Steven Goldfeder says institutions should build on layer 2s, not new layer 1s

Steven Goldfeder, co-founder and chief executive of Offchain Labs, says banks and fintechs building their own blockchains should launch them as Ethereum layer 2s, not as new layer 1s.

He makes that case as tokenized real-world assets reached $39.25 billion in distributed value on Oct. 16, 2026, according to RWA.xyz.

Goldfeder argued it on stage at TOKEN2049 in Singapore on Oct. 7, 2026, in a keynote titled "The Programmable Economy Will Be Built on Layer-2". Offchain Labs develops Arbitrum, the Ethereum layer 2 that Robinhood built its own chain on.

Institutions are picking chains, and regulators are setting the rules

Stablecoins and tokenized assets give institutions a reason to run their own chains. Stablecoins worth $303.1 billion sat across all networks on Oct. 16, according to DefiLlama, and $144.5 billion of that was on Ethereum.

Arbitrum held $3.6 billion in stablecoins, below Base at $5.2 billion and Solana at $15.8 billion, by the same data.

The U.S. has also set terms for the first regulated on-chain stock trading. The Securities and Exchange Commission's Innovation Exemption, issued Sept. 17, gives approved venues five years to trade tokenized U.S. stocks, the SEC said.

One condition goes to the heart of Goldfeder's argument. The order requires the smart contracts behind those tokens to be auditable, public and deployed on a public, permissionless ledger, according to the SEC.

'One of two choices'

Goldfeder framed the decision institutions face as a fork in the road. "And these institutions are typically faced with one of two choices," he said: build an Ethereum layer 2 or launch an alternative layer 1.

His case for the first option is about control. "Institutions are not going to want to be a little player on a large public network," Goldfeder said, so many want a chain of their own.

His conclusion was blunt: "layer twos are just a better design for most institutions today."

The check: the big names have split.

Robinhood built Robinhood Chain on Arbitrum's Orbit stack and went live on July 1, 2026, Crypto Briefing reported. Stripe and Circle went the other way with Tempo and Arc, payments-focused layer 1s that surfaced in August 2025, The Defiant reported.

Who keeps the fees?

The core of the pitch is economics. "The layer ones retain $0 of their economic activity," Goldfeder said, because fees go to validators, and security has to be paid for whether or not the chain is busy.

"That yield is actually just the cost of security. It's the cost of inflation," Goldfeder said.

A layer 2, he said, pays "about 3 to 5% of their transaction cost to Ethereum" and keeps the rest. "You pay a very low fixed cost that's per transaction," he added.

The check: the split depends on Ethereum's fee market, which a layer 2 does not control. The 3% to 5% range is Goldfeder's figure, and we did not find an independent dataset that confirms it across chains.

More assets, less value

Goldfeder pointed to Arbitrum's lead in tokenized assets. "Arbitrum at 7,000 plus RWAs has more RWAs than any other ecosystem in the entire crypto," he said.

The count holds up. Arbitrum hosted 7,421 tokenized real-world assets on Oct. 16, more than Solana with 3,457 and Ethereum with 3,220, according to RWA.xyz.

The value does not. Those assets were worth $981.1 million, about 2.5% of the $39.25 billion distributed total, our calculation shows. Ethereum held $16.9 billion and Avalanche $13.1 billion.

He also pointed to a new deal on yield. Paxos began issuing its USDG stablecoin natively on Arbitrum One on Oct. 6, and Arbitrum joined the Global Dollar Network, which shares reserve yield with partners that drive demand, KuCoin reported.

By the numbers

The other side: why some still build layer 1s

Stripe and Circle chose dedicated layer 1s for payments. Circle described Arc as a chain with USDC as its native settlement asset, according to The Defiant's August 2025 report.

Their bet is that a payments company wants control of the base layer, including fees and settlement, rather than a share of someone else's. Goldfeder's answer is that a layer 2 gives that control without paying for a validator set.

The SEC's requirement of a public, permissionless ledger cuts against private chains, but it does not choose between a layer 2 and a public layer 1. Both can qualify.

What to watch: institutional launches through 2027

The first test is volume. Robinhood said its stock-token trading passed $15 billion about 100 days after its chain went live, a company-reported figure, Crypto Briefing reported.

The second is the SEC. Venues that apply under the five-year exemption will have to name the ledger they use, which will show whether layer 2s win regulated stock trading.

The third is value, not count. If Arbitrum's share of tokenized-asset value rises from about 2.5%, Goldfeder's argument gains weight.

What we do not know is how many of the institutions now designing chains will announce a layer 2 rather than a layer 1.

How we reported this: Goldfeder's remarks come from his Oct. 7, 2026, TOKEN2049 Singapore keynote, checked against the video's auto-generated captions. Asset and stablecoin figures come from RWA.xyz and DefiLlama as of Oct. 16; Arbitrum's 2.5% share is our calculation: $981.1 million / $39.25 billion. Exemption terms come from the SEC's Sept. 17 release.