in your Robinhood account. It allows you to have margin interest production fees, all kinds of different benefits that they are enveloping into a full-stack financial services platform that covers your day-to-day needs. And so whether you want to spend day-to-day at Chipotle, whether you want to deposit money in the bank, which you'll be able to do over time through their bank partners,

• 36:46Speaker 02

  whether you want to trade equities like Tesla, or yeah, like Tesla, or Nvidia, or what have you, you can do that directly on the platform. Whether you want to buy crypto, you can do that directly through the platform as well. If you want to punt out options, you can do that. Now they've obviously integrated contract markets. And so if you want to have Robinhood prediction market offerings, like you can do that directly through Robinhood as well. And so like, you can kind of see the whole Robinhood story, which is, I'm going to grow with this cohort of customers. They're going to get richer and wealthier over time. And I'm going to sandwich them with a full range of financial products so that they don't need to go anywhere else. They can use me for literally everything.

• 37:29Speaker 02

  I think that is like the part of the product that I or the part of the business that I'm like the most bullish on because like I see it with everyone my age. I see it with people under a younger me and even some of the people that are older. It's just everyone wants consolidation. I don't want to use a credit card from Amex. I don't want to bank with Chase. I don't want to do all of these things across all of these different places and have 10 different accounts. I want everything to be mobile first and tailored and optimized to the way I conduct my day to day life with like extremely limited friction. And Robinhood is certainly going in that direction. And I think when you think about the crypto part of the business, that's where it fits in. It's like our generation is younger. We recognize the importance of crypto, how big of a role it's going to play in society.

• 38:11Speaker 02

  And it's a great way for them to continue to sandwich these users with the full stack of financial service offerings. But I will pause there. I've gone on for a little bit, but yeah, we can talk about anything.

• 38:22David Hoffman?

  I think that was beautifully articulated. I re-downloaded Robinhood. I initially got into investing, like I think many people here, through Robinhood, even before crypto, like right out of college for me. It was like two years before I got into crypto and I was owning like semiconductors. I was owning like 2X long semiconductors because I really like risk. Then I left Robinhood because I got into crypto and so I didn't touch Robinhood for years. But then it was sometime during like the last bear market in 2022, 2023, and we were all looking at coin at like $30. And I was like, well, you know what? I'm gonna, I'm gonna buy some coin. And so I re-downloaded Robinhood for the first time. And that's where that's where I got my first coin shares. And in that process, I was thinking, oh, where

• 39:04David Hoffman?

  do I even go to buy equities? Oh, yeah, I can get download Robinhood. And I was thinking in that moment, if it wasn't Robinhood, where else would I go? And I thought like, yeah, I guess I could do a TD Ameritrade. I could do a Fidelity, but like that just doesn't feel right at all. That just feels so boomer. So like Omar, the question is like, who is Robinhood's competition? I know there's pre-established brokerages that already have their base, but I couldn't think of a single alternative that was like interesting to me as a millennial who just wanted a basic exposure to spot stocks.

• 39:40Speaker 02

  Yeah, I mean, like it looks like all of the people that you know, which is the Fidelity's of the world, the E-Trade's of the world, the Ameritrades of the world, and IBKR's of the world. Like every traditional broker is kind of who they're competing against, but our generation kind of has this. Tech-first approach, I would say. It's like, we want something that's super simple, easy, not hard to onboard onto, which Robinhood abstracts so much of the pain away. And then, once you're on there, you want it to be super simple and like relatively few clicks before you're buying an equity. And so, like, all of the traditional brokers is who they are competing against is the way I think about it, especially in the US. And, you know, they compete against the banks more directly on like where they're going with the business today.

• 40:24Speaker 02

  But all of the boomer products that you can think of is who they compete with.

• 40:29David Hoffman?

  Right. And I can't imagine any of them are innovating or growing nearly at the rate of speed that Robinhood is.

• 40:35Speaker 02

  Yeah, this plays into the other, into David's thesis, which is the exchange infrastructure is a service play on Coinbase, which is like, everyone recognizes what's going on. And they're like, okay, I need to provide these customers with the full range of financial services offerings. Crypto is certainly one of them. And so, like, how do I get that into my platform so I don't lose them to Robinhood? And, you know, it's the very, it's exactly the reason we've seen Robinhood's accounts grow from 2 million in 2017 to 26 million today. It's, it's just like, people are looking for somewhere to do everything in one place. And Robinhood is arguably one of the best places to do that.

