•

www.ark-invest.com

January 25, 2022
Annual Research Report | For Informational Purposes Only
ARK Investment Management LLC. This is not a recommendation in relation to any named particular securities/cryptocurrencies and no warranty or guarantee is provided. Any references to particular
securities/cryptocurrencies are for illustrative purposes only. There is no assurance that the Adviser will make any investments with the same or similar characteristics as any investment presented. The reader
should not assume that an investment identified was or will be profitable. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE, FUTURE RETURNS ARE NOT GUARANTEED.

2•

DISCLOSURE

Risks of Investing in Innovation
Please note: Companies that ARK believes are capitalizing on disruptive innovation and developing technologies to displace older technologies
or create new markets may not in fact do so. ARK aims to educate investors and seeks to size the potential investment opportunity, noting that risks
and uncertainties may impact our projections and research models. Investors should use the content presented for informational purposes only,
and be aware of market risk, disruptive innovation risk, regulatory risk, and risks related to certain innovation areas.
Please read risk disclosure carefully.
RISK OF INVESTING IN INNOVATION
Rapid Pace of Change

Exposure Across Sectors and Market Cap

Uncertainty and Unknowns

à Aim for a cross-sector understanding of technology
and combine top-down and bottom-up research.

Source: ARK Investment Management LLC, 2021

Regulatory Hurdles

Disruptive
Innovation

Political or Legal Pressure

Competitive Landscapeà Aim to understand the regulatory, market, sector,
and company risks. (See Risk and Disclosure Page)

3•

Disruptive Innovation

Big Ideas 2022: Change & Convergence
When has investing not been about the future?
Change appears to happen slowly and then all at once. Over time,
innovation should displace industry incumbents, increase
efficiencies, and gain majority market share. With the rightunderstanding of disruptive innovation and a long-term time
horizon, we believe investors will capture exponential growth
opportunities, which deserve a strategic allocation in theirportfolios. For this reason, ARK focuses on opportunities likely toscale as technologies converge, transforming entire industries.
To enlighten investors on the impact of breakthrough technologies
we began publishing Big Ideas in 2017. This annual research reportseeks to highlight our most provocative research conclusions forthe coming year. We hope you enjoy our Big Ideas for 2022.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021

4•

Big Ideas 2022 - Report

Introduction

5

Gene Editing77

Artificial Intelligence

14

Multi-Omics

84

Digital Consumers

24

Electric Vehicles

93

Digital Wallets

30

Autonomous Ride-Hail

101

Public Blockchains

38

Autonomous Logistics

108

Bitcoin

44

3D Printing & Robotics

114

Ethereum & DeFi

56

Orbital Aerospace

122

Web3

66

Source: ARK Investment Management LLC, 2021

5•

Introduction to Big Ideas 2022

Technologies Are Converging
Brett Winton, Director of Research

ARK’s research is centered around the belief that fiveinnovation platforms are evolving and converging at
the same time: Artificial Intelligence, Robotics, Energy
Storage, DNA Sequencing, and Blockchain Technology.
We identified 14 transformative technologies that areapproaching tipping points as costs drop, unleashing
demand across sectors and geographies and spawning
more innovation.
We believe that historians will look back on this era as
one of unprecedented technological foment—andthey will say: everything changed.
Node Size: Log Prospective 2030 Market
Edge Size: ARK Convergence Score
Color: Innovation Platform
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
ARK Investment Management LLC, 2021. Forecast is compilation of forecasts for the 14 technologies that ARK defines as underlying the 5 innovation platforms. Assumes that traditional equity market exposures continue to compound value
at a rate in excess of inflation and are not substantially disrupted or marked down by negative exposure to innovation. Cryptoassets are likely to be increasingly considered a different asset class by many; comparisons between cryptoasset
values and equity market capitalization are cross-asset comparisons. Numbers rounded.
Source: World Federation of Exchanges, ARK Investment Management LLC, 2021.

6•

Introduction to Big Ideas 2022

We Believe That Five Innovation Platforms Will Generate
Significant Equity Market Returns Over The Long Term
2020

Non-Innovation
EquityCapitalizationAI$10.5T

Battery
Technology$1.5T

Blockchain$1.4T

Robotics
$168B

Gene
Sequencing
$125B

26%

35%

43%

51%

40%

$94T

CAGR:

3%

Attributable
Market Capitalization
100 T
10 T
1T

2030

100 B

Non-Innovation
EquityCapitalization
$126T

AI
$108T

Battery
Technology$32T

Blockchain$49T

Robotics$10T

Gene
Sequencing
$3.6T

10 B

CAGR: Compound Annual Growth Rate | Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any
particular security/cryptocurrency. | ARK Investment Management LLC, 2021. Forecast is compilation of forecasts for the 14 technologies that ARK defines as underlying the 5 innovation platforms. Assumes that traditional equity market
exposures continue to compound value at a rate in excess of inflation and are not substantially disrupted or marked down by negative exposure to innovation. Cryptoassets are likely to be increasingly considered a different asset class by
many; comparisons between cryptoasset values and equity market capitalization are cross-asset comparisons. Numbers rounded. Source: World Federation of Exchanges.

7•

Introduction to Big Ideas 2022

We Believe Disruptive Innovation Technologies Are Ready For Prime Time
2020: $14 Trillion

2030 Estimate: $210 Trillion

Reusable
Rockets

Battery
Technology

Robotics

Autonomous
Mobility

3D
Printing

Autonomous
Mobility

Reusable
Rockets

Battery
Technology
AI

MobileConnected
Devices

Robotics

Gene
Editing

Gene Seq

Living
Therapies

MobileConnected
Devices

DigitalWallets

Cloud
Computing

DigitalWallets

3D
Printing

Internet ofThings

Gene
Editing
100 T
10 T
1T

Blockchain

AI

100 B
10 B

Blockchain

Internet ofThingsCloud
Computing

Gene
Sequencing

Living
Therapies

Attributable
Enterprise Value

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Expected 2030 value is deduplicated expectation of value accrual to the individual technology on the basis of ARK’s forecast for technology uptake, revenue generation and cashflow accrual to meaningfully investable portions of the value
chain. 2030 market value assumes that market participants value modeled portions of the value chain at a roughly 5% cashflow yield. It is neither implied nor assumed that value accrual will occur in the public equity space alone, nor is any
accommodation or assumption made for equity issuance in the technology areas modeled.
Source: ARK Investment Management LLC, 2021

8•

Introduction to Big Ideas 2022

AI Innovation Could Increase Nearly 10-Fold To More Than$100 Trillion In Equity Market Capitalization By 2030
Mobile Connected Devices:

Humans could be enmeshing a constellation of connected
devices that will inform us, entertain us, relate us, protect us,
and mediate our perceptions of the world. Device
constellations likely will be the dominant softwaredevelopment platforms, providing primary end-point
distribution and productivity benefits. Legacy computation
manufacturers and operating system providers could be inperil, along with media, entertainment, and content
production companies with business models optimized forlegacy distribution platforms.

Internet of Things:

Internet of things could transform the distribution of media,
providing end-users with new ways to interface with the world
and capturing data-streams that enable the evolution of new
business models and services. Consumer habits could be
modified significantly and monetized in new ways. Voice
interfaces should take share of e-commerce, digital mirrors
should become fashion and exercise interfaces, and the age of
linear TV could end. Digital distribution platforms are likely to
accrue power as they promote private-label content andservices.

AI
$85T

AI:

Seemingly impossible problems could be solved bysoftware and other computational systems that learn andchange by integrating new data. These evolving systems
should transform work and accelerate computational
technology’s integration into all economic sectors. The
adoption of learning systems could prove more
momentous than the introduction of the internet,
transforming all economic sectors, including healthcare
and financial services.

Cloud Computing:Concentrated computational infrastructure could allow
every device to harness the power of supercomputers,
enabling continuous, data-driven improvements on thesoftware side. Best-in-class solutions are likely to accrue
winner-take-most share in each vertical, as customer lockin drives superior economics. End user productivity should
drive pricing, and should improve continuously based ondata-informed solutions. Legacy software and hardware
providers are likely to be vulnerable.

MobileConnected
Devices$8T

Cloud
Computing$10T

Internet ofThings
$4.6T
100 T
10 T
1T
100 B
10 B

Attributable
Enterprise Value

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Expected 2030 value isdeduplicated expectation of value accrual to the individual technology on the basis of ARK’s forecast for technology uptake, revenue generation and cashflow accrual to meaningfully investable portions of the value chain. 2030 market value
assumes that market participants value modeled portions of the value chain at a roughly 5% cashflow yield. It is neither implied nor assumed that value accrual will occur in the public equity space alone, nor is any accommodation orassumption made for equity issuance in the technology areas modeled.
Source: ARK Investment Management LLC, 2021

9•

Introduction to Big Ideas 2022

Battery Technology Could Enable Autonomous Mobility,
Generating More Than $30 Trillion In Market Capitalization By 2030
Battery Technology:

Declining battery costs could yield a Cambrian explosion in
mobility form factors, pushing electrical supply out tonetwork nodes and reducing EV prices enough to competewith traditional gas-powered cars. Micro-mobility and aerial
systems, including flying taxis, could transform landscapesand accelerate demand for electric energy displacing liquid
fuel. Traditional automotive manufacturers and their
suppliers could topple; oil demand globally is in the processof peaking and infrastructure will likely have to adapt.

Autonomous Mobility:

Battery-powered robots moving people andparcels could operate atop legacy transportation
infrastructure, transforming the economics ofphysical movement by an order of magnitude.
Taxi service could become the norm andownership of personal vehicles the exception;
frictionless delivery could turbocharge
ecommerce; and autonomous mobility-driven
data should provide real-time insights into thestate of the world. Incumbent providers in theautomotive, logistics, retail, and insurance sectors
could be upended.

Autonomous
Mobility$30T

Battery
Technology
$2T

100 T
10 T
1T
100 B
10 B

Attributable
Enterprise Value

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Expected 2030 value isdeduplicated expectation of value accrual to the individual technology on the basis of ARK’s forecast for technology uptake, revenue generation and cashflow accrual to meaningfully investable portions of the value chain. 2030 market value
assumes that market participants value modeled portions of the value chain at a roughly 5% cashflow yield. It is neither implied nor assumed that value accrual will occur in the public equity space alone, nor is any accommodation orassumption made for equity issuance in the technology areas modeled.
Source: ARK Investment Management LLC, 2021.

10 •Introduction to Big Ideas 2022

Robotics Advances Could Generate More Than
$10 Trillion In Equity Capitalization By 2030
3D Printing:

3D printing could transform traditional manufacturingmethods by removing design barriers and reducing cost,weight, and time to production. Already healthcare tools
created with 3D printing can be personalized, enhancing
experiences for both patients and doctors. Light 3D printed
aerospace parts could reduce global emissions and giveflight to new aircraft for earth and outer space. 3D printing
with artificial intelligence could design-on-demand
innovative parts better suited to their end applications at
a fraction of traditional manufacturing costs.

Reusable Rockets:Once a ludicrous notion, nearly every launch provider
today appears to be making plans for rocket reuse, whichshould lower costs by an order of magnitude and enable
exciting new business models. Given the economics ofrocket reuse, both low earth orbit constellations andhypersonic point-to-point travel could become feasible,
transforming military asset delivery, shrinking the world's
supply chains, and enabling economical broadband
connectivity anywhere on Earth.

3D
Printing
1.1T
Reusable
Rockets$500B
Robotics$8.6T

Robotics:

Collaborative robots powered by artificial intelligence
could flourish in increasingly dynamic environments,
transforming the economy. Harnessing the power of AI,
robots likely will learn from and adapt to the world aroundthem, lowering upfront and training costs. More companies
are likely to participate, supercharging productivity acrossindustries.

100 T
10 T
1T
100 B
10 B

Attributable
Enterprise Value

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Expected 2030 value isdeduplicated expectation of value accrual to the individual technology on the basis of ARK’s forecast for technology uptake, revenue generation and cashflow accrual to meaningfully investable portions of the value chain. 2030 market value
assumes that market participants value modeled portions of the value chain at a roughly 5% cashflow yield. It is neither implied nor assumed that value accrual will occur in the public equity space alone, nor is any accommodation orassumption made for equity issuance in the technology areas modeled.
Source: ARK Investment Management LLC, 2021.

11•

Introduction to Big Ideas 2022

Genomic Technologies Could Drive More Than $3 Trillion
In Equity Market Capitalization By 2030
Gene Sequencing:

As genome sequencing costs fall, tests once limited to research labs should
be deployed widely, spurring volume increases by three orders of magnitude.
Pan-cancer blood tests are likely to scale and commercialize, therapeutic
treatments should become more precise and efficacious, and highly effective
measures against inherited complex disorders should become prophylactic.
Importantly, gene sequencing advances could extend into agriculture andmaterials science. Legacy drug franchises and traditional diagnostic testing
businesses likely will be vulnerable.

Living Therapies:

Genetic tools that create new forms of therapeutic intervention could
emerge, enabling precise, efficacious, and durable treatments against
pernicious and chronic diseases. The promise of curing disease could boost
investment in tooling and delivery infrastructure that is likely to commandand sustain premium prices while improving health outcomes. Advances inthis field also could set the stage for cultivated protein products thattransform the economics of food production. Companies with early-stage
cancer franchises could be at risk.

Gene Editing:

Editing technology can insert or delete genes in atargeted portion of the human genome. Catalyzed
by the 2012 discovery of CRISPR, these molecular
editors are effective, inexpensive, and accessible
technologies that could advance our ability tounderstand and manipulate biological systems.
In health settings they allow for faster and more
precise pre-clinical experimentation, improving theprobability of early-stage research entering clinical
trials. At the therapeutic level they enable the repairof genetic disorders and curative treatments for rarediseases. This revolutionary gene technology,
alongside emerging genetic synthesis techniques,
could expand further into agriculture, foodproduction, pest control, materials, and energy.

