Robinhood Chain Transactions Fall 42% While Deposits Hold Steady

Robinhood Chain is losing momentum. From Oct. 2 to Oct. 8 the network averaged 6.2 million transactions a day, 42% below the 10.8 million it handled from Sept. 10 to Sept. 16. These are CoinDesk calculations based on growthepie data.

Until recently only fees were fading: in September they collapsed 97% while transactions stayed near their highs. Now transactions and trading have both slipped, and Robinhood is still paying clients' network fees itself. Deposits behave differently, as we show below.

Transactions fell 42% in three weeks

Robinhood launched the network in July as a second-layer solution on top of Ethereum. Through connected apps, users trade tokens and borrow and lend, and the plan includes round-the-clock trading of tokens tied to stocks and funds.

In the last week alone, activity dropped another 20%. Active addresses averaged about 322,000 a day, 31% lower than in mid-September. It would be a mistake to read that as people leaving. One person can control several addresses, and trading bots can generate thousands of transactions.

The mechanics are simple. Every transaction pays a network fee, and the apps on top charge their own fees for swaps and loans. So a drop in transaction count hits income twice, for the network and for the apps built on it.

Spot slid 21% while perps grew 26%

The network's spot exchanges handled $7.45 billion from Oct. 2 to Oct. 8. A week earlier the figure was $9.46 billion, so the drop is 21%. About 77% of that turnover went through Uniswap, according to CoinDesk calculations on DefiLlama data.

The only segment in the green is perpetual futures, contracts that let traders bet on a price without holding the token. On DefiLlama's seven-day figures their volume came to about $7.35 billion, up 26%. The comparison is imprecise, since spot was counted for Oct. 2 to Oct. 8 and perps on a rolling window as of Friday. Even so, derivatives have nearly caught up with spot in volume.

Money is not leaving, it is just traded less often

Deposits in the network's lending and trading apps rose about 2% over the week, to $1.04 billion. The stablecoin supply on the chain also ticked up, to roughly $1.10 billion. CoinDesk reads this as a sign that capital is staying put while traders handle it less often and wait.

That beats an outflow for the network. But it earns from turnover, not from balances. Weekly spot volume is roughly 7 times the size of deposits, so without turnover that billion earns little.

Fees shrank to $65,000 a day

Over the same week users paid roughly $65,000 a day in network fees, 39% less than the week before. On the busiest day in early September the chain collected $8 million. That is a gap of about 120 times. When CoinDesk reported the fee collapse on Sept. 19, transactions and weekly trading volume were still growing. Both have now turned down.

It hurts the company itself. According to a Bernstein note last month, Robinhood keeps about nine-tenths of network fees, so fewer transactions means less income from the chain.

Several things are being tried to keep activity up. Trading platform Arcus has handed out extra reward points since Oct. 1 for stock-token swaps made through Robinhood Wallet. And Robinhood extended its fee promotion: it will cover the network fee on any swap over 50 cents made through its wallet until Dec. 31, though the offer was due to end Sept. 29.

Paid priority in the transaction queue

According to a person familiar with the matter cited by CoinDesk, Robinhood Chain is evaluating a system where a user can pay for priority on a trade. The technology is built by Arbitrum, whose infrastructure powers the network. For now the chain uses a first-come, first-served rule.

The earlier version, Timeboost, gave traders a 200-millisecond head start. On Sept. 24 Arbitrum replaced it with a model called Priority Gas Auctions, where a trader raises the fee and pushes an individual transaction ahead. That is the model Robinhood is looking at. The company declined to comment.

For a network that entered the top 10 chains by total value locked after its July launch, this is not a cosmetic question. Paid priority also works against MEV, where other people's trades get front-run on a transparent blockchain. Speed has long been a commodity in high-frequency trading on Wall Street, and now someone is trying to sell it onchain.

The logic resembles payment for order flow in Robinhood's brokerage business, where market makers pay for the stream of client orders. Here the trader pays, and such a fee could reduce frontrunning and level access to speed. We would not rule out a second motive either, since paid priority could prop up the chain's shrinking fee income.

What December 31 will show

Less than three months remain before the promotion ends. In that time Robinhood has to get $1 billion of deposits trading again before users start paying for swaps themselves. The scenarios look like this.

• Holding: volumes stabilize near today's 6 million transactions while the subsidy simply continues.
• The slide continues, because trading was held up mostly by free swaps and reward points.
• Paid priority brings back part of the fee income but may scare off small traders.
• Perps keep growing and pull total turnover up while spot weakens.

In numbers, the picture is this. Transactions down 42%, spot down 21%, fees down 39% in a week, while deposits stayed put and even edged up. The main question is still open, namely whether clients will stay once swaps are no longer free. We will come back to these figures after Dec. 31.