• 41:11David Hoffman?

  David, when you hear Omar's thesis about Robinhood, what do you like? Anything you disagree with? Anything that you think Coinbase can actually like push up against Robinhood with their, you know, future aspirations?

• 41:24Speaker 01

  I love Robinhood. Like, I'm a user, I'm a power user out there. Like, I know I'm supposed to be like a coin bull here, but like, Robinhood, Robinhood's a great company. It is a masterclass on like product strategy and just, they're, whoever their product team is, like, every single web two, web three company should be trying to poach them because it is, it's a beautiful app. It's so easy to use. It's simple. My first foray into investing very much like yourself, David, and I'm sure Omar as well, maybe, was like downloading Robinhood back in like, uh, early 20, or like mid 2014, 2015, like right out of college and just messing around options. Like, it was just so simple. As someone that like did not do like any prior investing prior to that, like in my college days, like it was, it was.

• 42:09Speaker 01

  It was investing for dummies and they made it so simple. Um, but they have obviously large aspirations and they they've done a killer job with their product. They've done a great job with Robinhood Gold. I think what Coinbase can learn from is like product first, like they don't. I don't love Coinbase's major app, main app. Um, it is clunky. It, I would argue that maybe it's gotten a little bit better over the past year or so. But, um, it is, does not have a cohesive. It doesn't feel like a mobile first app, even though like it, it probably is. Um, but it doesn't feel like it. Um, I can't easily buy and sell assets. Um, in like the, the same like user interface that I'm used to or accustomed to, uh, with Robinhood.

• 42:54Speaker 01

  Um, I, I think Coinbase is gonna learn a lot from like the product and user experience side. Um, but I mean, I largely agree with everything Omar said, like they are the. They're the, the millennial, Gen Z and future generational, uh, JP Morgan, Bank of America, Morgan Stanley. Um, they, they're killing it. Um, and I think what Coinbase. I don't know if Coinbase has the product chops cannily to be able to compete with Robinhood in that arena. But I think they do have the chops to do and the expertise on is like everything in the backend. Don't get me wrong, they should absolutely still go toe to toe with Robinhood, becoming a financial super app. And I think they're obviously trying to make strides in that.

• 43:35Speaker 01

  They see obviously the, the future of, uh, subscription, you know, subscriptions like Gen Z's millennials love paying for subscriptions. So they launched Coinbase one where you get like pretty much free training, uh, on, on the app. Um, you obviously can now get the Coinbase credit card, which is like very similar to a Robinhood, Robinhood Gold. So they're definitely converging on the same offering for retail, uh, and like B to C strategy. But I think where Coinbase is, is differentiating is obviously more on the B to B side.

• 44:03Speaker 02

  Yeah, maybe just like one of the things I want to add for like the listeners is that is on the Robinhood side. In 21, there was like an existential crisis for the business and I'm sure many people that are listening probably remember it, but um, the whole GameStop saga. And I think one of the things and to draw a parallel back to crypto, maybe is um, the Maple and Euler stories of this year, which have been like two incredible comeback stories. Robinhood just had like its own version of that in 2021. People hated Robinhood. And if you went on to Wall Street Bets on Reddit and you went and like checked out any of the comments, people were seething at Vlad. They despised it.

• 44:47Speaker 02

  And I think there is certainly something to be said for the businesses that can survive existential crises, rebuild and come back stronger than ever. And at the same time, have their customers be some of their loudest supporters and sources of referrals. And like, if we look back in the history of time, I do think like Robinhood's 21 crash will be looked back at as one of the defining moments in its in its history, which is like it survived what could have been like the end of the business and it came back stronger than ever with a revigorated product strategy that changed the arc of like what this business is going to look like for the next 10, 15 years. And so

• 45:30Speaker 02

  um, I I think it's like worth noting that just because like Brazilian management teams as an indicator for good businesses, you don't necessarily see that too often. And so I think it's worth just noting.

• 45:42David Hoffman?