Gene
Editing$1T
Gene
Sequencing$1.6T

Living
Therapies
$1T

100 T
10 T
1T
100 B
10 B

Attributable
Enterprise Value

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Expected 2030 value is deduplicated expectation of value accrual to the individual technology on the basis of ARK’s forecast for technology uptake, revenue generation and cashflow accrual to meaningfully investable portions of the value
chain. 2030 market value assumes that market participants value modeled portions of the value chain at a roughly 5% cashflow yield. It is neither implied nor assumed that value accrual will occur in the public equity space alone, nor is any
accommodation or assumption made for equity issuance in the technology areas modeled.
Source: ARK Investment Management LLC, 2021.

12•Introduction to Big Ideas 2022

ARK Expects Cryptoassets And Digital Wallets To Command Nearly$50 Trillion In Equity Market Capitalization By 2030
Blockchain:

All money and contracts could migrate to open-source
protocols that enable and verify digital scarcity andproof-of-ownership. The financial ecosystem could beforced to reconfigure to take advantage of the capabilities
these technologies afford, potentially leading to moretransparency, fewer capital and regulatory controls, andsignificantly lower contract execution costs. More ofeverything could become money-like: fungible, liquid,
quantifiable; every corporate entity and consumer will
have to adapt; corporate structures might be called into
question; every sector could be impacted.

Digital Wallets:

Digital wallets allow anyone with a connected device totransact money instantly, transforming commercial andfinancial experiences. Consumers hold the power of a bankbranch in their pockets and demand wholesale pricing formany financial transactions, changing their relationships
with financial service providers. We believe that trillions inannual cash transactions will be digitized, presenting a data
monetization opportunity roughly equivalent to that of
Google Search. Digital wallets could become the point-ofcontact for a variety of digital services. Traditional financial
services institutions could be at risk.

Attributable
Enterprise Value

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Expected 2030 value is deduplicated expectation of value accrual to the individual technology on the basis of ARK’s forecast for technology uptake, revenue generation and cashflow accrual to meaningfully investable portions of the value
chain. 2030 market value assumes that market participants value modeled portions of the value chain at a roughly 5% cashflow yield. It is neither implied nor assumed that value accrual will occur in the public equity space alone, nor is any
accommodation or assumption made for equity issuance in the technology areas modeled.
Source: ARK Investment Management LLC, 2021.

13•

Introduction to Big Ideas 2022

Convergence Across Technologies Could Amplify Their Potential
Converging technologies:2030• The convergence of robotics, battery technologies,
and artificial intelligence is likely to collapse thecost structure of transportation, impacting the
economics of auto, rail, and airline activities.
• The convergence of next generation DNA
sequencing, artificial intelligence, and genetherapies should boost returns on investment
significantly, potentially creating a golden age ofhealth care likely to rival that of the eighties andnineties.
• The convergence of application programming
interfaces (APIs), social platforms, and blockchain
technology could integrate business andconsumer marketplaces, disintermediating the
middlemen dominating financial ecosystems.
Attributable
Enterprise Value

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Expected 2030 value is deduplicated expectation of value accrual to the individual technology on the basis of ARK’s forecast for technology uptake, revenue generation and cashflow accrual to meaningfully investable portions of the value
chain. 2030 market value assumes that market participants value modeled portions of the value chain at a roughly 5% cashflow yield. It is neither implied nor assumed that value accrual will occur in the public equity space alone, nor is any
accommodation or assumption made for equity issuance in the technology areas modeled.
Source: ARK Investment Management LLC, 2021.

•

A R K

•

B I G

I D E A S

2 0 2 2

Artificial
Intelligence
Enabling Humans To Become Superhuman
Research by William Summerlin and Frank Downing, ARK Analysts

Artificial Intelligence (AI) training costs appear to be declining at more than twice the rateof Moore’s Law1 as performance is increasing significantly.
By automating the tasks of knowledge workers, AI should boost productivity and lower unit
labor costs significantly. Our research suggests that the market capitalization of AI hardware
and software companies could scale at roughly 50% annualized rate, increasing from $2.5
trillion in 2021 to $87 trillion by 2030.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Moore’s Law suggests that the number of transistors per silicon chip doubles every two years, thereby reducing the cost of compute by 50%.
www.ark-invest.com
Source: ARK Investment Management LLC, 2021.

15•

Artificial Intelligence

AI Training Costs Appear To Be Declining At Twice The Rate Of Moore’s Law
GPT-3 is a large language model that uses deeplearning to generate text, ranging from translation
to poetry composition.
From 2015 to 2020, the cost to train a GPT-3 sizedmodel dropped 65% at an annual rate, from $875
million to $4.6 million. According to our research,
the cost will decline another four orders ofmagnitude to $500 in 2030.

Cost to Train a 175B Parameter Model (GPT-3)
ARK Cost Forecast

Moore's Law (2015 forward)$1,000,000,000$100,000,000$10,000,000$1,000,000$100,000

Given 240 trillion synapses, the cost to train aneural network equivalent in size to the humanbrain in 2021 would have been $2.5 billion and islikely to drop 60% at an annual rate to $600,000
by 2030.

$10,000$1,000
$100

2015

2020

2025

2030

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Source: ARK Investment
Management LLC, 2021 based on data sourced from Hernandez, Danny, and Tom Brown. “AI and Efficiency.” OpenAI, OpenAI, May 2020, openai.com/blog/ai-and-efficiency/, NVIDIA., “Demystifying GPT-3.” lambdalabs.com/blog/demystifyinggpt-3/., and“Brain Facts and Figures.” faculty.washington.edu/chudler/facts.html.

16•

Artificial Intelligence

Wright’s Law Models The Cost Declines Of AI Hardware And Software
Informed by Wright’s Law, we estimate that AI-relative compute unit (RCU) production costs could decline at a 39% annual rate
and that software improvements could contribute an additional 37% in cost declines during the next eight years. In other words,
the convergence of hardware and software could drive down AI training costs by 60% at an annual rate by 2030.
AI Training Hardware Cost
Estimated Cost Per Unit

AI Software Training Cost Using Neural Networks
Estimated Compute

Actual Cost Per Unit

$5,000Compute Required (TFS-Days)

1.000

$500

Predicted $/ AI RCU

Actual Compute

$50

$5

$1

$0

0.100

0.010

0.001

0.000
0

1

10

100

1,000

10,000

Cumulative Compute Units Produced(Millions)

100,000

0

1

100

10,0001,000,000

Cumulative Compute Units Produced(Millions)

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021 based on publicly available data sourced from Hernandez, Danny, and Tom Brown. “AI and Efficiency.” OpenAI, OpenAI, May 2020, openai.com/blog/ai-and-efficiency/, and NVIDIA. TFS-Days is ameasure of compute required to train a model. AI-Relative Compute Unit (RCU) is a measure of relative performance improvement on AI training compared against a NVIDIA K80 (2014) baseline.

17•

Artificial Intelligence

AI Could Automate The Tasks Of Knowledge Workers
And Boost Productivity
Our research suggests that by 2030 AI will increase the output of knowledge workers by 140%.

Output of AI-Assisted Knowledge Workers 2021 to 2030
Software Developer

Accountant

Bookkeeper

LawyerParalegal

Office and Admin Support

4.5x
4.0x
3.5x
3.0x
2.5x
2.0x
1.5x
1.0x
0.5x
0

Productivity
Multiplier
Productivity Multipler
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Source: ARK Investment
Management LLC, 2021 based on data sourced from the US Bureau of Labor Statistics. “Occupational Employment and Wage Statistics.” www.bls.gov/oes/current/oes_stru.htm., and McKinsey Global Institute. “A Future That Works:
Automation, Employment, and Productivity. mckinsey.com/~/media/mckinsey/featured%20insights/digital%20disruption/harnessing%20automation%20for%20a%20future%20that%20works/mgi-a-future-that-works_full-report.pdf

18•

Artificial Intelligence

Example:OpenAI Codex Already Can Complete 37% Of Coding Tasks
Codex can translate English language
commands like “Make a red ball bounce
around the screen” into software code,
potentially saving software developers
hours of time.
Today, Codex can complete 37% of coding
tasks, a percentage that is likely to increasesignificantly during the next few years.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: “OpenAI Codex.” openai.com/blog/openai-codex.

19•

Artificial Intelligence

AI Could Accelerate Productivity Gains
By 2030, artificial intelligence is likely to boost the output of global knowledge workers by 9% at an annual rate, from $41 trillion
in expected human labor output to roughly $97 trillion in AI + human output.

AI Software Spend And Labor Output Increase (Forecast)

ARK estimates that organizations
will increase spending on enterprisesoftware by 42% at an annual rate to$50

Billions, USD$14 trillion a year.
If automation boosts productivity
by 140%, AI software could increase
the output of global knowledge
workers at an annual rate of 9% to$97 trillion in 2030.

$56

$60

$40
$30
$20

$14
42% CAGR

$10
$0

$1
20212021
Enteprise
SoftwareEnterprise
Spend
Software Spend

2030 AI Software SpendLabor Output Increase fromAI Software

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Forecast excludes China.
Source: ARK Investment Management LLC, 2021 analysis based on company derived statistics and data sourced from the US Bureau of Labor Statistics. “Occupational Employment and Wage Statistics.” www.bls.gov/oes/current/oes_stru.htm.,
Gartner gartner.com/en/newsroom/press-releases/2021-10-20-gartner-forecasts-worldwide-it-spending-to-exceed-4-trillion-in-2022, and McKinsey Global Institute. “A Future That Works: Automation, Employment, and Productivity.”
mckinsey.com/~/media/mckinsey/featured%20insights/digital%20disruption/harnessing%20automation%20for%20a%20future%20that%20works/mgi-a-future-that-works_full-report.pdf

20 •Artificial Intelligence

AI Software Should Boost Demand For AI Hardware
ARK estimates that SaaS companies spend 50%+ of their cost of goods sold (COGS) on infrastructure hosting costs.
As demand for AI software grows, the demand for hardware could rise accordingly.

SaaS COGS

Cost of
Goods Sold25%

Hardware Cost
25%

AI Compute
40%

Storage25%
Other COGS
(Licensing,Travel, etc...)50%

AI Compute

Storage

Network

Network
20%
Overhead
15%

Overhead$1.7T$1,800

Cloud HostingMargin25%
Gross Margin
75%

Projected Hardware Spend Driven By AI

HardwareDemand

$1,600Billions, USD

SaaS
Revenues$1,400$1,200$1,00043% CAGR

$800
$600
$400
$200
$-

102% CAGR

$285B

$17B
2021

2025

2030

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Source: ARK Investment
Management LLC, 2021 based on data sourced from a16z. “The Cost of Cloud…” https://a16z.com/2021/05/27/cost-of-cloud-paradox-market-cap-cloud-lifecycle-scale-growth-repatriation-optimization/, Gartner
gartner.com/en/newsroom/press-releases/2021-10-20-gartner-forecasts-worldwide-it-spending-to-exceed-4-trillion-in-2022., and IDC. https://www.idc.com/getdoc.jsp?containerId=prUS47961621.
https://www.idc.com/getdoc.jsp?containerId=prUS47528921. https://www.idc.com/getdoc.jsp?containerId=prUS47525621. https://www.idc.com/getdoc.jsp?containerId=prUS47525621.

21•

Artificial Intelligence

Spending On Global AI Software And Hardware Could Be More Than
Triple The Consensus Expectation By 2030
Global IT Spend Forecast
Consensus IT Spend

ARK
Consensus+ AI Hardware& Software
Consensus
IT + AIITHardware& Software
Spend Spend$25

Trillions, USD

$20

$15

+$15T

20% CAGR$10

4% CAGR
$5

$0
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021 based on data from company derived statistics and Gartner gartner.com/en/newsroom/press-releases/2021-10-20-gartner-forecasts-worldwide-it-spending-to-exceed-4-trillion-in-2022

22 •Artificial Intelligence

Artificial Intelligence Could Scale From Almost $2.5 Trillion To $87 Trillion
In Enterprise Value By 2030
Enterprise Value (Trillions, USD)
By 2030, AI software companies could
produce $14 trillion in annual revenue
collectively. The resulting $4 trillion in free
cash flow could create over $80 trillion inenterprise value, up from $2.3 trillion in 2021,
generating returns of 48% at a compound
annual annual rate during the next nine years.

$90
$80
$70

AI

$60

Applications$50

By 2030, AI hardware companies could
produce $1.7 trillion in annual revenue
collectively. The resulting $350 billion in free
cash flow could create $7 trillion in enterprisevalue, generating returns of 57% at acompound annual annual rate during thenext nine years.

AI
Software$40$30

Foundation AI
Model-as-a-Service
APIs

$20
$10

AI Hardware$0Internet 1997 - 2021

AI 2021 - 2030 (estimate)

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021

•

A R K

•

B I G

I D E A S

2 0 2 2

Digital Consumers
Spending More Time and Money Online
Research by Nicholas Grous, ARK Analyst, and Andrew Kim, ARK Analyst Intern

The new digitally native consumer is spending an increasing amount of time socializing,playing, and purchasing online. As digital takes share in our daily lives, we believe themarket—as measured by online entertainment spend, advertising spend, and platform
e-commerce fees—is likely to grow at an 18% compound annual rate during the next five
years, from $1.8 trillion today to $4.1 trillion in 2026.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

24 •Digital Consumer

Digital Is Taking Share Of Our Lives
The COVID-19 crisis accelerated the shift from offline to online activities. We estimate that on average in 2021, internet users spent
38% of their free time online and 62% offline. By 2030, we expect these averages to flip, with users spending 52% of their free time
online and 48% offline.

