Robinhood Chain Struggles to Sustain Activity as Fees and Transactions Decline

Robinhood Chain is facing a sharp decline in usage, with daily transactions falling by 42% since mid-September despite the brokerage continuing to cover network fees for customer swaps. The slowdown comes even as more than $1 billion remains deposited across applications built on the blockchain.

CoinDesk calculations based on growthepie data show that the network processed an average of 6.2 million transactions per day from Oct. 2 to Oct. 8, down from 10.8 million between Sept. 10 and Sept. 16. Activity also dropped 20% compared with the previous week.

Robinhood launched its blockchain in July to support token trading, borrowing and lending through applications connected to Ethereum. The company has also planned round-the-clock trading for tokens linked to stocks and investment funds.

Transactions on the network incur fees, while applications built on top may charge separate costs for trading and lending services. A Bernstein note published last month estimated that Robinhood receives about 90% of network fees. Lower transaction volumes could therefore weigh on the brokerage’s fee income.

The decline signals a change from September. When CoinDesk reported on Sept. 19 that network fees had plunged 97%, transaction numbers were still close to their highs and weekly trading volume continued to rise. Both measures have since reversed direction.

The number of active addresses has also decreased. Robinhood Chain averaged around 322,000 active addresses daily during the latest week, down 31% from mid-September. However, this does not necessarily indicate an equivalent decline in individual users because one person can control several addresses, while automated trading systems can produce large numbers of transactions.

Trading slows while deposits remain steady

Spot exchanges recorded $7.45 billion in trading volume between Oct. 2 and Oct. 8, a 21% decrease from the $9.46 billion reported the week before, according to CoinDesk calculations using DefiLlama data. Uniswap, which allows users to swap tokens directly without a centralized intermediary, accounted for approximately 77% of the total.

Despite the drop in trading activity, users have not significantly reduced their funds held on the network.

Deposits across Robinhood Chain’s lending and trading applications increased by about 2% over the week to $1.04 billion. Stablecoin supply also edged higher to approximately $1.10 billion. The figures suggest that users are keeping their capital on the network but trading less frequently.

Perpetual futures have been a bright spot. These contracts allow traders to speculate on price movements without owning the underlying assets. DefiLlama’s rolling seven-day data showed perpetual futures volume at approximately $7.35 billion on Friday, up 26%.

Network fee payments, however, continued to weaken. Users paid around $65,000 per day in fees between Oct. 2 and Oct. 8, down 39% from the previous week. The figure remains far below the roughly $8 million collected on the network’s busiest day in early September.

Fee incentives face a crucial test

Robinhood and its partners are trying to stimulate activity through additional rewards and fee discounts. Trading platform Arcus began distributing extra reward points on Oct. 1 for stock-token swaps made through Robinhood Wallet. The brokerage also extended a fee promotion that was originally due to end on Sept. 29.

Under the revised terms, Robinhood will cover network fees for swaps worth more than 50 cents through its wallet until Dec. 31. The extension gives the blockchain less than three months to encourage more trading across its $1 billion-plus deposit base before users must pay the fees themselves.

The key question is whether trading activity will hold up once the promotion expires. If customers become less willing to transact when they have to cover network fees directly, Robinhood Chain could struggle to turn its existing deposits into sustained usage.