  Yeah, I'd actually like to learn a little bit more about that because to this day, Robinhood's brand still has echoes of that uh GameStop event. Like when I I posted the recent interview with Vlad I did, I had like a, I mean, you get reply guys on Twitter of all shapes and sizes. So there shouldn't be any sort of a particular surprise to anyone, but like somebody was like, oh, Vlad's corrupt because they yoinked the sell button non GameStop. And so, you know, there's some leftover notes uh left from from from that PR crisis back in in 2021. Now that we have like four years of hindsight behind us, my, I don't really know the true details of what happened. The accusation towards Robinhood was that they yoinked the sell button because the guy from Citadel called them up.

• 46:27David Hoffman?

  And it was like, hey, or no, it was the buy button. They yoinked the buy button because the guy from Citadel called them up and it was corruption. And then there was like a rebuttal from Robinhood that I don't really remember the nuances, but there was like a seemingly just like perfectly valid explanation for this that no one really wanted to hear. That's my understanding. I'm probably, I think listeners are about probably where I am. Omar, do you have any more clarity about like what happened? And if like Robinhood was like vindicated or not, or maybe there was corruption? I don't really know the details. What, what can you say?

• 46:56Speaker 02

  Yeah, you're, you're pushing the limits of my recall, but I, I would say that um,

• 47:03Speaker 02

  my, my understanding still is with all of the GameStop volatility, Robinhood had to come up with tens of billions of dollars, if I'm not mistaken, to post um,

• 47:18Speaker 02

  with the DTCC, if I'm not mistaken. And like they did not have access to that amount of money at the time. And so what they ultimately end up having to do was just restrict trading. And it was largely a function of the regulators requiring them to post capital as opposed to anything like nefarious on their end. And obviously like that impacted retail the most. And a lot of people that were bidding on the run up didn't have the ability to sell the stock because of like these crazy crap capital requirements that Robinhood had to come up with. And so just turned into a PR nightmare, which

• 47:54David Hoffman?

  Right.

• 47:55Speaker 02

  ultimately end up being like, oh, Robinhood is going after me. And their hands were tied and there wasn't really anything they could do. I think the messaging could have been much better and they could have been much clearer at the time. If I'm, you know, recalling everything um perfectly, but uh, I, yeah. It was a function of capital requirements as opposed to anything nefarious.

• 48:14David Hoffman?

  Right. Right, yeah, that's my loose understanding as well. One thing I want to touch on, because this will start to bring up some pretty good comparing and contrasting between Robinhood and Coinbase is Robinhood's announced banking platform that is coming, I think, in like Q3 or Q4 of this year. They are just announcing the fact that they can become a bank. And so retail customers can just deposit money in the Robinhood banking platform, which you would think has a very thin wall between their brokerage equity stock platform. Something that Coinbase does not have, because Coinbase still has banking partners that it needs to bank with. Robinhood itself is a bank. What kind of advantages does Robinhood being a bank give Robinhood over Coinbase?

• 48:57David Hoffman?

  Or is that not really much of one?

• 49:00Speaker 02

  My understanding is that they're not actually going to become a bank. They're going to use banking partners. I could be mistaken, but even if you look at their credit card, they're using Coastal. If they become a bank, there's just a lot, first off, it takes a lot of time. And second, there's a lot more regulation from a capital perspective. Now, you have various amounts of capital that you have to post across different tiers to maintain your status with the OCC and all of the different bank regulators that there are in the US. And so Robinhood doesn't want to do that, but they want to become a financial technology company. And I'm sure at some point down the road, they will arguably try and become a bank. But today, from my understanding, their strategy is to become a banking service provider. And like, the way you can kind of see it, even on the mortgage side, they're not the

• 49:45Speaker 02

  one providing the mortgage directly. They're sourcing mortgage rate for you to then switch your mortgage over, which then they get paid for, versus underwriting every single new mortgage application on the platform.

• 49:59David Hoffman?

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• 51:25David Hoffman?

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• 52:07David Hoffman?