Global Average Allocation of Online vs. Offline TimeTime Spent Offline

Time Spent Online% of Non-Working Waking Hours

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

2010

2015

2020

2025

2030

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, data sourced from eMarketer, Federal Reserve Economic Data, Organization for Economic Cooperation and Development, United States Census Bureau, United States Department of Labor, and WorldBank Group.

25 •Digital Consumer

Social Platforms Are Scaling Like Never Before
The accelerating adoption of online platforms gives businesses and individuals the ability to reach global audiences.
Today, six platforms have more than 1 billion monthly active users, and 29 platforms have at least 100 million monthly active users.

Number of Years Since Launch to Reach 1 Billion Monthly Active Users

Monthly Active Users (Millions)

Facebook

YouTubeWhatsApp

WeChat8.7 Years

1000

Instagram

TikTok
7.2 Years

7.0 Years

7.3 Years

5.1 Years

7.7 Years

800
600
400
200
0
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, “List of social platforms with at least 100 million active users,” Wikipedia, last accessed January 18, 2022,
https://en.wikipedia.org/wiki/List_of_social_platforms_with_at_least_100_million_active_users, data sourced from CNBC, Meta Platforms, TechCrunch, Tencent Holdings, and USA Today.

2018

2019

2020

2021

26 •

Digital Consumer

Digital Advertising Is The Primary Channel For Reaching Consumers
As traditional advertising declined during the Covid-19 pandemic, digital advertising gained share. By the end of 2021, global digitaladvertising totaled roughly $440 billion, or 62% of the total advertising market. We believe the global digital advertising market willgrow at a 11% compound annual rate over the next eight years, surpassing $1 trillion in expenditures by the end of 2029.

Global Advertising Expenditures$1,400Digital Ad Spend

Traditional Ad Spend$1,000(Billions, USD)

Total Advertising Expenditure$1,200

$800
$600
$400
$200
$2000

2005

2010

2015

2020

2025

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, data sourced from Kagan Research and MAGNA Global USA.

2030

27 •

Digital Consumer

Social Commerce Is The Next Wave In Online Shopping
When implemented correctly, social commerce combines the convenience of online shopping with the network effects of social
media. We expect social commerce gross merchandise value (GMV) to grow at a compound annual rate of 41% over the next five years
to $3.7 trillion, more than doubling it from less than 10% of total e-commerce today to 22% in 2026.

Digitalization of Commerce$35,000

Traditional Commerce

Pure E-CommerceSocial Commerce$25,000(Billions, USD)

Gross Merchandise Value$30,000$20,000$15,000$10,000$5,000
$-

2010

2012

2014

2016

2018

2020

2022

2024

2026

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Note: We define social commerce as any online sale of a physical good that takes place within a social media platform or via e-commerce platforms through social features.
Source: ARK Investment Management LLC 2021, data from Bond Capital, CEIC Holdings, China Internet Watch, Digital Commerce 360, eMarketer, EuroCommerce, FTI Consulting, Invesp, National Bureau of Statistics of China, and U.S. Census Bureau.

28 •Digital Consumer

Games Are The New Social Platforms
Fortnite exemplifies the massive shift to social gaming. Launched in 2017 as a first-person battle royale game, today Fortnite holds
virtual concerts for millions of players and has dedicated spaces in which users can hang out. We estimate that video game content
and services will grow at a 15% compound annual growth rate from roughly $200 billion in 2021 to more than $400 billion by 2026 withthe rise of “virtual worlds.”

Cumulative Hours of Fortnite Watched on Twitch
5,000

Marshmello Concert

Travis Scott Concert
J Balvin's Fortnite

Millions of Hours

4,000

ConcertAriana Grande

3,000ConcertCollaboration

Party Royale Launch

2,000with Balenciaga

Collaboration with
Marvel Begins

1,000

Collaboration
with NBA

Discovery Shark Week Premiere0

May-17BTS Music Video Premiere

Star Wars

Collaboration with NFL Begins

Fortnite Initial Release

Live Event with

Feb-18

Nov-18Aug-19

May-20Mar-21

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Our estimate and forecast for the video game industry include only video game content and services and exclude related hardware and accessory sales.
Source: ARK Investment Management LLC, 2021, data sourced from Epic Games, NPD Group, and TwitchTracker.

Dec-2129 •Digital Consumer

We Estimate That The Revenue Associated With Discretionary Online Time
Will Increase From $1.8 Trillion Today To $4.1 Trillion In 2026
Estimated Monetization per Hour of Discretionary Time Online

We identify three online revenue segments:
Entertainment Spend•Advertising•

Platform E-Commerce Fees

Based on ARK's research, the market shouldgrow from $0.19 to $0.29 on a cost per hourbasis during the next five years.
On a total revenue basis, we expect the market
to grow at a 18% compound annual rate during
the next five years, from $1.8 trillion today to$4.1 trillion in 2026.

Entertainment Spend (Direct)

Advertising (Indirect)

Platform E-Commerce Fees (Direct)

$0.35

$0.30

Global Cost Per Hour

•

$0.25
$0.20
$0.15

$0.10
$0.05
$-

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, data sourced from CEIC Data, China Internet Watch, Department of Labor and Training, Digital Commerce 360, EuroCommerce, eMarketer, Federal Reserve Economic Data, FTI Consulting, Invesp, Mary
Meeker, National Bureau of Statistics of China, Newzoo, NPD Group, Organization for Economic Cooperation and Development, Statista, US Census Bureau, the World Bank, and US Bureau of Labor Services..

•

A R K

•

B I G

I D E A S

2 0 2 2

Digital Wallets
Upending Traditional Banking
Research by Max Friedrich, ARK Analyst, and Nishita Jain, ARK Research Associate

Today, digital wallets like Venmo, Cash App, and others around the globe are penetrating
traditional financial services, including brokerage and lending, thanks to what we believe aresuperior user experiences and much lower costs of acquisition.
In ARK’s view, digital wallets could scale at an annual rate of 69% in the US, from more than$400 billion in market capitalization to $5.7 trillion, and 78% globally, from $1.1 to $20 trillion,
during the next five years.

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021

www.ark-invest.com

31•

Digital Wallets

Digital Wallets Are The Number One Payment Method Offline And Online
Dominating e-commerce payments since 2017, digital wallets surpassed cash last year in point-of-sales (POS) payments, likely inresponse to the COVID-19 pandemic.

Top Payment Methods as Share of Global

Top Payment Methods as Share of Global

E-Commerce Purchase Volume

Point-of-Sales (POS) Purchase Volume

Digital Wallet

Credit Card

Bank Transfer

Cash on Delivery

Debit Card

Digital Wallet

50%

50%

40%

40%

30%

30%

20%

20%

10%

10%

0%

Credit Card

Debit Card

Cash

0%
2016

2017

2018

2019

2020

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021; Worldpay Global Payments Report issues 2017, 2018, 2020, 2021. ARK estimates for 2017.

2018

2019

2020

32 •

Digital Wallets

The Number Of Digital Wallet Users Has Surpassed The Number Of
Deposit Account Holders At One Of The Largest US Banks
Based on publicly available data, Square’s Cash App and PayPal’s Venmo have amassed 74 million and 82 million annual active users in
the past 8 and 11 years, respectively. J.P. Morgan hit 60 million deposit account holders after five acquisitions in more than 30 years.1

J.P. Morgan De posit. Accounts

90

Cash App AAUs

Venmo AAUs

80
70
60

(Millions)

Deposit Accounts / Annual Active Users

J.P. Morgan Chase Deposit Accounts vs. Cash App and Venmo Annual Active Users (AAUs)

50
40
Acquisition

30
20
10

MergerChemical Bank,
Manufacturers
Hanover

Washington Mutual

MergerChemical Bank,
Chase Manhattan Bank

MergerChase Manhattan
Bank, J.P. Morgan

Acquisition
Bank One0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Refers to number of J.P. Morgan Chase deposit accounts <$100,000 prior to 2010 and number of deposit accounts <$250,000 after 2010 due to changing reporting regulation.
Source: ARK Investment Management LLC, 2021, based on data sourced from: Federal Deposit Insurance Corporation (FDIC) Statistics on Depository Institutions (SDI) and RIS.

33•

Digital Wallets

Digital Wallets Are Differentiated By Customer Acquisition Strategies
CustomerAcquisitionPeer-to-Peer (P2P)

Land and Expand

Vertical Integration into
Financial Services

Merchant-First

MarketStructure

Developed or developing markets
suffering from friction in P2P orcross-border payments

Developed or developing markets
with opportunities to optimize asingle use case in financial services

Developing markets with low
financial services penetration

Mostly developed markets
with well-established financial
services, making (P2P) payments anunattractive customer
acquisition strategy

Strategy

Growing P2P networks organically,sometimes accelerated bypartnerships with brands
or influencers

Leveraging trust with customers tocross-sell other products

Expanding into financial services,
often with giveaways
or rewards

Using relationships with establishedmerchants to acquire retailcustomers, mostly throughcash-back campaigns

ExamplesForecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021

34 •Digital Wallets

Differentiated Customer Acquisition Strategies Result In
Lower Customer Acquisition Costs
On a net basis, traditional banks in the US spend roughly $750 inpaid marketing and roughly $2500 in total, including the occupancy
expenses for branch networks, to acquire a new customer

Based on network effects, viral marketing, and arguably superior value
propositions, digital wallet providers spend as little as $1 to acquire
new customers, giving them room to invest and move up-market.

Customer Acquisition Costs: Digital Wallets vs. US Banks$2,500$2,500$2,000$1,500$1,000

$750

$500

$-

$1

$5

$18

$26

NubankCash App

Tinkoff Bank

Kaspi

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, Company information and ARK Estimates

US Banks: Paid Marketing

US Banks: Paid Marketing
and Occupancy Costs

35•

Digital Wallets

Each Digital Wallet User In The US
Could Be Worth $22,500 At Maturity

Potential Value Per Average Digital Wallet User (U.S.)$30,000

per average US user.
Beyond financial services, digital wallets could become
lead-generation platforms for offline and online commerce,
potentially adding more than $12,000 to their net present
value per user.
Digital wallets also could serve as on-ramps to Web3 assets,such as NFTs. ARK estimates that such Web3 monetization
could add $1,700 to their net present value per user.

$25,000

Value Per User (USD)

If digital wallets were to become consumer financial
dashboards, ARK estimates that the net present value of
their financial service revenues would be roughly $10,000$12,400 $22,500$20,000$15,000$10,000$2,400$1,200$1,700$2,300$5,000$700$1,800

$-

)
3
e
e
t
ts
ce
to
ag
eb
nc
un
p
en
er
g
a
y
o
t
r
W
r
r
m
m
c
u
C
y
o
m
Ac
Ins
Pa
s&
Co
dM
ng
k
i
n
e
c
o
in
nd
it a
nl
(St
pe
ed
O
g
S
r
&
d
tin
lC
an
es
ne
na
i
v
l
g
o
f
In
rs
vin
Of
Pe
Sa

tal
To

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021. All net present value estimates based on 2020 or 2021, except web3. Offline/Online Commerce assumes digital wallet captures lead generation fee for 100% of offlineand online average US consumer retail spend. Insurance assumes digital wallet captures lead generation fee on average insurance revenue per US consumer. Saving and Spending Account assumes digital walletcaptures spread between interest rate and risk-free rate for average balance of US transaction accounts as defined by the Federal Reserve or lead generation fee on net interest income. Offline and Online Payments
assumes digital wallet captures fee on 100% of offline and online average US consumer retail spend. Personal credit and mortgage assumes digital wallet captures spread between interest rate and risk-free rate forinterest income from average debt per adult in US or or lead-generation fee on net interest income. Investing assumes digital wallet captures revenue (excluding commissions) from average US brokerage andcryptocurrency exchange consumer. Web3 assumes digital wallet captures lead-generation or first party marketplace fee on 100% of 2026 web3 Gross Merchandise Value as forecasted by ARK.

36 •Digital Wallets

The US Digital Wallet Opportunity Could Scale 69% At An Annual Rate
From More Than $400 Billion In 2021 To $5.7 Trillion In 2026.

Penetration of Potential Value per Digital Wallet User
Digital Wallet Penetration of
Smartphone Users 2026 (US)Digital Wallet Users 2026 (US)

Potential Valueper Digital Wallet
User (US)

5%

10%

25%

50%

75%

100%

Digital Wallet Opportunity (US)50%

127 Million$140
Billion$290
Billion$710
Billion$1.4
Trillion$2.1
Trillion$2.8
Trillion

75%

190 Million$210
Billion$420
Billion$1
Trillion$2.1
Trillion$3.2
Trillion$4.2
Trillion

100%

250 Million$290
Billion$570
Billion$1.4
Trillion$2.8
Trillion$4.2
Trillion$5.7
Trillion$22,500

If every US smartphone user,
valued at $22,500 per user, would
adopt a digital wallet by 2026.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021.

37•

Digital Wallets

The Global Digital Wallet Opportunity Could Scale 78% At An Annual Rate
From $1.1 Trillion To $20 Trillion In 2026.

