Source: thetokendispatch

Compilation: Vernacular Blockchain

A war is quietly unfolding in your pocket, and most people are unaware.

The two major financial apps in the U.S.—Robinhood and Coinbase—are conducting radically different experiments on millions of users. Robinhood ranks 14th in the App Store's finance category, while Coinbase ranks 20th, with both having a market value of around $80 billion. They both target young investors but believe that the other's approach is completely wrong.

Both experiments were successful to some extent.

The Essence of Robinhood and Coinbase

These two companies are not competitors in the traditional sense, but are conducting different experiments on the same experimental subject ( we ).

Robinhood sees the pain points in finance and asks, "What if we fix all the annoying parts?" They offer 15 types of cryptocurrencies, zero-commission trading, and an interface that allows you to buy Tesla stocks without a finance degree. Their philosophy is: you don't need to know how sausages are made to enjoy a hot dog.

Coinbase, on the other hand, has taken the opposite approach, asking: "What if we rebuild the entire financial system on blockchain technology?" Coinbase charges higher fees than competitors like Robinhood, but it has built a platform for users who want full access to the crypto ecosystem, offering over 260 cryptocurrencies. They bet that traditional finance will eventually go on-chain and hope to become the infrastructure for this transformation.

Coinbase CEO Brian Armstrong stated: "Our goal in the next 5 to 10 years is to become the leading financial services application globally, as we believe that cryptocurrencies are devouring financial services, and we are the number one crypto company. All asset classes - money market funds, real estate, securities, debt - will be on-chain."

The two companies went public several months apart in 2021, each with a market capitalization of $80 billion, targeting young investors who prioritize mobile, but their products seem designed for different species.

This is not a war for dominance, but a competition to serve different financial futures.

The Race for Expansion of Crypto Products

Both companies are accelerating the expansion of their crypto products, but their approaches are completely different.

Robinhood recently announced that they are trying to directly surpass Coinbase. In June, they launched Robinhood Chain—its own Layer-2 network that supports tokenized stocks and crypto trading, and in the future, it will also support assets raised from SpaceX and OpenAI. European users can now trade tokenized US stocks around the clock, rather than being limited to market trading hours. This is the 24/7 trading model that crypto users have been looking forward to, applied to traditional assets.

They also launched crypto staking for ETH and SOL, acquired Bitstamp, the oldest crypto trading platform in Europe, for $200 million, and plan to introduce crypto perpetual futures for European users. The crypto infrastructure they are building seamlessly integrates with the existing stock trading experience, rather than simply adding crypto functionalities to traditional brokerage services.

All of this—blockchain, tokenized stocks, low fees—is designed for the next generation of investors who will inherit trillions of dollars in wealth.

In the fee battle, Robinhood's crypto trading fee is about 40 basis points ( 0.4% ), while Coinbase's equivalent transaction could be as high as 1.4% or more. When purchasing $1000 worth of Bitcoin, Robinhood charges about $4, whereas Coinbase charges over $14.

Robinhood profits through payment for order flow, where market makers pay for executing retail trades, similar to its stock trading model. This mature model allows them to offer "free" trading while still making money.

But Coinbase offers features that Robinhood cannot match: true ownership of cryptocurrency. With Robinhood, you are purchasing "receipts" for cryptocurrency, which are merely receipts for the crypto assets that Robinhood owes you. You cannot transfer Bitcoin to your own wallet, nor can you use it elsewhere; you can only buy and sell within the Robinhood app. You cannot participate in DeFi, stake most tokens, or use cryptocurrency for purposes other than buying and selling.

For most people, it doesn't matter; they just want exposure to cryptocurrencies rather than practicality. But for users looking to perform complex crypto operations, Coinbase is the only real choice among the major platforms in the U.S.

Q2 Financial Report Analysis

The financial report for this summer reveals the effectiveness of two methods.

Robinhood performed impressively. Total revenue grew by 45% year-on-year, reaching $989 million. Crypto revenue surged by 98%, reaching $160 million, increasing from 10% of total revenue last year to 16% this season, despite the overall crypto market being relatively stable. They have 26.5 million active accounts, managing assets of $279 billion, a year-on-year increase of 99%. By acquiring Bitstamp, they added approximately 520,000 crypto users, with Bitstamp generating $7 billion in nominal crypto trading volume after the acquisition was completed in June.

The platform's assets reached $279 billion, a year-on-year increase of 99%, with net deposits of $13.8 billion. Active accounts grew by 10% to 26.5 million, and cash balances surged by 56% to $32.7 billion, indicating an increase in customer wallet shares.

Coinbase experienced a "difficult quarter." Total revenue fell 26% to $1.5 billion compared to Q1, missing analyst expectations. Trading revenue dropped 39% due to a decline in retail trading. On the day of the earnings report, the stock price fell 16% as investors tried to determine whether this was a temporary slump or a signal of a high-cost model.

But calling this quarter a failure overlooks the bigger picture. Coinbase achieved a net revenue of $1.4 billion, exceeding the adjusted EBITDA of $512 million, primarily due to $1.5 billion in unrealized gains from its portfolio and strategic holdings in cryptocurrencies. Even after excluding these one-time gains, the adjusted net income still stands at $33 million, demonstrating actual profitability.