  So Robinhood just announced the Robinhood Chain. They also announced tokenized stocks, which I think is one of the more exciting things that we've seen in crypto, perhaps since the Bitcoin ETF. I can't really think of another thing that was more exciting, more new for crypto since that. Coinbase, maybe two or three weeks ago, filed some requests with the SEC for a regulatory sandbox for tokenized stocks. So you know Coinbase is eyeing this as well. Robinhood, I mean, it's just an announcement, but you can kind of see Robinhood beating Coinbase to the punch in tokenized stocks. And then also the Tokenized private equities like SpaceX and OpenAI I think is extremely exciting to people. Only available for EU citizens because of compliance.

• 52:51David Hoffman?

  But nonetheless, you are now seeing Robinhood chain being announced, which of course goes up toe to toe against base. Both Coinbase and Robinhood want to produce tokenized stocks for the crypto world. And so we are now seeing at least some of the spheres of influence butt up right against each other. Omar, when you saw this announcement from Robinhood just earlier this week, what were your first initial thoughts?

• 53:13Speaker 02

  Yeah, I think you know, Vlad's kind of teased the announcement over the last, I'd say, six, 12 months. And so you had a decent sense that it was coming. No one had any particularly great insight into what it was actually going to look like. But when it was announced, it made perfect sense. I'd say like, the important thing to understand or think about with respect to Robinhood, and it's slightly different relative to Coinbase. But Robinhood wants to be this place that allows our generation to trade everything. And so if you like, think about it through that lens, like having an on-chain strategy is like critically important, right?

• 53:53Speaker 02

  Because like now you can have this liquid playground for a bunch of people to trade a range of different stocks, securities, non-securities, and everything that you can kind of imagine under the sun. And like, what better way for them to do that than have their own chain? And like, in the traditional financial world, trades get routed to the range of traditional venues or liquidity providers. But here, this now allows them to be their own venue. And it's kind of an alternative take on like what the world looks like. Whereas Robinhood was facilitating access to the traditional financial world, they're almost building the infrastructure for the new world.

• 54:34Speaker 02

  And I, and I think like, it's important to understand when you think about the business as a whole. Because if you look at like their long-term arc and you like go and you read and you listen to them speak about it. Phase one of the business is be this active trader platform. Phase two is like the all in one neo bank platform, which is like all of your financial services needs. And phase three is like the world's financial infrastructure. And so if you think about it through that lens, this is like a perfect piece to add into their product strategy, which allows them to offer like tokenized equities. It allows them to like use that as an infrastructure for the range of foreign markets that they're going to enter into over time. It allows them to offer a range of things like private stocks again, which people can't trade.

• 55:17Speaker 02

  It'll allow them to do private real estate over time, like a whole bunch of different products. Now you have the flexibility to do in an environment which you control. As opposed to going and trying to back into the traditional financial system and working with a range of players.

• 55:32David Hoffman?

  David, from the Coinbase side of things, what do you think was going through Coinbase's head when they saw this announcement? I'm sure that they thought that this was inevitable, but now they have a moat to defend, right? You know, base, you know, pre-existing ecosystem, Robin Hood, just Robin Hood change as an announcement. And so, you know, already has a huge head start, but you can see like Coinbase is like, you know, biggest rival in this space start to appear. So what does Coinbase need to do to defend its moat? What do you think its next steps need to be?

• 56:01Speaker 01

  Yeah, I mean, I think that Coinbase is still largely like the premier US based crypto exchange. And like they're obviously trying to expand internationally. Obviously, Robin Hood is starting largely with international, you know, largely EU markets for its crypto strategy, which, which makes sense given the regulatory environment there.

• 56:21Speaker 01

  I think that they, I think they're thinking like, we have to be first mover advantage to all US based crypto products. And in order to continue on, it's like, if they're going to try to tackle Robin Hood against like the B to C vertical. They're launching US perps in, I think, July 21st, so two and a half, three weeks from now. Their hope, I'm guessing, is like similar to what Robin Hood did for options, right? They made Rob, they made options easy for our generation, for high beta chasing, risk on customers. And like perps of the next evolution of, you know, pretty much options. Uh, for crypto natives and they're trying to introduce perps to the, the US capital markets, the, you know, the retail base for them. So I don't know if Rob, I don't know why Robinhood

