The revolutionary capabilities of decentralized finance through cryptocurrencies are undeniable even for centralized, traditional finance applications such as Robin Hood and PayPal.
In fact, 17% of Robinhood’s revenue in the first quarter of 2021 was on the backdrop of a crypto trading trend, with reports showing a staggering 34% of RobinHood’s revenue being in crypto, not to mention 6% from Dogecoin retail traders alone.
However, despite breaking the ice between TradFi (Traditional Finance)and DeFi (Decentralized Finance)with an announcement that will allow its users to not only trade but also lend and stake crypto, Robinhood’s stock suffered a hard 8% drop hours after its debut listing on Nasdaq.
The Robinhood conundrum
Robinhood is a zero-fee US-based stock trading application that offers commission-free trading of both stocks and crypto-assets for its user base to even be able to support cryptocurrency lending and staking in the future.
However, despite having explosive growth from its inception into crypto in recent months, Robinhood has been covered in controversy, especially after the GameStop incident.
With its headquarters in Menlo Park, Robinhood has been offering its users an option of buying and selling various cryptocurrencies including Bitcoin, Ethereum, Litecoin, and Dogecoin, but without an option for withdrawal to third party wallets.
Early in 2021, Robinhood set off a storm online when it prohibited the buying of GameStop and other stocks amid a growing trend of traders on Reddit who wanted to get back at wall street traders for shorting GameStop.
In addition, Robinhood equally prohibited the trading of Dogecoin albeit temporarily while the meme-inspired token was rising.
These moves by Robinhood left a sour taste in the mouths of most of its retail traders even though the trading app cited “extraordinary market conditions” as the reason for temporarily turning off trading.
New promises: Centralized platforms looking to decentralize
In what seems like a move to save face, Robinhood announced in March 2021 that it will offer its users a crypto wallet alongside its order-book-based crypto exchange platform.
According to Robinhood’s CEO Vlad Tenev, the forthcoming wallet is set to also include the listing of news coins along the way.
Days before its IPO listing, Robinhood also announced that its users will now be able to move their crypto to external wallets as the stock trading app prepares to launch crypto lending and staking on its platform.
Following in PayPal’s footsteps
As it seems, Robinhood is following PayPal’s lead. Meanwhile, Paypal is eyeing more of crypto and DeFi with a move to expand its crypto trading services to the UK and maybe even integrate decentralized finance features.
According to Dan Schulman who is the CEO of the global payment platform, Paypal has performed well in the period it has offered crypto trading.
“We continue to be really pleased with the momentum we’re seeing in crypto,” added Schulman.
In regards to the integration of DeFi, PayPal’s CEO said that the company is considering how to integrate smart contracts and decentralized apps into its ecosystem.
“There are some interesting DeFi applications,” said Schulman as he added that the company is looking into “what the next generation of the financial system looks like.”