Digital Wallet Penetration of
Smartphone Users 2026

Penetration of Potential Value per Digital Wallet User
Digital Wallet Users 2026
(Global)(Global)Potential Value per
Digital Wallet User
(Global) 1

5%

10%

25%

50%

75%

100%

Digital Wallet Opportunity (Global)

50%

2.7 Billion$500
Billion$1
Trillion$2.5
Trillion$5
Trillion$7.7
Trillion$10
Trillion75%

4.1 Billion$750
Billion$1.5
Trillion$3.8
Trillion$7.7
Trillion$12
Trillion$15
Trillion$1
Trillion$2
Trillion$5
Trillion$10
Trillion$15
Trillion$20
Trillion$3,800100%

5.4 Billion

1

Applying ratio of Global GDP per Capita to US GDP per Capita to Potential Value per Digital Wallet
User in US to estimate Global Potential Value per Digital Wallet UserIf every global smartphone user,
valued at $3,800 per user, would
adopt a digital wallet by 2026.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021.

•

A R K

•

B I G

I D E A S

2 0 2 2Public Blockchains
Enabling a Coordination Revolution
Research by Yassine Elmandjra and Frank Downing, ARK Analysts, andNishita Jain, ARK Research Associate

Public blockchains are powering novel forms of coordination across money, finance, andthe internet. By decentralizing institutions with open-source software, blockchain
technology minimizes the need to trust centralized authorities.
We believe bitcoin is the most profound application of public blockchains, the foundationof “self-sovereign” digital money. The Bitcoin protocol has enabled two other revolutions:
The Financial (DeFi) and Internet (Web3) Revolutions.
Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.

www.ark-invest.com

39 •Public Blockchain

Public Blockchains Minimize The Need To Trust Centralized Authorities
Public blockchains shift the distribution of trust, replacing institutions that rely on centralized authorities with decentralized, opensource software. The first profound application was self-sovereign, digital money (bitcoin). While centralized institutions must
coordinate the functions of a financial system, Bitcoin operates as a single, decentralized institution. Instead of relying on
accountants, regulators, and governments, Bitcoin relies on a global network of peers to enforce rules.

Traditional Institutions

Manual, Centralized, Less Consistent, Opaque

VisaTransaction
Settlement

J.P. Morgan

Custody and AssetManagement

FederalReserve

Monetary Policy

Public Blockchains

Automated, Distributed, Consistent, Transparent

BitcoinA distributed
monetary systemthat facilitates thetransfer andcustody of
bitcoin, a scarce
digital asset.

Transaction
Settlement
Custody and AssetManagement
Monetary Policy

Note: Each entity presented above is a representative sample of a ”name brand” in their respective verticals.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, 2021

40 •Public Blockchain

Public Blockchains Have Unique Characteristics
Public blockchain infrastructure serves as the backbone for new forms of economic coordination: it minimizes the need to trust centralized
institutions. The decentralized, open, and permissionless characteristics of public blockchains lower the cost of coordination, among otheradvantages.
Public Blockchain Infrastructure

Status Quo Infrastructure

Centralized

Central authorities mediate network activity

Decentralized

Distributed computer nodes mediate
network activity

Closed-Source

Network rules are determined behind closed
doors at the discretion of companies,
platforms, and regulators

Open-Source

Network rules are open and auditable,
coordinated by users and stakeholders

Corporate-Run

Corporations facilitate coordination, often
excluding network participants

User-Run

Permissioned

Geography and regulation control access toplatforms

Permissionless

Network participants facilitate coordination
through a fair system of checks and balances

Anyone with an internet connection canparticipate and innovate

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, 2021

41•

Public Blockchain

Public Blockchains Could Transform Every Traditional Asset Class
Investors once thought the internet was a new channel among others:
Radio

TV

Newspaper

Internet

Now, the internet is facilitating all channels:
Internet
Online Radio

Online TV

Online News

Communication

E-Commerce…

Similarly, cryptoassets issued on public blockchains are likely to impact all asset classes. Just as the internet turned
information into packets online, public blockchains are likely to turn all assets into transactions on-chain.
Public Blockchains

Crypto-currencies

Crypto-equities

Crypto-commodities

Crypto-art (NFTs)

DAOs

…

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, 2021 and Srinivasan, Balaji, Twitter, 23 Apr. 2021, twitter.com/balajis/status/1385572764485001221.

42 •Public Blockchain

Public Blockchains Are Stirring Several Revolutions
In our view, the Bitcoin protocol created the most profound application of public blockchain infrastructure. In addition to the Money
Revolution, public blockchains also have catalyzed Financial and Internet Revolutions.

Public Blockchain Infrastructure

The Money Revolution

The Financial Revolution

The Internet Revolution

Coordination of value transfer andproperty rights outside the purview ofcentralized authorities, governments,
and top-down control

Coordination of financial services andcontracts outside the purview of
traditional financial institutions

Coordination of identity, reputation, anddata outside the purview of traditional
media conglomerates and big tech

Fiat Currencies &Central Banking

Global, Decentralized,
Non-State Money

BitcoinTraditional Finance(TradFi)

Decentralized Finance(DeFi)

DeFi

Corporate-Owned
Platforms

Interoperable, UserOwned Web

Web3Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, 2021

43 •Public Blockchain

Each Revolution Involves A Different Level of Trust
In our view, the Money Revolution requires predictable monetary assurances, maximum decentralization, and conservatism. The Financial
and Internet Revolutions require some tradeoffs to achieve scalability, convenience, and innovation. Competing blockchains should
recognize that too much trust in centralized authorities risks a reversion to the status quo.
Decentralized TrustCentralized Trust

The Financial & Internet Revolutions

The Money Revolution
Objective

Rules-Based Self-Sovereign Money

Objective

Composable, Permissionless Programming

Status Quo
Objective

Discretionary, Highly Regulated Networks

Ethos

Conservative and predictable, resilient to change,
optimized for security and decentralization

Ethos

Progressive, technology focused, experimental,
optimized for functionality and scalability

Ethos

Closed-loop, slow to adapt, highly permissioned,
optimized for centralized control and scale

Moat

Monetary Integrity, Proof of Work, Highly
Decentralized, Founder Myth, Fair Launch

Moat

Dev Ecosystem, “Decentralized Enough,”Feature-Rich, Venture Funded

Moat

Central Government, Scale, Vendor Lock-in

Bitcoin
Ethereum
Solana, Avalanche, Terra
Binance Smart Chain

Note: Each entity presented above is a representative sample of a ”name brand” in their respective verticals.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC., 2021

•

A R K

•

B I G

I D E A S

2 0 2 2

Bitcoin
A Monetary Revolution
Research by Yassine Elmandjra, ARK Analyst

As bitcoin’s market capitalization hit an all-time high in 2021,
ARK’s research indicated that its network fundamentals remained healthy.
Bitcoin’s market capitalization still represents a fraction of global assets and islikely to scale as nation-states adopt as legal tender. According to our estimates,
the price of one bitcoin could exceed $1 million by 2030.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.

www.ark-invest.com

45 •Bitcoin

Bitcoin Reached $1 Trillion In Market Capitalization In 2021
Bitcoin Market Capitalization 2021

Market Capitalization (Trillions, USD)

$1.4

Tesla allocates 8% of
its cash to Bitcoin

Bitcoin hash rate
hits an all-time highChina calls for severe
crackdown on Bitcoin mining

SEC approves first
Bitcoin Futures ETF$1.2
ARK speaks at
The B Word: How Institutions
Can Embrace Bitcoin$1.0

Taproot, Bitcoin’s
long-anticipatedupgrade, activates$0.8
Canadian regulators
approve world’s first
Bitcoin ETF

$0.6
$0.4
$0.2

Bitcoin hits
$1 trillion market capitalization$0.0
January

February

March

Twitter enables
BTC tipping

Tesla suspends bitcoin
payments for vehicle purchases
amidst environmental concerns
Bitcoin’s hash-rate
hits a 2-year low

April

May

June

July

El Salvador accepts
bitcoin as legal tender

AugustSeptember

OctoberNovember

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: Glassnode Pro, Cointelegraph, Feb 8, 2021 https://cointelegraph.com/news/tesla-allocates-7-7-of-gross-cash-to-bitcoin; Mondaq March 18, 2021
https://www.mondaq.com/canada/fin-tech/1047964/canadian-regulators-approve-world39s-first-bitcoin-etf-for-individual-investors, Wall Street Journal May 12 2021 https://www.wsj.com/articles/elon-musk-says-tesla-suspends-accepting-bitcoinfor-vehicle-purchases-11620858838 NPR September 7 2021 https://www.npr.org/2021/09/07/1034838909/bitcoin-el-salvador-legal-tender-official-currency-cryptocurrency; Twitter September 23 2021
https://blog.twitter.com/en_us/topics/product/2021/bringing-tips-to-everyone; Coindesk October 15 2021 https://www.coindesk.com/policy/2021/10/15/sec-approves-bitcoin-etf-opening-crypto-to-wider-investor-base/; Coindesk November 122021 https://www.coindesk.com/tech/2021/11/13/taproot-bitcoins-long-anticipated-upgrade-activates-this-weekend/

46 •Bitcoin

Bitcoin’s Market Participants Are Maturing And Focused On The Long-Term
Despite increased exuberance as bitcoin scaled to a record high price, on-chain data suggests that bitcoin holders are focused onlong-term fundamentals.

Long Term Holder Supply

450
Amount of BTC Held By Long Term Holders

400
350
300
250
While Bitcoin’s market capitalization
grew by 96% in 2021, its realized
capitalization grew by 168%.

200
150
100
50
0
2015

2016

2017

2018

2019

2020

2021

16

Accumulation Addresses
600,000

Long-term investors hold 13.5 million BTC,
with more than 500,000 addresses exhibiting
long-term holding behavior.

14

500,000

12
400,000

10
8300,000

6

200,000

4
100,000

2
0

0
2011

2013

2015

2017

2019

2021

Note: Accumulation addresses are defined as addresses that have at least 2 incoming non-dust transfers and have never spent funds. Note: “Long-term holder base” refers to Bitcoin that has not been moved in 155 days or more.
“Bitcoin dust” refers to the very small amounts of bitcoin leftover or unspent in a transaction that is lower in value than the minimum limit of a valid transaction.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: Glasssnode

Accumulation Addresses

500

Realized Capitalization (Billions, USD)

Bitcoin’s Long-Term Holder BaseHit An All Time High in 2021

Bitcoin’s Aggregate Cost Basis Hit A New Record
In 2021

47 •Bitcoin

Bitcoin Is Taking Market Share As A Global Settlement Network
Bitcoin’s cumulative transfer volume increased by 463% in 2021. Bitcoin’s annual settlement volume has surpassed Visa’s payments volume.
Bitcoin’s Transfer Value Metrics,
On Both An Absolute and Price-Adjusted Basis

Average Daily Transfer
VolumeAverage Transaction
Value

2021

$

$2.3 trillion$13.1 trillion

BTC

212.0 million

275.4 million$$6.4 billion$35.9 billion

BTC

579,190

754,499$$21,590$136,555

BTC

1.97

2.87

$14.0

140%

$12.0

120%

$10.0

100%

$8.0

80%

$6.0

60%

$4.0

40%

$2.0

20%

$0.0

0%

2015

2016

2017

2018

2019

2020

BTC Volume as % of Visa Payments Volume

Cumulative Annual
Transfer Volume

2020

Annual Transfer Volume (Trillion, USD)

Bitcoin Metrics

Bitcoin Settled ~$13.1 Trillion in 2021

2021

Note: All BTC transfer volume and transaction value metrics are on a change-adjusted basis. ARK's calculation for average change-adjusted transaction value uses both the total and the mean change-adjusted volume metrics aggregated by
Glassnode. Visa payments volume is on a nominal-basis as reported by the company. It includes global consumer credit, consumer debit, and commercial payment volumes. Visa 2021 Q4 nominal payments volume is annualized based on historicalQ4 quarter-over-quarter growth.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: Glasssnode, Visa, and FRB Services

48 •Bitcoin

Bitcoin Could Continue To Scale In Response To Technological Breakthroughs
Last year, Bitcoin made conservative, strategic enhancements at the base layer while encouraging experimentation “off-chain.”

Successful Soft Fork Activation“Layer 2” Growth

Bitcoin-Denominated DeFi

Bitcoin activated Taproot, its biggest base-layer
protocol upgrade since SegWit in 2017. Along with
the introduction of Schnorr signatures, Taproot
could increase the privacy and efficiency of
Bitcoin transactions.

Lightning Network (LN), a second layer payment
protocol built on Bitcoin, saw significant growth. LN
channels and BTC capacity on LN increased 119%and 210%, respectively.

Tokenized bitcoin on other blockchains provides
holders with features and functionality not available
on the Bitcoin network. As of Nov. 21, 2021, 315,000
BTC, or 1.5% of Bitcoin’s circulating supply, is“wrapped” on Ethereum.

BTC on Ethereum

BTC Capacity

400,000

3500
3000

80000

2500

60000

2000

40000

1500
1000

20000

500

0

0
2018

2019

2020

2021

BTC on Ethereum

100000BTC Capacity

ReceiverLightning Network Channels

Network Channels

SenderComplex transactions
require a single
merged signature,
greatly reducing the
bandwidth andstorage burden on
the protocol.

LN Channels and BTC Capacity*

WBTC

HBTC

re nBTC

sBTC

300,000
200,000
100,0000
Aug 2020

Feb 2021

Aug 2021*BTC Capacity is the total BTC locked across all Lightning Network channels. For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: Glasssnode and Coingecko

49 •Bitcoin

Bitcoin Is Attracting Institutional Holders
Bitcoin’s institutional holder base appears to be broadening after the launch of more regulated products and adoption bycorporations and nation-states.
Exchange Traded Products, Countries, and Corporations
Held 8% of Bitcoin’s Supply As of November 2021
Category

ETPs

Countries# of Bitcoin

816,379

263,037% of
Circulating Supply

Value Today($ billions)

4.32%

$49.0

1.39%

$15.8

Public Companies

231,781

1.23%

$13.9

Private Companies

174,068

0.92%

$10.4

Total

1,494,824

7.91%

$89.7

Grayscale Bitcoin Trust Remains The Largest
Non-Custodian Bitcoin Holder As of November 2021
Ten Largest Publicly Disclosed Bitcoin Holders
Holder

Type

BTC

1.