• 57:06Speaker 01

  hasn't announced US perps yet. Um, obviously it's not a regulatory thing. Maybe it's because the acquisition of Derbit for Coinbase effectively allowed them to do this and they're not effectively perpetual futures. They're actually just like long dated, uh, options that have like a five year expiry, but who really holds perps for five years straight? Um, so I think Coinbase is, is thinking a few things. It's one, we have to grow US perps like ASAP. Uh, that could be a material, you know, revenue driver for the business if they succeed. We already know how much like, you know, Binance, for example, I think 90% of their entire trading volume is perps compared to spot and it's like a large revenue driver for Binance and other like offshore

• 57:46Speaker 01

  centralized exchanges. Um, I'm unsure how worried they are about Robinhood chain. Like they should be worried, but if history repeats itself, like other centralized exchanges or, uh, with large distribution, large customer bases have not done that well launching their own L2 or their own L1. BNB may, may be the exception, given like they're the 900 pound gorilla in the room. They have a hundred million plus global US base. But like, if you look at every other centralized exchange so far, like haven't done that well launching their own L2. Bybit, I think they've reported they have a 60 million global, you, uh, you know, user base. That is, um, significantly larger than what Robinhood has. Has anyone

• 58:29Speaker 01

  used Mantle? I haven't. They're now launching on Solana with their own like, you know, uh, Decks. Um, has anyone used Ink? Uh, nothing against Kraken. I think they're a great exchange. I am a customer of theirs as well, but like, I haven't used Ink and now they're launching tokenized stocks on Solana. Um, yeah. World Chain, like I, not the exact same thing, but like World Chain has also found a limited traction. Coinbase has a crypto first culture. They have the brand. Um, and I think it's going to be very hard to unseat Coinbase, uh, as a L2 or as your own like execution environment. But if any team is going to beat them, it could

• 59:12Speaker 01

  be Robinhood because of their operational excellence and their, just their ability to execute. Um,

• 59:18Speaker 01

  But I think obviously they're probably worried about their international expansion plans like Robin Hood going into EU. Is obviously like a risk for them. Coinbase's international derivatives platform has like grown decent amount over the past. You know, six, six or so months. I think they recently hit over 10 billion O I. I could be mistaken there, but they it has seen like some like really well, good growth over the past. You know, I guess either date. I'm not personally familiar with how strong Robin Hood's brand is in the EU. I think that'll be a very interesting to see in the coming quarters on earnings report, like how well is their international expansion plans growing?

• 59:59Speaker 01

  Coinbase hasn't done exceptionally well on that front. And I don't know if that's an execution problem or the fact that like Binance and all these other offshore exchanges just have like such a moat. And Binance themselves in their own right are trying to build their own super app, right? And they have, again, an order of magnitude, maybe of more users than than Robin Hood does. And they have shown to their ability to execute over the past few years.

• 1:00:25Speaker 01

  But yeah, if I'm Coinbase, first thing I'm thinking about is like make US perps like the go to venue for high beta chasing retail users. Like that should be the product that can potentially absorb or take users away from from Robin Hood.

• 1:00:40Speaker 01

  Yeah, I I'm I'll stop for now and see what your guys thoughts are.

• 1:00:45David Hoffman?

  Omar rebuttal thoughts, arguments, what comes to mind?

• 1:00:49Speaker 02

  No, I think like that is one of the Coinbase strengths, which is like it is a crypto first brand and a crypto native company. And because of that, they have like a range of different advantages that they can play in when Robin Hood starts encroaching on their territory. I think, you know, if I were to articulate like the bull case for Robin Hood is on the crypto side today anyways. I think like it's like a fee story largely, which is like Coinbase still charges like 1.4% roughly on retail trading volume. And Hood comes in at like 40 basis points. It's just like materially cheaper to trade crypto on Robin Hood. But at the same time, like I I'm here in New York.

• 1:01:31Speaker 02

  And if I go to the Robin Hood app and I try and buy crypto, there's like 22 tokens I can buy or roughly that number. Whereas if I go to Coinbase, I can buy 200 plus tokens. And I think like. This crypto nativity and the willingness to take risk is like what really does allow Coinbase to build out its product offering, customer base, user base, and like retain customers relative to, you know, a challenger that's entering into its space and trying to poach its customers on the retail side. And so like, I largely agree with everything David said, like, they do shouldn't lean into perps. It is a great product. Robinhood doesn't offer them yet. I'm sure they will at some

• 1:02:10Speaker 02

  point. Robinhood is doing it out of Europe and like leverage is capped at 3x. But it, you know, it's still like a very nascent battleground, which Coinbase has like a really, really good advantage in. And so like, they should just like push on, push on the gas if I were them.