Operating expenses increased primarily due to a one-time loss of $307 million from the data breach in May. Core costs ( technology, administrative, marketing ) actually decreased, demonstrating cost control capabilities. Revenue from the USDC stablecoin business reached $332 million, with an average balance growth of 13%. Custodial assets hit a record high of $245.7 billion. Prime Financing ( institutional financing ) balance also reached a new high, which is part of Coinbase Prime, providing custody, trading, borrowing, and financing services for hedge funds, family offices, and more.

Coinbase continues to launch new products: new derivatives, expansion of the Base chain, and the launch of the Coinbase One Card. Despite a decline in revenue, the fundamentals remain strong.

Coinbase's infrastructure empire

Coinbase's infrastructure strategy is more complex. They provide custody for $245.7 billion in assets, which accounts for a large share of the institutional crypto market. When you purchase a Bitcoin ETF through a 401k, you are likely using Coinbase's infrastructure.

Coinbase is the main custodian for over 80% of Bitcoin and Ethereum ETFs in the U.S., managing approximately $113.4 billion (, which accounts for $140 billion ) of total crypto ETF assets. When BlackRock's IBIT or Fidelity's FBTC needs to store billions of Bitcoins, they turn to Coinbase. PayPal's launch of the PYUSD stablecoin or when JPMorgan needs a crypto payment rail, they also use Coinbase's backend.

Coinbase has over 240 institutional clients, more than 420 liquidity providers, and regulatory licenses that most competitors cannot match. Its custody business is chartered by the New York State Department of Financial Services, a regulatory approval that took years to obtain and is difficult for competitors to replicate.

Their "all-in-one trading platform" strategy is beginning to show results. They have launched perpetual futures with leverage of up to 10 times, bringing derivative trading that was previously only available on overseas trading platforms to retail users in the United States. They have directly integrated decentralized trading platforms into the application, allowing users to trade any Token on Ethereum or Base without leaving Coinbase.

Its Base Layer-2 network processes over 54,000 token issuances in a single day, surpassing Solana. The real highlight of Base lies in its integration with other Coinbase services: ETF providers can be used for instant settlement, enterprises can directly tokenize assets, and retail users can access institutional-grade infrastructure.

The generational takeover of Robinhood

Coinbase builds infrastructure for institutions, while Robinhood executes the smartest long-term strategy in finance: capturing young people's wealth before they get rich.

Similar strategies have brought success to Disney. In the early 20th century, Disney captured the hearts of children through animation and theme parks, establishing emotional bonds before they had money. As these children grew up and started earning, their loyalty translated into spending on movies, merchandise, streaming, and vacations, creating multi-generational cash machines.

Robinhood dominates among young investors, traditional brokers should be worried:

About 50% of customers are millennials, 25% are Generation Z, and 20% are Generation X.

Robinhood users start investing at an average age of 19-22, much lower than the 20s for millennials on other platforms and the 30s for baby boomers.

Robinhood guides new users to quickly complete their first sell order, not to encourage frequent trading, but because locking in actual gains (, even if only $50 ), will create an emotional hook that keeps users coming back.

Its "full financial" expansion aligns with this logic. Robinhood Gold( has a monthly subscription of $5,) which includes a 3% cash back credit card, high-yield savings, retirement matching, and margin discounts. Gold subscribers grew by 60% year-on-year to 2 million. These users are using Robinhood for banking, credit cards, and retirement.

The platform currently manages $279 billion in assets, targeting the massive wealth transfer of $84-124 trillion from the baby boomer generation to the younger generation over the next 20 years. Robinhood bets that if it can establish user habits early, it won't need to predict wealth inheritance patterns, only to secure a place when the wealth arrives.

Who is winning?

The market values of the two companies are close: Robinhood at $81 billion and Coinbase at $85 billion. In terms of performance this year, Robinhood has risen by 135%, while Coinbase has only increased by 30%, with much of that coming in the last month.

American bank analyst Craig Siegenthaler recently raised the target price for Robinhood to $119, while lowering Coinbase from $383 to $369, stating: "Robinhood's crypto revenue has surged, while Coinbase is overly reliant on the volatile altcoin trading that retail users are abandoning."

Coinbase's global market share fell from 5.65% to 4.56%, showing a slight rebound in July, while Kraken has seen the most significant growth in market share in the US this year. Coinbase faces a dilemma: lowering fees hurts profit margins, or sticking to high fees risks losing traders. They chose profit margins, adding fees to previously free stablecoin trades, while Robinhood's rates are about 50% lower.

Mizuho reiterated its price target of $120 after meeting with Robinhood CEO Vlad Tenev, praising its crypto resilience and aggressive push for tokenized stocks. They stated: "The opportunities in Europe for tokenized stocks, expansion into upstream and youth markets, 15% of net deposits coming from competitors, focus on NPS and execution, and the inelasticity of crypto prices are all impressive."

However, Coinbase has institutional credibility. While other trading platforms compete on trading fees, Coinbase builds relationships with institutions that will determine the integration of crypto and traditional finance in the next decade.

Neither company will disappear. They cater to different user needs, and those needs are both growing. This is not a winner-takes-all competition; it's more like market segmentation—Robinhood targets mainstream finance, while Coinbase focuses on crypto infrastructure.

This reveals two competing theories about how people will interact with money in the future:

• Robinhood believes the future of finance will be "invisible", abstract, simple, and integrated into lifestyle applications, making finance a part of the environment.
• Coinbase bets on winning trust through architecture.

There is no right or wrong between the two, just different goals. One side pursues simplicity and trust, while the other builds the underlying architecture.

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