Grayscale Bitcoin TrustETP

654,200

2.

Block.one

Balance Sheet

140,000

3.

Microstrategy

Balance Sheet

121,044

4.

Coinshares XBT Provider

ETP

48,466

5.

Tesla Inc.

Balance Sheet

42,902

6.

Purpose Bitcoin ETF

ETP

24,0977.

3IQ Coinshares ETF

ETP

22,0108.

ETC Group Bitcoin ETP

ETP

17,976

9.

The Tezos Foundation

Balance Sheet

17,500

10.

Galaxy Digital

ETP

16,400For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: https://www.buybitcoinworldwide.com/treasuries/

50 •BitcoinEl Salvador Is The First Nation-State To Adopt Bitcoin As Legal Tender
Salvadoran Congress Approves
Bitcoin Law by a Super Majority

July

June

Bitcoin Becomes Legal
Tender in El Salvador

AugustSeptember

October

El Salvador Buys
its first 200 bitcoin

Salvadoran Citizens (millions)

In El Salvador, More People Have Bitcoin Wallets
Than Traditional Bank Accounts
4.0
3.0
2.5
1.5
1.0
0.5

El Salvador to use Bitcoin
Profits to Build 20 Schools•

As of December 31, 2021, El Salvador had purchased 1,391 BTC.

•

An estimated 3.8 million people use El Salvador’s Bitcoin
wallet, Chivo, suggesting 84% adoption among eligible citizens.

•

Chivo was settling $2 million in remittances daily as of October
2021, accounting for roughly 12% of El Salvador’s $6 Billion in
annual remittances and more than 2% of its GDP.

0.0

Chivo Wallet Users

November

In September, El Salvador became the first country to adopt
bitcoin as legal tender.

1.9

2.0

Chivo Wallet Users
Surpass Bank Accounts

El Salvador Announces $1
Billion Bitcoin Bond Issue

•

3.8

3.5

El Salvador Mines First
Bitcoin With Volcanic Energy

Traditional Bank Accounts

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: Forbes, Salvadoran President Nayib Bukele’s Twitter Feed https://twitter.com/nayibbukele

51•

BitcoinConcerns About Bitcoin’s Lack Of Sustainability Seem Ill-Informed
Our research suggests that Bitcoin has the potential to transform monetary history by providing financial freedom andempowerment in a fair, global, and distributed way.

Environmental

SocialGovernance

Bitcoin incentivizes new and more efficient forms ofenergy generation.

Bitcoin is open, transparent, auditable, andpredictable.

Bitcoin mining can capture natural gas that
otherwise would be vented or flared.

Bitcoin offers a system of property rights without
reliance on nation-states, protecting the purchasing
power of people in countries with strict capital
controls, highly inflationary currencies, or capricious
governments.

Bitcoin mining can encourage investment inintermittent energy systems, increasing renewables
share of energy provisioned to the grid.

Bitcoin is open to anyone as it does not rely on acentralized authority to determine the eligibility ofparticipants.

Bitcoin incorporates a unique system of checks andbalances intended to encourage protocol
innovation and maintenance, ensuring that any
changes are in the interest of stakeholders.

Bitcoin has no central point of failure and reduces
potential human bias and error.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021.

52 •Bitcoin

Bitcoin Mining Has Evolved Into A Multibillion Dollar Industry
Converting energy into a monetary asset can be critical in times of geopolitical uncertainty and financial market volatility.

A Digital-Monetary Energy Network••

Bitcoin incentivizes the discovery of cost-efficient energy
sources, independent of location and consumer demand.
Following China’s crackdown on mining, the US has emerged as
the leader in Bitcoin mining, accounting for more than 35% of
total hash rate as of November 2021.
Nation-states like El Salvador are investing heavily in Bitcoin
mining infrastructure. In October 2021, El Salvador announced
the mining of bitcoin with energy from its volcanos, threemonths after instructing state-owned geothermal electriccompany La Geo to plan for bitcoin mining.

Cumulative Miner Revenue

Daily Miner Revenue

$90

$18

$80

$16

$70

$14

$60

$12

$50

$10

$40

$8

$30

$6

$20

$4

$10

$2

$0

$0
Jan

Feb

Mar

Apr

May

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021, based on data sourced from: Glassnode, CBECI

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Cumulative Miner Revenue (Billions, USD)•

Bitcoin’s innovative potential rests in its ability to facilitate thetransfer of value without relying on a centralized authority. The
key enabler is proof-of-work mining.

Daily Miner Revenue (Millions, USD)•

Bitcoin Miners Generated Revenue of $16.7 billion in 2021

53 •Bitcoin

Bitcoin Mining Could Revolutionize Energy Production
According to our research, bitcoin mining will encourage and generate more electricity from renewable carbon-free sources.

• As energy buyers, Bitcoin miners could
incentivize new and more efficient formsof energy generation.

• Energy asset owners could become bitcoinminers.
• The addition of Bitcoin mining into power
developers’ toolboxes should increase theoverall addressable market for renewable
and intermittent power sources. In thebottom left of the chart, in the absence ofBitcoin mining, renewables might satisfy
only 40% of the grid’s needs. In the top
right of the chart, with the introduction of
Bitcoin mining, solar and batteries could
satisfy 99% of the grid’s demand.

2,000

Solar Installation Power (MW)• According to ARK’s research, intermittent
energy sources like wind and solar could
meet a larger percentage of grid demand if
Bitcoin mining impacts the utility grid.

A Solar and Battery Bitcoin System Could Meet Grid Dispatch Targets
at Constant Cost of Electricity1
70%

1,600

80%

90%

60%
1,200
50%
99% of

800

Grid Demand Met

400
20%

40%
(Size of Bubble = Bitcoin Mining Power)

10%
0
0

200

400

600

800

1,000

1,200

1,400

1,600

Battery System (MWh)[1] Note: The addition of Bitcoin mining into power developers’ toolboxes should increase the overall addressable market for renewable and intermittent power sources. In the bottom left of the chart, in the absence of Bitcoin mining, renewables
can satisfy only 40% of the grid’s needs. In the top right of the chart, including Bitcoin mining, solar and batteries can satisfy 99% of the grid’s demand.For informational purposes only and should not be considered investment advice, or arecommendation to buy, sell or hold any particular security or cryptocurrency. Source: ARK Investment Management LLC, 2021.

54 •BitcoinNow A Fraction Of Global Asset Values, Bitcoin Has Significant
Appreciation Potential
Market Capitalization of Major Asset Classes As Of November 2021
Market Capitalization (Trillions, USD)

$250

$220

According to our research, Bitcoin’s
market capitalization could scale morethan 25-fold in the next decade, witheach exceeding $1 million in value.

$200

$150

$124

$123
$106

$100

$50

$10

25.9x

$28.5

$1.1

$-

Global Real Estate

Global Bonds

Global M2

Global Equities

Gold

Bitcoin (2021)

Bitcoin (2030E)

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021.

55 •Bitcoin

The Price Of One Bitcoin Could Exceed $1 Million by 2030

$1.36 million / BTC

Bitcoin Market Capitalization$28.5

Market Capitalization (Trillions, USD)

$30
$25
$20
$15
$10
$5

$1.1

$0
Bitcoin (2021)

Bitcoin (2030E)

Bitcoin (2030E)

Bitcoin Use Case

Market Cap

Value per BTC

Remittance Network
50% of global remittances at 1.5x velocity$0.3 trillion$14,000 / BTC

Emerging Market Currency
10% of M2 (excludes top 4 countries)$2.8 trillion$133,000 / BTC

Economic Settlement Network
25% of US bank settlement volumes$3.8 trillion$181,000 / BTC

Nation-State Treasury
1% of total reserves$3.8 trillion$181,000 / BTC

Seizure-Resistant Asset
5% of global HNWI wealth$4.0 trillion$190,000 / BTC

Institutional Investment
2.55% of institutional asset base

$4.1 trillion$196,000 / BTC

Corporate Treasury
5% of cash of S&P 500 companies$4.2 trillion$200,000 / BTC

Digital Gold50% of gold’s total market capitalization$5.5 trillion$260,000 / BTC$28.5 trillion$1.36 million / BTC

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021. | Corporate Treasury Data Source: Capital IQ, Seizure Resistant Asset Data Source: https://worldwealthreport.com/wp-content/uploads/sites/7/2021/07/World-Wealth-Report-2021.pdf, Remittances
Market Data Source: https://thefintechtimes.com/global-remittance-market-is-expected-to-grow-by-200-billion-by-2026/ , Nation State Treasury Data Source: https://data.worldbank.org/indicator/FI.RES.TOTL.CD?end=2020&start=2002 Note: a 25x
price multiplier was applied to Nation-state treasury and corporate treasury opportunities. The price multiplier is the upper bound estimate made by Chris Burniske (Co-author of Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond
and Partner at VC firm Placeholder), which roughly equates to the average between the estimated lower bound made by Burniske and the estimated upper bound made by Citi Bank https://medium.com/@cburniske/cryptoassets-flowamplification-reflexivity-7e306815dd8c

•

A R K

•

B I G

I D E A S

2 0 2 2Ethereum & DeFi
A Financial Revolution
Research by Frank Downing, ARK Analyst, and Nishita Jain, ARK Research Associate

Decentralized Finance (DeFi) promises more interoperability, transparency, and financial
services while minimizing intermediary fees and counterparty risk. After a turbulent 2018-2019,
Ethereum emerged in 2021 as the predominant smart contracting platform for decentralized
finance and non-fungible tokens (NFTs).
According to ARK’s research ether (ETH) is both the preferred collateral in DeFi and the unit ofaccount in NFT marketplaces, suggesting that it is likely to capture a portionof the $123 trillion global money supply.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.

www.ark-invest.com

57 •Ethereum and DeFi

Smart Contracts Are Usurping Traditional Financial Functions At The Margin
Smart contracting platforms like Ethereum are open and transparent. They do not rely on traditional financial intermediaries,
thereby reducing counterparty risk.

Examples: Traditional FinanceFunction

Examples: Decentralized FinanceBank of America

Banking & Lending

Compound

New York Stock Exchange

Exchange

Uniswap

Robinhood

Brokerage

Metamask

BlackrockAsset Management

Yearn

AIG

Insurance

Nexus Mutual

CME Group

Derivatives

DYDX

Note: Each entity presented above is a representative sample of a ”name brand” in their respective verticals.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: “Defi Report Q1 2021.” Consensys, https://consensys.net/reports/defi-report-q1-2021.

58 •Ethereum and DeFi

Ether Hit New Highs In Response To DeFi and NFTs
Built on Ethereum, DeFi, stablecoins, and NFTs pushed ether to an all time high in late 2021. Since the speculative ICO washout in
2018, Ethereum’s activity has evolved considerably.

Ether’s Price$5,000Stablecoin marketcap

ATH

hits $100 billion$4,000

EIP 1559

Beeple sells $69
million NFT$3,000”DeFi Summer”“Crypto Winter”$2,000OpenSea tops

ICO Washout

ETH2 Beacon$6B Q3 Volume

Chain Launches$1,000

Canadian ETH
ETFs Launch$Jan-18

Apr-18

Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20

Apr-20Jul-20

Oct-20Jan-21

Apr-21

Jul-21

Oct-21

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: “The Beacon Chain.” Ethereum.org, Ethereum Foundation, 7 July 2021, https://ethereum.org/en/eth2/beacon-chain/; DiCamillo, Nate. “Canada Approves Three
Ethereum Etfs in One Day.” CoinDesk Latest Headlines RSS, CoinDesk, 16 Apr. 2021, https://www.coindesk.com/markets/2021/04/16/canada-approves-three-ethereum-etfs-in-one-day/; “Ethereum: Price.” Glassnode,
https://studio.glassnode.com/metrics?a=ETH&category=&m=market.PriceUsdClose; Kastrenakes, Jacob. “Beeple Sold an NFT for $69 Million.” The Verge, The Verge, 11 Mar. 2021, https://www.theverge.com/2021/3/11/22325054/beeple-christiesnft-sale-cost-everydays-69-million; “NFT Marketplace Monthly Volume.” The Block, https://www.theblockcrypto.com/data/nft-non-fungible-tokens/marketplaces/nft-marketplace-monthly-volume; Sigalos, MacKenzie. “Ethereum Just
Activated a Major Change Called the 'London Hard Fork' - Here's Why It's a Big Deal.” CNBC, CNBC, 5 Aug. 2021, https://www.cnbc.com/2021/08/05/ethereum-just-activated-its-london-hard-fork-and-its-a-big-deal.html; “Total Stablecoin
Supply.” The Block, https://www.theblockcrypto.com/data/decentralized-finance/stablecoins/total-stablecoin-supply-daily;

59 •Ethereum and DeFi

Increased Network Activity Has Pushed Ethereum’s Transaction Fees Higher
Than Those For Bitcoin
Higher fees have created demand for ”Layer 2” scaling solutions to lower Ethereum’s transaction fees while maintaining security.
Fee Revenue Per Transaction
ETH Fees Per TX

BTC Fees Per TX

$80
$70
$60
$50
$40
$30
$20
$10
$0
Jan-20Mar-20May-20Jul-20

Sep-20Nov-20Jan-21

Mar-21

May-21

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: GlassnodeJul-21

Sep-21

Nov-21

60 •Ethereum and DeFi

Crypto-Powered Finance Might Scale More Efficiently Than Traditional Finance
Smart contract-based financial transactions settle in near real-time almost anywhere in the world. Revenue per employee illustrates
DeFi’s efficiency relative to that of traditional finance (TradFi).
LTM Revenue Per Employee (Millions)1
TradFi

DeFi

$40
$30
$20
$10
$-

Banking

BOA

CompoundExchange

Exchange

Uniswap

Brokerage

Robinhood Metamask

Asset Management

BlackrockYearn

Insurance

AIG

Nexus Mutual

Derivatives

CME GroupdYdX

Note: Each entity presented above is a representative sample of a ”name brand” in their respective verticals.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Note: DeFi application revenue is defined as Total Revenue by TokenTerminal (https://www.tokenterminal.com/terminal/metrics/revenue) – “How much are users paying to use a project’s service? Revenue refers to the total fees paid by ablockchain’s or decentralized application’s end users and does not include Ethereum transaction fees. DeFi application employee count is defined as number of employees on the LinkedIn page for the founding entity (i.e., Compound Labs
for Compound Protocol). TradFi Revenue and Employees is sourced from Ycharts and is based on standard quarterly financial statements. Representative companies[1] LTM is defined as last twelve-month revenue. TradFi defined as Traditional Finance and representative of a traditional public company in the financial services industry. DeFi defined as Decentralized Finance, a categorization of software
deployed on public blockchains focused on financial services functions.
Source: ARK Investment Management LLC, 2021 based on data sourced from: YCharts; TokenTerminal; LinkedIn

61•

Ethereum and DeFi

Decentralized Autonomous Organizations (DAOs) Enable A Novel FormOf Coordination And GovernanceCritical to DeFi’s governance, DAOs are replacing centralized, hierarchical corporate structures with decentralized communities.