• 1:02:28Speaker 01

  Yeah, I think also a story for both companies, especially like with Robinhood launching Robinhood Chain is gonna be what does that take rate look like over time? So Coinbase is obviously trying to, in a way, disintermediate its largest revenue driver, which is transaction revenue. Like, I think it's mixed take rate is approximately 30, 30 bips between retail and the institutional user. Obviously, retail gets absolutely fleeced, but it's the greatest, the greatest business in the world. But, uh, that's, that's, but, but if you look at Base, right, and they're obviously trying to, they're gonna be enshrining, I guess, the essential, all the, just all the assets launched on Base onto their, their front end on the Coinbase main app and eventually go after other assets on

• 1:03:11Speaker 01

  other ecosystems. The, the take rate, so if you look at like Base's DEX volumes as a function of the sequence of revenue, it's an order magnitude less. So they have a 30 bips take rate on centralized exchange front end. Base gets approximately a three bips take rate. And I think their thinking is we're going to, you know, move more on chain, the lower take rate, no other centralized exchange or no other traditional financial company can compete with us if we can offer a three bips take rate. Uh, but they're gonna take like maybe the Solana approach, which is like low fees, high throughput equals more REV, more revenue, whatever you want to call it. Um, and I'm curious to see what Robinhood's transaction revenue is going to be as more of

• 1:03:54Speaker 01

  its trading does move on chain. Is it gonna be a similar take rate? Probably. Um, another thing that I think about when I think about Robinhood's businesses, you, you know, called out earlier Omar, which is payment for order flow. The EU has banned payment for order flow as of the end of 2026. So what does that revenue model look like in the EU? And I obviously US, it's, it's still legal today. It will be legal tomorrow, probably. We have probably like a more um, progressive regulatory environment in that sense. Um, but I, I will be, it will be interesting to see like how well Robinhood does international waters again. I don't know what the brand is internationally. I, I have a tough time believing that anyone that is using an offshore centralized exchange

• 1:04:35Speaker 01

  today will move to Robinhood because buy, uh, buy bit, buy nance, OKX. You know, objectively offer great products for crypto users. Um, but you know, again, Robinhood is, is a behemoth and like really does have really strong execution, uh, and operational excellence. So maybe they can take users from those, uh, those players.

• 1:04:59Speaker 02

  Yeah. The only thing I'd add to this is like on the Robinhood side, if you like, listen to Vlad talk about doing a Robinhood chain, I think one of the things that he said recently is like, he's gonna focus on having an active developer ecosystem. And so like, that's Robinhood very much coming into Coinbase's territory. And like, obviously Jesse's done a great job and like, they have really built out that ecosystem. And so like, there are going to be challenges for Robinhood as they like move on chain. And I, and I know I'm the Robinhood bull here and not trying to give too much of the bear case, but um, it, it, it will be a challenge for the business. And like, they have 10 different business lines that roughly do a hundred million dollars plus each. And so like, they have a lot of shovels in the fire and lots of things that they are

• 1:05:41Speaker 02

  trying to do um, to build out that business across a range of vectors and going to beat Coinbase on its own game is really, really hard. And so, um, you know, there are things to like, keep in mind and be careful of and just watch out for as Robinhood expands to this on-chain ecosystem. I'm, I'm sure a lot of people will build there to be honest, just given the captive user base that Robinhood will funnel. But at the same time, it's like, if they have pride in themselves on building great products and like, they have to continue doing that.

• 1:06:10Speaker 01

  And I bet you Robin Hood's developers that launch on Robinhood chain are gonna be using Coinbase developer platform to build their app.

• 1:06:16David Hoffman?

  Yeah, that's funny.

• 1:06:19David Hoffman?

