Robinhood now makes more money from predicting the future than trading crypto
The year-over-year crypto decline contrasted with $173 million in event-contract revenue and record company revenue of $1.42 billion. Read the full story on CryptoSlateUnderstand the crypto stories that matter and what to watch next. Get The Catalyst in your inbox
Robinhood's cryptocurrency revenue fell 55% in the third quarter, even as its new blockchain helped offset declining trading income.
The brokerage reported $120 million in crypto revenue for the three months ended Sept. 30, trailing the $173 million generated by prediction-market contracts. Meanwhile, total company revenue rose 12% to a record $1.42 billion.
The results highlight a growing divergence between Robinhood's digital asset business and its other trading products, with options and prediction markets emerging as larger revenue contributors.
According to Robinhood's earnings presentation, its Ethereum-based Layer 2 network, Robinhood Chain, generated more than $50 million in transaction fees during its first quarter on mainnet, contributing $26 million to the company's reported crypto revenue.
The network processed more than $80 billion in decentralized exchange trading volume during the period, ranking among the five largest blockchains by revenue and trading activity, according to Robinhood.
Tom Wan, head of data at Entropy Advisors, noted that Robinhood Chain accounted for approximately 22% of the company's cryptocurrency revenue, generating more than four times Bitstamp's $6 million contribution.
Without the blockchain business, Robinhood's crypto revenue would have declined 6% quarter over quarter to $94 million. Instead, the additional $26 million lifted total crypto revenue 20% from the preceding quarter.
The weakness persisted despite a recovery in trading activity. Cryptocurrency volumes increased 23% sequentially to $49.8 billion, with Bitstamp contributing $29.2 billion and Robinhood's retail application generating $20.6 billion.
However, compared with the same period last year, total crypto trading volume fell 38%. Activity on Robinhood's retail app fell 48%, while Bitstamp's volume contracted 28%. It explained:
“Crypto Notional Trading Volumes decreased 38% year-over-year to $50 billion, including Robinhood App Notional Volumes which decreased 48% year-over-year to $21 billion, and Bitstamp Notional Volumes which decreased 28% year-over-year to $29 billion.”
Robinhood's app generated $88 million in crypto trading revenue, down from $94 million in the second quarter, while Bitstamp's contribution remained unchanged at $6 million.