Permissioned$80

PermissionlessCostlyFrictionless

Uniswap DAO

41.2

$60
$40

Governance

Example:

71.5

9.6

$20

•

UNI token launched in
September 2020•

60% of genesis supply
allocated to early community
members•~$7.8 billion2 in UNI token
market cap•~296,0004 unique addresses
with UNI token2

7.6
4.6

3.3

5.3

O
th
er

Ownership3

DeFi DAOs Market Cap1 (Billions, USD)

DAOs

As
se
Le
tM
nd
an
in
ag
g
em
en
tS
De
er
riv
vi
ce
at
iv
s
es
&
In
su
ra
nc
e
St
ak
in
g
Se
rv
ic
es

Traditional
Corporations

Discourse

OpaquePrivateTransparent

Public

Ex
ch
an
ge

Accounting

To
ta
l

$0

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
[1] As of January 4, 2022 | [2] CoinGecko market cap number as of December 31, 2021 | [3] Permissioned / Permissionless referring to the level of access rights required to obtain or assume ownership in a Traditional Corporation (private or
public company) vs. a DAO. In Traditional Corporations, accredited investor status or access to a KYC’d US brokerage account is often necessary to become an owner, where as the barriers of entry to a DAO are much lower – often needingnothing more than an internet access to transact on the underlying blockchain network. [4] CoinMarketCap data
Note: Uniswap DAO was selected as a representative, ”name brand” DAO for illustrative purposes
Source: ARK Investment Management LLC, 2021 based on data sourced from: DeFi Llama, Etherscan, CoinGecko, Uniswap

62 •Ethereum and DeFi

Stablecoins Have Fueled Crypto Trading, Lending, And Payments
Stablecoins—cryptoassets pegged to fiat currency,
often the USD—serve as fixed-value assets forcrypto trading, lending, and payments in both
centralized and decentralized markets. They
increased nearly 5x in 2021.

USD Stablecoin Supply (Billions, USD)
USDT

USDC

BUSD

UST

DAI

USDP

$180
$160
$140

On international crypto exchanges with limitedaccess to US Bank accounts, like Binance,
stablecoin-denominated trading pairs account for
more than 70% of total trading volume on
centralized crypto exchanges, well above USDdenominated trading at only 15%.
Used heavily in DeFi, stablecoins account for 95% of
total outstanding debt on Compound and 22% of
total liquidity on Uniswap.

$120
$100
$80
$60
$40
$20
$-

2019

2020

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK investment Management LLC, 2021 based on data sourced from: Glassnode, CoinMarketCap, The Block, DeFi Llama, Dune Analytics, Messari, Uniswap

2021

HUSD

GUSD

63 •

Ethereum and DeFi

Regulators Are Prioritizing Crypto Innovations, Especially DeFi
July 19

July 30

September 3

September 7

September 24

Treasury Secretary
Janet Yellen urges
policymakers to “actquickly” andregulate stablecoins.

A fifth state
regulator suggeststhat BlockFi’s
interest accounts
might violate
security laws.

The SEC launches aninvestigation of
Uniswap, targetingthe developers of thedecentralizedexchange.

The first country to
do so, El Salvador
adopts bitcoin as
legal tender.

China bans crypto
again, halting all
trading and mining
activities in the
country.

September 30

October 14

November 2Federal Reserve
Chairman Jerome
Powell says the US
won’t bancryptocurrency.

Coinbase publishes a
Digital Asset Policy
Proposal, calling for a
new regulatory
framework for digitalassets.

Miami Mayor Francis
Suarez commits toreceiving his next
paycheck in bitcoin,quickly followed by NYC
Mayor-elect Eric Adams.

July 27

August 3

September 7

September 14

October 11

November 1

November 15

The US House Committee
on Financial Services
discusses the opportunities
and risks associated with
CBDCs.

SEC Chairman Gary
Gensler claims thatmost crypto exchanges
are operating withunregistered securities.

Coinbase announcesthat it received a
Wells Notice for its
planned Coinbase
Lend product.

In remarks to the Senate
Banking Committee, SEC
Chairman Gensler
emphasizes that the SEC isreviewing stablecoins andlending platforms.

The UK Gambling
Commission
questions fantasy
soccer platform
Sorare and its use
of NFTs.

The President’s
Working Group on
Financial Markets
publishes aninteragency report on
stablecoins.

President Biden signs theInfrastructure Bill into law,
receiving pushback for its
broad crypto tax provisionsand ”broker” definitions.

Source: ARK investment Management LLC, 2021 based on data sourced from: Banjo, Shelly, and Francesca Maglione. NYC Mayor-Elect Adams Says He’ll Take Paycheck in Bitcoin. Bloomberg, 4 Nov. 2021, https://www.bloomberg.com/news/articles/2021-11-04/nyc-mayor-elect-eric-adams-sayshe-ll-take-paycheck-in-bitcoin?sref=1f7Aj053. China's Top Regulators Ban Crypto Trading and Mining, Sending Bitcoin Tumbling. Reuters, 24 Sept. 2021, https://www.reuters.com/world/china/china-central-bank-vows-crackdown-cryptocurrency-trading-2021-09-24/, Coinbase. The SEC Has Told
Us It Wants to Sue Us over Lend. We Don’t Know Why. The Coinbase Blog, 8 Sept. 2021, https://blog.coinbase.com/the-sec-has-told-us-it-wants-to-sue-us-over-lend-we-have-no-idea-why-a3a1b6507009, Condon, Christopher. “Yellen Tells Regulators to ‘Act Quickly’ on Stablecoin Rules.”Bloomberg.com, Bloomberg, 19 July 2021, https://www.bloomberg.com/news/articles/2021-07-19/yellen-tells-regulators-to-act-quickly-on-stablecoin-rules?sref=1f7Aj053, Crooks, Nathan. Miami’s Mayor Says He’Ll Take His Next Paycheck in Bitcoin. Bloomberg, 2 Nov. 2021,
https://www.bloomberg.com/news/articles/2021-11-02/miami-mayor-suarez-says-he-ll-take-next-paycheck-in-bitcoin-kvifidjb?sref=1f7Aj053. Digital Asset Policy Proposal: Safeguarding America’s Financial Leadership. The Coinbase Blog, 14 Oct. 2021, https://blog.coinbase.com/digital-assetpolicy-proposal-safeguarding-americas-financial-leadership-ce569c27d86c. Federal Reserve Chair Jerome Powell: U.S. Has No Plans to Ban Bitcoin and Crypto. Nasdaq, 30 Sept. 2021, https://www.nasdaq.com/articles/federal-reserve-chair-jerome-powell%3A-u.s.-has-no-plans-to-ban-bitcoinand-crypto-2021-09. Hayward, Andrew. Ethereum NFT Game Sorare Investigated by UK Gambling Commission. Decrypt, 11 Oct. 2021, https://decrypt.co/83194/ethereum-nft-game-sorare-investigated-uk-gambling. Michaels, Dave, and Alexander Osipovich. Regulators Investigate CryptoExchange Developer Uniswap Labs. The Wall Street Journal, 3 Sept. 2021, https://www.wsj.com/articles/regulators-investigate-crypto-exchange-developer-uniswap-labs-11630666800?mod=latest_headlines. Post, Kollen. Biden Signs Infrastructure Bill, Handing Crypto Broker Definitions to the
US Treasury. The Block, 15 Nov. 2021, https://www.theblockcrypto.com/linked/124387/biden-signs-infrastructure-bill-handing-crypto-broker-definitions-to-the-us-treasury. Post, Kollen. “Kentucky Is Fifth State to Scrutinize Blockfi's Interest Accounts.” The Block, The Block, 30 July 2021,
https://www.theblockcrypto.com/linked/113124/kentucky-regulator-blockfi-interest-security. President's Working Group on Financial Markets Releases Report and Recommendations on Stablecoins. U.S. Department of the Treasury, 1 Nov. 2021, https://home.treasury.gov/news/pressreleases/jy0454. The Promises and Perils of Central Bank Digital Currencies. U.S. House Committee on Financial Services, 27 July 2021, https://financialservices.house.gov/events/eventsingle.aspx?EventID=408111. Remarks Before the Aspen Security Forum. U.S. Securities and Exchange
Commission, 3 Aug. 2021, https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03. Sinclair, Sebastian. Bitcoin Now Legal Tender in El Salvador, Marking World First. CoinDesk, 7 Sept. 2021, https://www.coindesk.com/policy/2021/09/07/bitcoin-now-legal-tender-inel-salvador-marking-world-first/. Testimony Before the United States Senate Committee on Banking, Housing, and Urban Affairs. U.S. Securities and Exchange Commission, 14 Sept. 2021, https://www.sec.gov/news/testimony/gensler-2021-09-14.

64 •Ethereum and DeFi

Ethereum Is A Work In Progress
Ethereum
Whitepaper

PoS Research
Begins

2013

2014

PoW Mainnet
Launches

2015

ETH2 Phase 0
Planned for Jan 2020

2016

2017

2018

2019

ETH2 Phase 0
Launches after delay

2020

Merge date pushed
to May-June 2022

2021

2022

Ongoing, Iterative Proof of Stake (PoS) Research

ETH 2.0 Claim*
More scalable

More secure

More sustainable

Considerations
Sharding and layer 2 scaling solutions will expand
Ethereum’s throughput from 15 to 100,000 transactions
per second.

Proof of Stake (PoS) consensus will increase both
decentralization and the cost of attacking the network.

Proof of Stake (PoS) consensus is a “greener” alternativeto Proof of Work (PoW).

•

Layer 2 scaling solutions took off more slowly than expected, hindered by long withdrawal times
and limited layer 2 liquidity.

•

Managing shards and multiple layer 2s will be a challenge for developers.

•

Putting control in the hands of the wealthiest token holders and limited physical barriers to entry,
increase the risk of centralization.

•

Existing Proof of Stake chains have not been shown to be more decentralized than Proof of Work.

•

Proof of Work mining could accelerate the world’s transition to renewable energy.

•

Energy consumed does not mean energy wasted.

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: “The Beacon Chain.” Ethereum.org, 31 July 2021, https://ethereum.org/en/eth2/beacon-chain/; Buterin, Vitalik. “Ethereum Whitepaper.” Ethereum.org, 2013,https://ethereum.org/en/whitepaper/; Caffyn, Grace. “Ethereum Launches Long-Awaited Decentralized App Network.” CoinDesk Latest Headlines RSS, CoinDesk, 30 July 2015, https://www.coindesk.com/markets/2015/07/30/ethereumlaunches-long-awaited-decentralized-app-network/; Ethereum Foundation. Eth2.0 Implementers Call #19 [2019/6/13]. 13 June 2019, https://www.youtube.com/watch?v=izspfej05lE&t=2640s; Fadilpašić, Sead. “Ethereum Merge Estimated in
May-June 2022 - Developers.” Crypto News, 18 Oct. 2021, https://cryptonews.com/news/ethereum-merge-estimated-in-may-june-2022-developers.htm; Vitalik.eth. “2. Ethereum Proof of Stake Research Began in Jan 2014 with Slasher...” Twitter,
Twitter, 16 Aug. 2018, https://twitter.com/VitalikButerin/status/1029900794353483776.

65 •Ethereum and DeFi

Ether’s Market Cap Could Exceed $20 Trillion In The Next 10 Years

According to our research, Ethereum could displace many
traditional financial services, and its native token, ether,
could compete as global money.

As the preferred collateral in DeFi and the unit of accountin NFT marketplaces, ether (ETH) has the potential tocapture a portion of the $123 trillion in global M2.

$140$122.7
Market Capitalization (Trillions, USD)

As financial services move on-chain, decentralized
networks are likely to take share from existing financial
intermediaries. The beneficiaries of this shift include
Ethereum, the base protocol, and DeFi, the decentralized
applications built on top of Ethereum.