  Guys, I've learned a lot so far in this conversation. So really, really, I'm glad you guys were able to come on and shed some of your knowledge. As we kind of wrap this up here, let's go back to the very beginning where I talked about the current valuations. Hood, the ticker is Hood, eighty one billion dollars, Coin eighty five billion dollars. So again, roughly neck and neck as it kind of stands today. Omar, when it comes to future Hood aspirations, I know I can't ask you to ever predict the future of the market. You know, we have macro that we have to be concerned about, but obviously your bullish Hood. Like, what kind of numbers are you looking for? Are you looking for, you know, a 50% gain? Are you looking for a 500% gain? What kind of timelines are you thinking about? Just shed some light about your future, your future imaginations for where this could go.

• 1:07:02Speaker 02

  Yeah, I, I haven't sold any Hood and I've sold it for a while. And I think that one, the one aspect to this story that we like, didn't talk about, which is like really important to think about when you look at Hood's valuation is there is like our parents' generation and our grandparents that unfortunately aren't going to be with us forever. And like the way Robin Hood is building their business is to very much be the primary recipient of like this generational wealth transfer. And if you like, look at a range of different forecasts, like the numbers look something like 10 trillion dollars over the next decade plus. And so like, if you were to just like truly think about what happens in that bear scenario where someone that you love very in your family passes away.

• 1:07:47Speaker 02

  And where does that money flow? Does it end up sitting on like the traditional platforms that your parents were using? Does it end up coming to what you're using? And I think like, I have a quite constructive view on that, which is I think Robin Hood is going to be one of the primary beneficiaries, especially if I do my banking, my payments and all my investing. And if that number is anywhere in that wheelhouse and they're able to capture, you know, 10% of that, which is like a trillion dollars, which is insane. You know, so 1%, you know, you are talking about a business that can more than double, triple or quadruple without like having to go too far out on the imagination spectrum. And so. It's part of the reason why they bought a company called Trade PMR, which is if I have money passed down,

• 1:08:32Speaker 02

  I want to do it in the most tax efficient and optimized way. And so that when that money does come, I have access to the right financial advisors. I have access to the right tax professionals and I have right access to like the range of different investment alternatives to make sure my family is set up. And then when you think about it in the construct of their whole business, which is like, if I have a Robinhood gold card and I have virtual cards for my kids and like my wife is on it and everything is encapsulated, Robinhood will be one of the primary beneficiaries of all of that in the future. And so I think when you look at $80 billion, like it is expensive. There's like no doubt about it. The stock, to your point, it's dropped a lot recently.

• 1:09:12Speaker 02

  But I do think like if the business is the primary beneficiary of this wealth transfer and like you don't really even need to believe anything else, like you can almost discount the crypto stuff. It is, it's a business that should be worth a few hundred billion dollars over the coming decade. And like, I think it's probably underselling it relative to the opportunities set globally and the financial infrastructure globally and the range of different ways they can monetize. Like today, it's $150 million or $150 ARPU per user. And so like, I think there, yeah, I'm not going to like put on a specific price target on it, but I do think it's expensive relative to the business today, but it's not relative and not expensive relative to what it can potentially grow into.

• 1:09:55Speaker 02

  And so like for that reason, I continue to be bullish and I like am a big fan of Vlad and everything he has done. And I feel like it sits at the perfect intersection of changing a technology, just global societal trends with populations and the way we interact with technology. And so I love it for all of those reasons. I've done a great job. And so I think, you know, even if the valuation does seem expensive today, if you look at it on a reasonable time horizon, they can more than grow into that and exceed it by a large margin.

• 1:10:27David Hoffman?

  I definitely really enjoy that thesis because this is also one of the same theses that make me bullish about crypto. This is something that the crypto industry has chanted, is like when that wealth does come down from the boomers and the Gen Xs down into the millennials and zoomers. Those generations are going to buy assets that they relate to, which is Bitcoin and crypto assets, Ether. And so I've heard that same thesis Omar, but I've also heard it in the crypto context too, which definitely benefits Coinbase. In a similar fashion, maybe Robinhood has a bigger net and I could totally take that argument. But nonetheless, like I think that's generally bullish for crypto assets. Which I'm taking to take that same argument and give it a plus one to the Coinbase side as well.

• 1:11:08David Hoffman?

