Robinhood Launches 7% Yield DeFi Product: Where Does the Money Come From and Where Is It Going?
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Robinhood Launches 7% Yield DeFi Product: Where Does the Money Come From and Where Is It Going?
When yield products, stock tokens, and collateralized lending are combined, Robinhood is building a prototype of a decentralized prime broker.
Navigating Web3 tides with focused insightsAuthor: Fintech Brainfood
Compiled by: TechFlow
TechFlow Editor's Note: Robinhood launches 7% APY DeFi yield products, stock tokens, and commodity futures in London, backed by a mixed strategy of half-real yield and half-marketing subsidies. With yield products, stock tokens, and collateralized lending combined, Robinhood is building a prototype of a decentralized prime broker. This means new liquidity mechanics for investors and an upgrade in direct competition with Coinbase for the industry.
Robinhood Launches 7% APY Yield Products, Mainnet, and Futures
At the National Maritime Museum in Greenwich, London, Vlad Tenev took the stage wearing a stylish pirate-style jacket to announce the launch of Robinhood Earn—a 7% APY DeFi yield product. Stock tokens from over 120 countries, 24/7 trading, usable as collateral in DeFi lending pools. Also launching commodities, ETFs, and FX perpetual futures (gold, oil, EUR/USD) in Europe, with up to 10x leverage.
The 7% yield product is interesting. Where does the yield come from? A Morpho vault curated by Steakhouse invests in spUSDG, USDe, and SyrupUSDG, providing over-collateralized lending to institutions. Half the yield comes from native yield, half from incentives.
In other words, approximately 3.5% of the yield is currently marketing expenditure. But as the campaign expands and USDG trading volume grows, it gains more float (because it buys more Treasuries). USDG will share the float with distributors, in this case, Robinhood. If all goes well, the other 3.5% should start coming from the stablecoin itself.
This is for all 27 million users, not just the DeFi crowd. This 7% yield product will be open to its 27 million users via the core Robinhood app (powered by embedded wallets provided by Privy).
It is also underwritten by Lloyd's of London, covering DeFi risks. So it can handle hacker attacks or smart contract vulnerabilities (these do happen!).
Stock tokens are super interesting. Although technically not stocks, nor beneficial ownership. Robinhood is a registered broker-dealer, so it can ensure these are 1:1 pegged to the stocks. It also supports securities lending. Users can take these stock tokens to collateralize loans, such as paying for a down payment on a house or something.
Now combine stock tokens and yield products. If you have a very large "lend to traders" capability, can earn yield natively, and can also earn yield through your stablecoins, now you can also lend to those who want to borrow using stock tokens as collateral. Ultimately, what you get looks very much like a decentralized prime broker. Very interesting.
Their own chain also has economic benefits. They keep all trading fees instead of paying them out. These fees are negligible on most modern chains.
The contrast with Coinbase is obvious. Coinbase announced it will soon launch "stock tokens", USDC offers lower yield, it offers futures through premium and institutional platforms, but not as core consumer products. Robinhood has more control over stablecoins with USDG, and as a seasoned licensed broker, has greater scale and experience in acquiring stocks and ETFs to back its products.
With a market cap close to $100 billion, can Robinhood become a trillion-dollar financial company? There are no trillion-dollar financial companies. Not JPMorgan Chase, not Visa, not BlackRock. This company expands geographically, in products, and enters new fields like prediction markets and AI faster than anyone else. It can be said to be the financial company to catch up to (or alongside Revolut, Nubank).
Damn, Robinhood's marketing is too clever. They hold these events for the most active users, with TV-level camera equipment, the whole theme, and then announce possibly 10 different products. We recorded a full interview with Johann at their event site, you can find it on Tokenized.
Plaid Reportedly Exploring IPO in the US
According to Bloomberg, the company has reportedly held preliminary discussions with banks regarding a potential public listing. Plaid was valued at $13.4 billion during the 2021 fintech boom, subsequently reset to $6.1 billion in 2025. Earlier this year, as investor sentiment towards fintech began to recover, it rebounded to an $8 billion valuation. If Plaid continues to move forward, it could become one of the most important fintech IPOs this year.
Plaid successfully hopped on the AI bandwagon. They launched integrations with ChatGPT and Perplexity, allowing people to access and view their own account data. This turns what was originally a pipeline into a secure pipeline for AI agents. This could be much bigger than using it for apps or fintech companies.
They are also doing interesting things with custom LLM transformer models. I talked to them last week about new sequence foundation models, which are more effective than previous machine learning attempts in categorizing payments, predicting fraud, or missed repayments. This brings more loans or less fraud for customers, the product becomes better, revenue grows.
Plaid has successfully achieved revenue diversification. Its lending and fraud products now bring considerable revenue to the company. The outcome of "bank pay" is yet to be seen, but if it really happens, Plaid is also in a pretty good position in this regard.
Wherever Plaid goes, fintech follows. Although Stripe, Robinhood, and Revolut are much larger companies, Plaid is the industry bellwether. They acquired This Week in Fintech. In many ways, Plaid is the core of "fintech" from 2019 to now. When they IPO, it's graduation day. I just hope the window stays open long enough for them to catch it. There is some tension in the market currently.
Erebor Targets $8 Billion Valuation, Deposits Reach $4 Billion
According to Bloomberg, Erebor deposits reached $4.05 billion. Their March report showed $1.1 billion. Nearly 4x growth in a single quarter, for a bank that only got full national charter in February. They are now negotiating to raise funds at a valuation exceeding $8 billion, higher than $4.35 billion in December.