Market Cap Opportunity For Ether (Forecast)

$120
$100
$80
$60
$40

$22.5

56x

$20
$0

$0.4
ETH

Global Financial Services

Global M2

Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Source: ARK Investment Management LLC, 2021 based on data sourced from: “Broad Money (% of GDP).” The World Bank, https://data.worldbank.org/indicator/FM.LBL.BMNY.GD.ZS; “GDP (Current US$).” The World Bank,
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD; “Global Financial Services Market Outlook 2021-2030; Expected to Reach $28.52 Trillion by 2025 - Researchandmarkets.com.” Business Wire, 10 Mar. 2021,
https://www.businesswire.com/news/home/20210310005386/en/Global-Financial-Services-Market-Outlook-2021-2030-Expected-to-Reach-28.52-Trillion-by-2025---ResearchAndMarkets.com.

•

A R K

•

B I G

I D E A S

2 0 2 2

Web3
An Internet Revolution
Research by Nicholas Grous, Frank Downing, ARK Analysts, and Andrew Kim, ARK Analyst Intern

Now that consumers are spending more time and resources online, the importance of digitalassets is likely to increase considerably as consumer spending shifts to virtual worlds.
A global framework like non-fungible tokens (NFTs) provides a stable way of taking theownership and control of digital assets away from corporations, to the benefit of individuals.
By 2030, we expect Web3 to depress annual offline consumption by $7.3 trillion,
boosting direct online expenditures at an annual rate of 28%, from $1.4 trillion today
to $12.5 trillion per year.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

67 •

Web3

Digital Ownership Could Accelerate The Transition Of Activity
From The Physical To The Digital World

In contrast, public and decentralized blockchains allow
users to store and trade their assets in a legitimate
secondary market.

Siloed Data + Assets

Public Data + Assets

Central Aggregator

Protocol Validators

In traditional Web 2.0 business models, end users typicallyface restrictions on products or services. They cannot port
in-game assets from one game to another, for example,
and they risk censorship on the social media platforms
that profit from their content.

Web3

Decentralized Apps

We believe Web3 virtual ecosystems will thrive if online
human participants can own—as opposed to use or rent—
digital assets.

Web 2.0

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.

68 •

Web3

Public Blockchains Enable The Ownership Of Digital Assets
Non-fungible tokens (NFTs) serve as smart contracts that verify the ownership of digital assets on public blockchains. They usurp thepower of centralized platforms to house, control, and verify assets. In 2021, NFTs generated $21 billion in sales as the number of monthly
unique buyers soared nearly eight-fold to more than 700,000.

NFT Demand
Total NFT Sales

Monthly Unique Buyers$6,000900$4,000600
500$3,000400$2,000300
200$1,000

100

ec
-2
1
D

ov
-2
1
N

O
ct
-2
1

Se
p21

21
Au
g-

-2
1
Ju
l

1
Ju
n2

21
ay
M

r21
Ap

ar
-2
1
M

Fe
b21

-2
1
Ja
n

ec
-2
0
D

ov
-2
0
N

O
ct
-2
0

Se
p20

20
Au
g-

-2
0
Ju
l

0
Ju
n2

20
ay
M

r20
Ap

ar
-2
0
M

Ja
n

Fe
b20

0
-2
0

$-

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, data sourced from Cryptoslam and NonFungible.

(Thousands)

Millions, USD

700Monthly Unique Buyers

800$5,000

69 •

Web3

Ethereum Has Been The Chain Of Choice For Smart Contracts Thus Far
Based on public data, Ethereum is the dominant smart contract platform and the blockchain of choice for NFT issuance andtransactions. As fees continue to rise on Ethereum, however, the competition from other layer-1 blockchains and layer-2 scaling
technologies is likely to increase.
2021 NFT Secondary Sales

2021 Monthly Unique Buyers by Chain(Millions, USD)
Ethereum Sidechains
$800

Flow

SolanaEthereum

WAX

Ethereum Sidechains

Flow

SolanaWAX

600,000

$400

$800

$3,900$12,300

Monthly Unique Buyers

Ethereum

500,000
400,000
300,000
200,000
100,000
0
Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
We refer to layer-1 as the underlying blockchain architecture for any smart contract platform. As usage grows on Ethereum’s underlying blockchain, demand for space on each block grows while the size of the blocks remains the same,
causing, on average, higher fees for participants. To mitigate the negative impact of higher demand for Ethereum, various developer teams are innovating with different scaling solutions to increase the rate of transactions processed, also
known as throughput. We refer to Ethereum sidechains as separate blockchains from Ethereum with their own set of consensus mechanisms that are compatible with Ethereum. We only include the sum of Ronin and Polygon as Ethereum
Sidechains within the charts. Layer-2 solutions build protocols on top of Ethereum itself to handle large batches of transactions off-chain rather than on a separate blockchain as sidechains do. Cumulative NFT secondary sales volume isrounded to the nearest hundred million US dollars.
Source: ARK Investment Management LLC, 2021, data sourced from Cryptoslam.

70 •

Web3

NFTs Could Shift From Static Collectibles to Dynamic Digital Assets
Currently, collectibles and digital art accountfor more than 75% of NFT sales on Ethereum.

NFT Demand by Type
Collectibles

Art

Virtual Worlds

GamingUtility

NFT sales in virtual worlds like The Sandbox
and games like Axie Infinity have accounted forless than 25% of cumulative sales on Ethereum.
Based on the evolution of the video gaming
market, NFT demand for blockchain-based
games and virtual worlds could exceed that for
digital collectibles and art, especially as
collectibles and art begin to exhibit moreutility in various games during the next five toten years.

Contribution to Cumulative NFT Volume

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Jan-21

Feb-21 Mar-21

Apr-21

May-21

Jun-21

Jul-21

Aug-21

Sep-21

Oct-21

Nov-21

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, data sourced from NonFungible.

Dec-21

71

•

Web3

Dynamic NFTs Create A New Type of Active Entertainment
The increasing interoperability of NFTs could enable the convergence of collecting, gaming, socializing, and investing.

Present

FutureDigital Assets

Web3

Experiences

Utility

Virtual Worlds

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.

72 •

Web3

We Believe NFTs Will Blur The Line Between Consumption And Investment
NFTs offer a liquid marketplace in which consumers can invest in different digital assets and engage in peer-to-peer transactions.
NFT buyers and sellers determine market-clearing prices on blockchains instead of data aggregation platforms, creating new forms
of asset monetization.

Purchase Physical
Clothing

Resell

<0% ROI*

Use/Wear Physical
Clothing

DonateDiscard-100% ROIUse Digital Clothing For
Decentralized
Applications/Platforms

Purchase Digital
Clothing

Sell

Lend/Stake

Collateralize

Fractionalize>0% ROI Possible

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
*We believe that the negative return on investment (ROI) on secondary transactions of physical clothing is most applicable to non-luxury goods that are not assigned a premium for rarity.
Source: ARK Investment Management LLC., 2021 | Note: Each entity presented above is a representative sample of a ”name brand” in their respective verticals.

73

•

Web3

Blockchain-Based Gaming Can Enable Entertainment
And Monetization Simultaneously
Evolution of Gaming

5

Pay-to-Play models require end-users to purchasegames at a fixed cost.

Because NFTs recognize the ownership of in-gameassets, they are enabling Play-and-Earn models.
Games can raise capital and reward users through
NFT sales and in-game rewards.

Play &
Earn

3(Billions)Free-to-Play models are replacing Pay-to-Play andunlocking a larger customer base. Virtual goods andgaming-as-a-service are increasing the revenue
upside for game developers.

Number of Gamers World Wide

4

2

Free ToPlay
1

Pay To
Play
0
1970

1980

1990

2000

2010

2020

Forecasts are inherently limited and cannot be relied upon | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, 2021, data sourced from DFC Intelligence and Sport Hiatus for historical data points for years 2014 onwards.

74 •

Web3

NFT Projects Can Maximize The Returns To Individual Buyers And Sellers
Compared to centralized platforms like Amazon, NFT aggregators like OpenSea charge a fraction of their transaction take rates.
As demand for blockchain-based assets grows, however, the cost to use the blockchain—as measured by gas fees—grows.
Various scaling solutions are in development to help lower the cost of using these blockchains.

Take Rate

Protocol-Level Cost per
Transaction

Sotheby’s

13.9% - 25.0%$0

Amazon

8.0% - 15.0%

$0

eBay

10.0%

$0

Etsy

5.0%

$0

OpenSea

2.5%

$65*

Immutable X

2.0%

≈ $0

Total Ethereum-Based Fees on OpenSea*

Total Fees (Millions, USD)

Platform

Fees to OpenSea
Fees to Sellers
Ave rage Gas Fees per Transaction, 90 Day Moving Average

$200

$120
$100

$150

$80

$100

$60
$40

$50

$20

$-

$Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security or cryptocurrency.
Gas fees are payments made by users to compensate for the computing energy required to process and validate transactions on the Ethereum blockchain. Immutable X’s take rate does not include the default application fee paid out toapplication developers and only includes the fees accrued to Immutable.
*OpenSea’s decentralization cost per transaction is calculated using the annual average of the daily average transaction fees used by OpenSea’s contract for a single transaction. The 90-day moving average gas fees per transaction use thesame underlying data used to compute OpenSea’s decentralization cost.
Source: ARK Investment Management LLC, 2021, data sourced from Amazon, Dune Analytics, eBay, Etsy, Immutable X, OpenSea, and Sotheby’s.

75 •

Web3

If Web3 Proliferates, The Monetization Rate Of Online Spending Should
Approach That Of Offline Spending By 2030
Our research suggests that the monetization of time spent online will grow at a compound annual rate of 19% with Web3
but only 8% without Web3 during the next ten years.
Potential Web3 Monetization
Offline Discretionary Expenditures

Offline Discretionary Expenditures without Web3

Online Direct Expenditures

Online Direct Expenditures without Web3

Direct Monetization per Hour

$1.20
$1.00
$0.80
$0.60
$0.40
$0.20
$2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Forecasts are inherently limited and cannot be relied upon | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, data sourced from Bond Capital, CEIC Holdings, China Internet Watch, Cryptoslam, Digital Commerce 360, Dune Analytics, eMarketer, EuroCommerce, Federal Reserve Economic Data, FTI Consulting, Invesp,
National Bureau of Statistics of China, Newzoo, NonFungible, NPD Group, Statista, United States Bureau of Labor Services, United States Census Bureau, United States Department of Labor, and World Bank Group.

76 •

Web3

Thanks To Web3, Annual Online Expenditures Could Reach$12.5 Trillion In The Next Decade
Based on ARK’s research, offline consumption will peak mid decade at $49 trillion annually and then decline in response to Web3 .
Without Web3 , annual online expenditures is likely to grow at an annual rate of 16%, from $1.4 trillion in 2021 to $5.2 trillion in 2030.
With Web3 , annual online expenditures are likely to grow at an annual rate of 28% to $12.5 trillion.

Total Digital Expenditures Forecast

Total Offline Expenditures

Online Expenditures

Offline Expenditures, without Web3
Offline Expenditures, with Web3

$14

$55

$12

Trillions, USD

Trillions, USD

Incremental Expenditure s to Web3

$50
$45
$40

$10

+59%

$8
$6
$4

$35

$2
2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

$30

+12%

+108%
+19%

$-

2021

2026

2030

Forecasts are inherently limited and cannot be relied upon | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security/cryptocurrency.
Source: ARK Investment Management LLC, 2021, data sourced from Bond Capital, CEIC Holdings, China Internet Watch, Cryptoslam, Digital Commerce 360, Dune Analytics, eMarketer, EuroCommerce, Federal Reserve Economic Data, FTI Consulting,
Invesp, National Bureau of Statistics of China, Newzoo, NonFungible, NPD Group, Statista, United States Bureau of Labor Services, United States Census Bureau, United States Department of Labor, and World Bank Group.

•

A R K

•

B I G

I D E A S

2 0 2 2

Gene Editing
Curing Disease, Not Masking Symptoms
Research by Ali Urman, ARK Analyst

The convergence of next generation DNA sequencing, CRISPR gene-editing, andartificial intelligence (AI) has the potential to transform health care. These advances
could accelerate the pace of scientific discovery, personalizing medicine to curedisease instead of masking symptoms.
Based on ARK's research, the equity market capitalization of gene editing and genetherapy companies could grow 54% at a compound annual rate of return, scaling fromroughly $130 billion today to $1.1 trillion by 2026.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

78 •Gene Editing

The Pace Of Gene Editing Innovation Is Accelerating
According to our research, gene editing breakthroughs are creating more effective therapies at a faster rate than historically has
been the case. Compared to Zinc Finger nucleases (ZFNs), which moved from discovery to the first human dose in roughly eight
years, CRISPR took less than half the time, three years, and can address 48% of known diseases, nearly twice ZFNs’ 28%. Prime andBase editing, CRISPR derivatives, address even more diseases, 79% and 59% respectively.
Time from Gene Editing Discovery to Human Dosing

Note:
Ex vivo modifies apatient's cells outside
the body andthen transplants themback into the patient.
In vivo gene therapy
modifies a patient’s
cells inside the body.

