Robinhood Chain outage and AMC backlash highlight growing pains

Outage on Sept. 4

Robinhood Chain, an Ethereum layer‑2 network, stopped producing blocks for at least 14 minutes on Friday, Sept. 4. Transactions were delayed while the network recovered. Robinhood has not disclosed the cause of the interruption.

Key points

• Block production halted for about 14 minutes.
• The two‑month‑old network has earned roughly $23 million in fees, including $4 million in a single 24‑hour period.
• AMC Entertainment’s CEO called the platform’s Stock Tokens “illegal” and asked Robinhood to stop trading them.

Rapid growth and fees

Since its public mainnet launch two months ago, Robinhood Chain has become one of the highest‑earning layer‑2 blockchains. Advisors estimate the chain generated $23 million in cumulative fees, and Token Terminal says it accounted for 78.5 % of layer‑2 revenue in the last 30 days. At the current pace, annualized revenue would be about $1.7 billion, though this is a short‑term snapshot, not a forecast.

DeFi activity on the chain also rose, with total value locked climbing nearly 27 % to about $840 million and decentralized exchange trading increasing.

AMC’s objection to Stock Tokens

AMC CEO Adam Aron posted on X that the token tracking AMC shares is not registered under U.S. securities laws and called the practice “disgusting.” He said AMC would seek legal counsel and asked Robinhood to cease trading the token. Robinhood’s chief legal officer replied that the company will not stop the token and suggested the lawyers be educated about the matter.

Robinhood describes Stock Tokens as ERC‑20 tokens that give economic exposure to U.S. shares and ETFs without granting legal ownership of the underlying shares. The tokens are issued by Robinhood Assets Limited, a Jersey entity, and are not registered for U.S. investors.

Why the event matters

The outage showed that even a fast‑growing network can be vulnerable to brief downtime, which is costly when fees are high. The dispute with AMC highlights regulatory uncertainty around tokenized stocks that are created without the underlying company’s participation.

Sources

• CryptoSlate