  David, I want to throw the same kind of question to you again, eighty-five billion dollars Coinbase is where it currently sits. Again, I don't want to pin you down to any sort of timeframes, but give me a similar kind of like ending thesis to Coinbase and its future aspirations.

• 1:11:25Speaker 01

  Yeah, I mean, I said something to Omar, I would say yesterday or the day before. I think the target for both these companies is higher on a longer timeframe. The near-term target is Bank of America, three hundred billion plus market cap. The long-term target is overtaking JP Morgan, eight hundred billion plus. I think both of them can do that in a decade, potentially by the end of this decade, depending on how large the shift is. In terms of global wealth transfer from demographics and also a technology shift from off-chain to on-chain. So I think Robinhood is the demographic wealth transfer play. I think Coinbase is the technology shift play to the global on-chain economy, the on-chain, sorry, the global economy moving on-chain.

• 1:12:08Speaker 01

  Coinbase is the preeminent US-based crypto company, the largest capital market in the entire world, a hundred trillion plus on global economy. If you believe that the industry, if you believe that the capital markets will move on-chain, I think Coinbase is the clear play. It has nine hundred and thirty million dollars of like adjusted EBITDA in Q1 alone. Compared to Robinhood sitting at about 430 to 450 million adjusted EBITDA. Yes, Robinhood does have a higher ARPU. I think it's like 30 to 40% higher, even though it's largely an estimate on Coinbase because they don't share their trend, you know, their monthly transacting users anymore like they used to. Robinhood does have like a larger, larger net today.

• 1:12:53Speaker 01

  But I think if you look at the overall growth rate of Coinbase year over year, even quarter over quarter, over year over year basis, it's growing about 25%. Obviously, maybe a little, a little hard to discern because of the cyclicality nature of the crypto industry. But if you look at its subscription and services revenue, it's growing at about 35 to 36% year over year, very much like what Omar said. I think both companies are expensive today. But I think that if you look at both, both businesses, they have a very clear line of sight to 10x-ing their revenue over the foreseeable future. I think Coinbase's revenue growth is largely going to come from, maybe in the short to

• 1:13:36Speaker 01

  midterm, maybe it comes from US perps if it is a, if it is a hit. In addition to the growth of stable coins on chain and obviously getting the large revenue share from Circle. I think the long-term thesis on Coinbase is that is the thin layer, it is a thin infrastructure layer for the, for the economy moving on chain and it's going to power every single front-end, TradFi or fintech front-end in the world, maybe outside of Robinhood. But every single developer that is building in the on-chain economy is going to be using some toolset that is developed through Coinbase and they're going to figure out a really, you know, intricate or really elegant way to monetize that and have a high-margin, high-growth

• 1:14:15Speaker 01

  business for years to come. Yeah, so very bullish both. I think that I'm rat, I think Coinbase is just a bet on the industry growing. Robinhood is a bet on Robinhood. And I think both will extremely, will do extremely well.

• 1:14:31David Hoffman?

  Well, I mean, I went into this episode thinking like it's going to be Coin versus Hood, but I think it's, as we wrap this up, it's going to be Coin and Hood. I don't really see why they actually need to be, they are doing very similar things, but in pretty different lanes that definitely do touch in certain arenas. But overall, I think it's just a story of two new companies bringing the world of finance into modernity in their own particular ways, in ways that are very necessary and meaningfully differentiated. And so this was a great discussion, guys, and I think my big takeaway is going to be Coin and Hood in the future.

• 1:15:09Speaker 02

  Awesome. Thank you for having us. It was great.

• 1:15:13David Hoffman?

  Great talk. Omar, we will get your Twitter into the show notes. You are from Dragonfly, and David, we will also get your Twitter from Twitter into the show notes as well. You are from Blockworks. Guys, I learned a lot. You guys, this is a phenomenal episode. I really appreciate you guys coming on and sharing your knowledge. Thank you very much.

• 1:15:30Speaker 02

  Thank you again.

• 1:15:31David Hoffman?

  Bankless Nation, you guys know the deal. Crypto is risky. Equities, they're risky too, but you know what? Being sidelined, also risky. So you can lose what you put in, but nonetheless, we are headed west. This frontier is not for everyone, but we are glad you are with us on the bankless journey. Thanks a lot.