Robinhood Chain, the popular Layer-2 blockchain tailor-made for tokenized real-world financial assets, is evaluating a transaction-ordering system that would allow users to pay a fee to prioritize certain trades, according to a person familiar with the matter
The technology is being developed by Arbitrum, which provides the infrastructure behind Robinhood Chain. The system, which isn’t affiliated with the chain, had been offering a paid-for transaction-ordering technology called “Timeboost” that gives users a priority-sequencing advantage in the form of a 200-millisecond head start. However, on September 24, Arbitrum replaced its Timeboost transaction-ordering system with a new model, Priority Gas Auctions, that allows traders to pay higher fees to have individual transactions processed ahead of others
It is this newer version of the tech that Robinhood Chain is understood to be evaluating, the person said, under the condition of anonymity because the matter is private
Currently, Robinhood Chain uses a first-come, first-served transaction ordering policy and has not availed itself of Arbitrum’s original Timeboost application
Since launching its Ethereum-compatible network back in July, Robinhood Chain has surged in popularity, entering the top 10 list of blockchains ranked by total locked value
Robinhood’s traditional brokerage business, which is now melding with a 24/7 onchain model for distributing tokenized stocks, has long made money from “payment for order flow,” a system in which market makers pay brokers for routing customer trades to them
Paid transaction priority on a blockchain works differently. It gives traders an advantage by enabling faster transaction processing, potentially helping professional firms compete for trading opportunities that can disappear in fractions of a second
Applying the logic of fee-based transaction ordering to the onchain environment also prevents the frontrunning of transparent blockchain trades, known as “maximum extracted value” (MEV). This could also level the playing field for entities seeking to acquire a faster trading connection. Such a speed advantage has long been a feature of high-frequency trading on Wall Street, made famous in the exposé “Flash Boys.”
Robinhood declined to comment. Off-Chain Labs, the developer behind Arbitrum, did not immediately respond to a request for comment
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