Founded by Palmer Luckey. Backed by Founders Fund, 8VC, and Lux Capital. It took them about 9 months to apply for and get full charter from the OCC. Paxos, Ripple, Circle, and Stripe all applied for trust charters. None of them operate a full deposit bank.
This quarter they added about 400 customers, deposits grew by about $3 billion. Even if every dollar came from new customers, the average account is over $7 million. A small number of very large depositors, almost all exceeding FDIC limits. Sound familiar?
Demand for crypto collateralized lending was lower than they expected. The winning product is the boring one: a deposit account that stays open. It turns out, a bank that "prevents being choked off" might be the main feature for certain types of customers.
Luckey specifically said none of this quarter's growth came from his own companies. When the CEO refutes this criticism in advance, you know the hit really struck home the first time.
Rapid growth, concentrated, uninsured, correlated deposits are exactly the pattern of SVB. The current difference is: according to the Q1 report, Erebor holds zero loans. It operates more like a narrow bank than a lender. And it achieved profitability without those loans.
Meta Wants to Buy Kalshi
Before Meta CEO Mark Zuckerberg instructed employees to build an independent prediction market app, he proposed acquiring Kalshi. NPR reported there were meetings, but negotiations never went beyond that stage. In June 2025, Kalshi and Polymarket traded about $28 billion monthly. A year later, according to The Block, these sites' monthly trading volume approached $220 billion, driven mainly by sports-related betting.
Although acquisition negotiations never advanced, Meta did partner with Kalshi in March, allowing easy integration of Kalshi markets on Meta's social media app Threads.
Meta seems to be better at M&A than R&D. WhatsApp and Instagram might be the greatest acquisitions of all time. But considering the suspicious AI and "Metaverse" investments, the failed "Facebook Workplace", you have to wonder where this big tech company's next step lies, besides better ad monetization.
Last week I wrote about Meta trying payments in India again. After Facebook Credits, Libra, and countless other attempts, perhaps by hiring the founder of CRED, they can add another major monetization channel.
4 Companies
1. Novaquant - AI Decision Governance Layer
Novaquant sits between internal systems and AI models, observing every interaction, ensuring these interactions are auditable and compliant with policies. Policies, decisions, and information flows can then be combined into a complete decision history.
If you are regulated and send data to models, you need this. I first wrote about this idea when writing the agent oversight framework for Sardine in early 2025. Companies have hundreds or even thousands of policies; the connection between these policies, your operational processes, and what the models do can be extremely difficult to track. It makes sense to embed a layer between them. However, I wonder if this is a feature of the emerging larger "Enterprise AI Control Plane", rather than a product?
2. F2 - AI Native Deal Execution for Private Markets
F2 reads all historical memos, models, and reviews, building a structured, queryable history of deals created by each company. This intelligence can then be used to screen new deals, perform deep due diligence to prepare for investment committees, build models in Excel, and then monitor the entire portfolio.
F2 is a private credit specialist. There are companies like Hebbia and Rogo designed for broader tasks and workflows. F2's differentiation is deep understanding of the credit market, embedded into the product. Time will tell if this means they become the preferred choice.
3. Wealthreach - AI Content and Website Engine for RIAs
Wealthreach helps RIAs create websites without templates, with good SEO ranking. Companies can continue to edit and maintain websites, change copy, publish blog posts, using the platform as a combination of specialized SEO agents and website agents. Active websites perform stronger in SEO audits. The platform aims to create new content in the tone of an RIA based on the input you give it, and retarget those visitors who visit your website but do not fill out forms via email and LinkedIn outreach. Active websites start at $300/month, SEO $500/month, retargeting $500/month.
AI is creating companies operating in niches within niches. Imagine building this company 5 years ago before AI appeared? It would be tricky. With AI, generating pages and copy is not hard. Making it sound like an RIA and perform well in SEO for that niche is the key.
4. Trustapp - Escrow for Agents
Trustapp was originally an online escrow solution, solving risks in markets that often suffer high levels of fraud, with fake sellers or bad buyers. This leads to high chargeback rates and high costs. They have shifted their top-level messaging to focus more on AI agents and any large transactions or B2B payment processors. The world needs processors specialized in handling complex transactions. I wonder if becoming that is the best outcome. They also focus on helping these merchants get discovered by AI better.
I've definitely seen two or three pitches to make your "e-commerce AI agent ready". But automotive and B2B markets also need agent cataloging and discovery. This vertical focus might be Trustap's wedge.
Recommended Reading
1. The Frontier Without an Ecosystem is Unstable
Microsoft CEO Satya Nadella believes that the value of AI will not come from "who has the best model", but from "who can build learning loops around various models". Can you bring in all data, your context, and private IP you don't want to share, and push it to different models based on tasks? The skill for the next decade is building private evaluation and private reinforcement learning environments, helping your AI get better every time it executes what you do.
This is obviously Satya's pitch, to own enterprise tools, control planes, and context, helping these companies build private evaluation and reinforcement learning models. Considering the content in the Microsoft suite, they have a reasonable chance. I also strongly agree with this pitch and vision. As we wrote in the Operating Model Handbook, tools, control planes, and your ability to make evaluations and private models are key to distinguishing AI haves and have-nots.
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