Robinhood Adds Shiba Inu, Solana, Polygon, and Compound. What Investors Need to Know About These Cryptos

Here's the lowdown on Robinhood's new cryptos.

Popular cryptocurrency broker, Robinhood, has added four new cryptos to its offer. It takes the number of cryptos people can buy and sell on the platform to 11 and adds some depth to Robinhood's selection.

Until now, apart from Ethereum (ETH), the majority of the cryptos available on Robinhood were pure payment cryptos such as Bitcoin (BTC), Bitcoin SV (BSV), and Litecoin (LTC). Payment cryptos are interesting but there's a lot more that blockchain can do -- as shown by some of the new cryptos.

Here's what you need to know about Robinhood's new cryptocurrencies:

Compound (COMP)

COMP is the governance token for the Compound decentralized finance (DeFi) platform. Compound is one of the more established interest-paying protocols. Users can lock crypto assets up on the platform to earn interest. In turn, borrowers can borrow against crypto collateral. When investors use the platform to borrow, withdraw, or repay, they receive COMP tokens.

This is a competitive market and Compound lost ground to some of its competitors last year, no thanks to a security bug that was uncovered in October. In addition, any increased crypto regulation is likely to be an issue for the whole DeFi sector. If you're considering investing in COMP, it's worth researching the possible impact of new regulation and how Compound compares with other DeFi players in more detail.

Polygon (MATIC)

Polygon is a layer 2 solutions aggregator for Ethereum. Layer 2s sit on top of existing blockchains to improve performance. In Polygon's case, it brings together various solutions to some of Ethereum's issues -- including network congestion, and high fees.

Polygon attracted a lot of attention last year because it lets developers continue to use the Ethereum blockchain they are familiar with, while also avoiding some of the issues faced by the leader in smart contract cryptos. The surge in demand made MATIC one of the top performers of 2021, an increase of over 14,000%, according to CoinGecko data.

Shiba Inu (SHIB)

Shiba Inu fans have been campaigning to get SHIB listed on Robinhood for some time. Shiba Inu is a meme crypto that shot to fame last year. It's a community-based project that plays on the popularity of Dogecoin (DOGE), the original meme token. Be aware that meme tokens carry more risk than many other cryptocurrencies because they have less (or no) utility.

Shiba Inu does have its own decentralized exchange (DEX) and is in the process of developing a metaverse. However, these projects don't stand out against other DEXs or metaverse tokens yet. Some argue that getting listed on Robinhood is a step toward mainstream acceptance. That may be the case, but a better step would be to build products that impress in their own right.

Solana (SOL)

Solana was another of last year's shooting crypto stars. It gained over 11,000% in 2021, as developers and investors looked for alternatives to Ethereum. Solana offers super fast transactions at a fraction of the cost of Ethereum, though its rapid growth has also caused some technical difficulties.

Solana currently has over 1,500 projects in development on its ecosystem. It's also building a reputation in the non-fungible token (NFT) space. Popular NFT marketplace OpenSea now lets users buy and sell NFTs on the Solana blockchain.

Robinhood's new features

This is Robinhood's second big announcement this week. Chief Product Officer Aparna Chennapragada told the recent Bitcoin 2022 conference that the brokerage had rolled out its crypto wallet functionality to everybody on its waitlist. The new feature means Robinhood customers can send and receive crypto from the app, where before they could only use it to trade.

For now, users can only buy and sell the four new cryptos listed above. Robinhood promises that it will soon also offer the ability to withdraw and deposit them from its wallet. As with any investment, take time to research each new asset in depth and evaluate how they fit with your wider investment goals. Robinhood is unlikely to pull the new offerings, so there's no rush to buy.

If none of these cryptocurrencies appeal, bear in mind that Robinhood is not your only crypto-buying option. Many exchanges and even other brokerages have a much wider range of coins and tokens. Check out our list of top cryptocurrency apps and exchanges for more options.