Robinhood plans to let DeFi apps access tokenized stocks without permission

Fintech giant Robinhood has announced a three-phase plan to make tokenized stock permissionless for DeFi app users, leveraging Arbitrum Stylus for compatibility. The final phase will make the stock tokens fully permissionless, allowing users to use them across decentralized applications (dApps).

The Head of Strategy at Offchain Labs, AJ Warner, stated that Robinhood is laying the groundwork to transition traditional finance into a permissionless ecosystem. He added that the recent launch of the brokerage app’s tokenized stock offering in Europe is the first step in the three-phase plan. Warner noted that the tokenized stock offering includes roughly 800 publicly traded securities and is set to add private equity.

The Offchain Labs CSO stated that the final phase of Robinhood’s plan ends with users being able to withdraw their permissionless assets to external wallets and use them across decentralized applications. Currently, in Phase 1, users within the EU can purchase these tokenized stocks through the Robinhood app, but cannot transfer them outside the app. The tokens are restricted to the Robinhood app, with no access to outside protocols or platforms.

Warner says phase two focuses on infrastructure

AJ Warner mentioned that Phase two focuses on the infrastructure. Robinhood is using Bitstamp, which it acquired for $200 million in June, to facilitate around-the-clock trading of stock tokens. The platform will mirror the always-on nature of crypto markets and break away from traditional market windows.

However, Warner disclosed that phase three will introduce the most substantial change. Users and DeFi protocols will be able to use the permissionless tokens freely. A user will be able to buy tokenized Apple stock on Robinhood, withdraw it, and post it as collateral in a decentralized lending app like Aave. 

Warner also said that this marks a significant shift in how retail investors engage with equities. The Offchain Labs CSO asserted that tokenized stocks would become programmable building blocks in a global, open financial system, rather than being locked inside brokerage platforms like Robinhood or routed through clearinghouses. He described phase three as a long-term play.

Warner acknowledges that compatibility is a major issue

Warner said compatibility is one of the major hurdles in making the tokenized stocks permissionless. He noted that financial infrastructure, such as Robinhood’s ledger systems and engine, is built in C++ or Rust, which do not work natively on Ethereum. Smart contracts in Ethereum are written in Solidity, and rewriting those systems would be both risky and slow.

Warner also mentioned that Offchain Labs has developed Arbitrum Stylus, which allows developers to write smart contracts in traditional languages like C++, Python, and Rust, while maintaining compatibility with the Ethereum Virtual Machine (EVM). Arbitrum noted that rich language and tooling support already exist for Rust, adding that users can try the CLI and SDK using the quickstart.

According to Arbitrum, Solidity contracts and Stylus contracts are fully interoperable. Users can call a Rust program and vice versa in Solidity, thanks to a second coequal WASM virtual machine. On the other hand, Stylus contracts offer comparatively faster execution and lower gas fees for memory and compute-intensive operations, thanks to the efficiency of WASM programs.

Arbitrum states that Stylus is an upgrade to its Nitro (ArbOS 32) tech stack, which powers Arbitrum One, Arbitrum Nova, and Arbitrum Chains. The upgrade adds a second, coequal virtual machine to the EVM, allowing contracts to behave as they would in Ethereum. Arbitrum refers to this paradigm as multiVM, as everything is entirely additive.

Arbitrum also claims that rebuilding existing apps in Stylus will open the door to optimization and innovation, making dApps faster, cheaper, and safer. Stylus can be easily integrated into existing Solidity projects by calling a Stylus contract to optimize specific parts of a dApp, or by building the entire dApp from scratch using Stylus.

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