% Disease Variants Addressable

First Euk. GE to First Human Ex Vivo Application*

First Ex Vivo to First In Vivo Application in Humans

PRIME, 79%

75%

BASE 1, 59%
50%

CRISPR Cas9/Cas12a, 48%
TALENs, 38%

25%

ZFN, 28%
2000

2005

2010

2015

2020

2025

*Euk GE, or Eukarys Gene Editing, refers to the first successful gene edit on a non-human eukaryotic cell using the specific gene editing method. | Forecasts are inherently limited and cannot be relied upon. | For informational purposes onlyand should not be considered investment advice, or a recommendation to buy, sell or hold any particular security. Source: Orphanet: an online database of rare diseases and orphan drugs. Copyright, INSERM 1997. Available at
http://www.orpha.net Accessed (12/10/2021). P. A. Jamieson, Addressable Variants Analysis Tool, (2021), GitHub repository,https://github.com/jamiesonpa/addressable_variants_gene_editing; Bibikova M, Golic M, Golic KG, Carroll D. Targetedchromosomal cleavage and mutagenesis in Drosophila using zinc-finger nucleases. Genetics. 2002 Jul;161(3):1169-75. doi: 10.1093/genetics/161.3.1169. PMID: 12136019; PMCID: PMC1462166. Sander, J., Cade, L., Khayter, C. et al. Targeted genedisruption in somatic zebrafish cells using engineered TALENs. Nat Biotechnol 29, 697–698 (2011). https://doi.org/10.1038/nbt.1934. Liu, X., Zhang, Y., Cheng, C. et al. CRISPR-Cas9-mediated multiplex gene editing in CAR-T cells. Cell Res 27, 154–
157 (2017). https://doi.org/10.1038/cr.2016.142 CRISPR-Cas9-mediated multiplex gene editing in CAR-T cells Cell Research - CRISPR-Cas9-mediated multiplex gene editing in CAR-T cells. Su, S., Hu, B., Shao, J. et al. CRISPR-Cas9 mediated efficientPD-1 disruption on human primary T cells from cancer patients. Sci Rep 6, 20070 (2016). https://doi.org/10.1038/srep20070. National Library of Medicine (U.S.). (https://clinicaltrials.gov/ct2/show/NCT02702115; National Library of Medicine(U.S.). (https://clinicaltrials.gov/ct2/show/NCT03226470; National Library of Medicine (U.S.). (https://clinicaltrials.gov/ct2/show/NCT04601051

79 •Gene Editing

CRISPR Appears To Be the Superior Gene Editing Method

ZFNs

TALENsCRISPR

Cost

High

Low

Very Low

Time

Months

Weeks

Days

Technical DifficultyHigh

MediumLow

Targeting Mechanism

Protein-DNA interaction

Protein-DNA interaction

RNA/DNA interaction

Two proteins around the target

Two proteins around the target

Guide RNA and Cas protein

Very Difficult

Difficult

Not Difficult

DeliveryMultiplex Editing• ZFNs (zinc finger nucleases) use engineered ZF repeat domains to target specific sites in host DNA and induce double stranded breaks (DSBs) with the nuclease.
• TALENs (transcription activator-like effector nucleases) targets host DNA using unique modular proteins and induce DSBs with the nuclease.
• CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats) uses a protein-RNA complex to guide its nuclease to the target site.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021

80 •Gene Editing

CRISPR Is Dominating Academic Research And Clinical Trials

ZFN, TALEN & CRISPR Clinical Trials

ZFN, TALEN & CRISPR Papers
ZFN

7,000

TALEN

CRISPR18

ZFN

TALEN Trials

CRISPR Trials

16

6,000

14
12

4,000

# of Trials# of Papers

5,000

3,000

10
8
6

2,000
4
1,000

2
0
20
19
20
20

20
18

20
17

20
15
20
16

20
13
20
14

20
11
20
12

20
10

20
09

20
08

20
07

20
05

20
06

0

2015

2016

2017

2018

2019

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: Clairivate Analytics. Web of Science. Accessed 12/10/2021. National Library of Medicine (U.S.). (https://clinicaltrials.gov/. Accessed 12/10/2021

2020

2021
Annualized

81•

Gene Editing

CRISPR Extends Beyond Gene Editing

CRISPR/Cas
SystemFunction

Benefit/Application

Transcriptional Activation
Recruiting RNA polymerases to express
genes of interest

Turns on genes that are
dormant or not expressed

Transcriptional Repression
Blocking the expression of specific genes
with CRISPR-directed repressor proteins

Silences toxic genes and genevariants

Epigenetic Control
Controlling expression through the addition
or removal of chemical moieties to DNA
and its packaging proteins

Turns genes on or off

Diagnostic Imaging
Visualizing the presence of disease variants orviral genetic material with CRISPR-mediatedfluorescent reporters

Lowers cost

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021. CRISPR/Cas9-Based Engineering of the Epigenome. Pulecio, Julian et al. Cell Stem Cell, Volume 21, Issue 4, 431 – 44. Zhang, F. (2019); Development of CRISPR-Cas systems for genome editing andbeyond. Quarterly Reviews of Biophysics, 52, E6. doi:10.1017/S0033583519000052

82 •Gene Editing

CRISPR Functionality Is Increasing
ReverseTranscriptase

Base and prime editing can address
diseases like cardiomyopathy thatcannot be cured today.

gRNA

gRNA
(guide RNA)Size
PAM (protospacer adjacent motif) Dependence*
BreaksClinical Variants Addressable

Deaminase

PegRNA(prime editing guide RNA)CRISPR Nucleases

Base Editing

Prime Editing~4 kilobase (kb)

~5 kb

~6 kb

High

High

Low

Double stranded breakSingle strand nickSingle strand nick

48%

59%

79%

*PAM is the landing spot for CRISPR. It is required for a Cas nuclease to cut at the site of interest and is generally found 3-4 nucleotides downstream from the cut site.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021

83 •Gene Editing

Gene Editing And Gene Therapy Companies Could Reach Roughly$1.1 Trillion In Market Capitalization By 2026

Given potential cures for diseases, the share ofresearch and development funding for genetherapy innovations should continue to rise.

Gene editing and therapy market capitalization
could scale 54% at a compound annual growth ratefrom roughly $130 billion to $1.1 trillion by 2026.

100.0%% of Total Pharma

By 2026, the share of total R&D spending devoted
to gene editing and therapy companies could growfrom 3% to 17%.

Gene Editing and Gene Therapy Market Cap (Forecast)
Could Track R&D Spend as a Precent of Pharma/Biotech

Gene editing and gene therapy
market cap as percent ofpharma/biotech enterprise value

10.0%

Gene editing and gene therapy
R&D spend as percent ofpharma/biotech enterprise value

1.0%

0.1%
2012

2013

2014

2015 201620172018 2019 2020 2021 2022 2023 2024 2025 2026

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021; PHrMa annual reports. Public filings of companies. Capital IQ. Equivate.
Assumes that gene editing and gene therapy companies continue to invest cashflow into R&D into a rate consistent with history and that returns on research capital within gene editing and gene therapy are consistent with history. Market
value assumption embeds an assumption that the market will value gene editing and gene therapy pipeline assets at a premium to traditional pipeline assets

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2 0 2 2Multi-Omics
The Future of Molecular Biology
Research by Simon Barnett, ARK Analyst

Leveraging the genome, transcriptome, proteome, and other ‘omics, scientists are likely
to translate groundbreaking discoveries into clinical solutions. New analytics andsoftware tools, especially those focused on high-throughput proteomics, should allow
scientists to unlock the codes to life, disease, and health.
According to ARK’s research, the multi-omics revenue opportunity—including life
science tools, basic and translational research, population health efforts, and moleculardiagnostics—will scale at a 22% annual rate, from roughly $110 billion to $300 billion,
during the next five years.
Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

85 •Multi-Omics

The Human Genome Project Finally Finished In 2021
Created using next-generation sequencing (NGS), the 2003 human genome draft sequence was incomplete. Using a combinationof long-read sequencing (LRS) methods, the Telomere-to-Telomere (T2T) Consortium finally published a complete humangenome–discovering 200 million more base pairs (bps) of DNA and 1,500 new genes in the process.1 ARK believes thismonumental achievement is a harbinger of novel life science tools and methods that will surface previously hidden biology.
LRS enables unprecedented views of the genome—likeadding color to a previously black and white image.

Structural Variation

Epigenetics

Long-Range Phasing

LRS characterizes at least twice as
many structural variants as SRS.2

LRS natively captures epigenetic informationsuch as methylation without separate sample
preparation.3,4

LRS discerns diploid genomes, allowing
scientists to see if mutations are on “mom’s
side or dad’s side.”5

Me

?

!

?

!

Me

?
Variant Detected

Me
Me

!
!
Variants are in trans.

For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Nurk, Sergey, et al. “The Complete Sequence of a Human Genome.” BioRxiv, Cold Spring Harbor Laboratory, 1 Jan. 2021, https://www.biorxiv.org/content/10.1101/2021.05.26.445798v1.
[2] “Epigenetics and Methylation Analysis.” Oxford Nanopore Technologies, 26 Oct. 2021, https://nanoporetech.com/applications/investigation/epigenetics-and-methylation-analysis.
[3] Ebert, Peter, et al. “De Novo Assembly of 64 Haplotype-Resolved Human Genomes of Diverse Ancestry and Integrated Analysis ...” BioRxiv, Cold Spring Harbor Laboratory, 1 Jan. 2020, https://www.biorxiv.org/content/10.1101/2020.12.16.423102v1.
[4] “Direct Detection of DNA Methylation during Single-Molecule, Real-Time Sequencing.” PacBio, 2010, https://www.pacb.com/publications/direct-detection-of-dna-methylation-during-single-molecule-real-time-sequencing/.
[5] Botton, Mariana R., et al. “Phased Haplotype Resolution of the SLC6A4 Promoter Using Long-Read Single Molecule Real-Time Sequencing.” MDPI, Multidisciplinary Digital Publishing Institute, 12 Nov. 2020, https://www.mdpi.com/2073-4425/11/11/1333.

86 •Multi-Omics

The Central Dogma Describes
How Information Flows Downstream Through Biological Systems
In simple terms, the Central Dogma states that DNA (the genome) is transcribed into RNA (the transcriptome), which ultimately istranslated into protein (the proteome).1 Proteins carry out virtually all critical-to-life functions but, when altered, can cause disease.
Understanding the interactions between and among the pillars of the Central Dogma, we will improve our ability to make predictions,diagnoses, and leaps of fundamental, biological insight.

Transcription

DNA

Translation

RNA• Primary Sequence• Phasing• Epigenetics• Small Variants• Complex Variants• Gene Expression• Isoform Expression• RNA Modifications

Nucleus

Nuclear Membrane

Protein• Protein Quantification• Post-Translational Modifications• Proteoform Detection

Cell Interior

Cell Membrane

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Malone, Cindy S. “Central Dogma of Genetics - CSUN.EDU.” csun.edu, https://www.csun.edu/~cmalone/pdf360/Ch13-1transcription.pdf.

Phenotype87 •Multi-Omics

Comprehensive Clinical Proteomics Is Challenging For Myriad Reasons,
Including High Costs
Blood serum (plasma) is the only feasible sample type that offers an unbiased view of the complex human proteome. ARK believes that clinical proteomics
offers enormous potential as an indicator of human health and will be key to understanding the inner workings of the Central Dogma.1

New Technologies Are Causing A SteepDNA And High-Res Proteomics Cost Decline Over 20 Years2

Cost-Decline3 in Proteomics$1,000,000,000
NGS Supplants Sanger$100,000,000

Enhanced MS^2

Sequencing$1,000,000

Despite incremental
progress, proteomics has not$100,000

yet had its “NGS moment.”$10,000$1,000$100$10$1
Apr-01

SomaScanNautilus (Predicted)$350

DNA = Cost ($) / Genome
Protein = Cost ($) / 100,000 MS^2 Scans

Cost (USD) / 1,000 Proteins

Cost (USD) [Log Scale]$10,000,000

Olink Explorer

$300
$250
$200
$150
$100
$50
$-

Jan-04

Oct-06

Jul-09Apr-12

Dec-14

Sep-17

Jun-20Mar-23

Dec-25

Feb-21

Mar-22

May-23Jun-24MS^2 = "Tandem Mass Spectrometry", a common method for analyzing complex proteomic samples like blood plasma.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Blume, John E., et al. “Rapid, Deep and Precise Profiling of the Plasma Proteome with Multi-Nanoparticle Protein Corona.” Nature News, Nature Publishing Group, 22 July 2020, https://www.nature.com/articles/s41467-020-17033-7.
[2] ARK Investment Management LLC, 2021, Data sourced from the National Human Genome Research Institute (NHGRI) and Nature Reviews, Chemistry[3] ARK Investment Management LLC, 2021, Data sourced from Seer (SEER), Olink Proteomics (OLK), SomaLogic (SLGC), and Nautilus (NAUT)

Jul-25

88 •Multi-Omics

Mass Spectrometry (MS) Is Undergoing A Renaissance
MS is a technique to analyze complex proteomic samples one at a time, taking advantage of different masses and charges ofproteins. MS has been difficult to scale as it requires manual analysis that often fails to detect protein levels in plasma.1
Novel sample prep and analysis that bookend MS are beginning to address its shortcomings. Because MS is ubiquitous, the market
is likely to adopt these advancements in short order.
Novel sample prep methods like tunable nanoparticles cancompress the plasma proteome’s dynamic range, making
low- and high-abundance proteins easier to detect.1,2

Deep neural-network (NN) tools like OpenPIP shorten
the time necessary to analyze MS spectral data.4• New MS instruments enable clever methods like
Scanning SWATH to exploit additional data.3• Scanning SWATH improves the detection ofplasma proteins by 70% (CV: 6.4%) and collapses
sample prep time to five minutes.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Blume, John E., et al. “Rapid, Deep and Precise Profiling of the Plasma Proteome with Multi-Nanoparticle Protein Corona.” Nature News, Nature Publishing Group, 22 July 2020, https://www.nature.com/articles/s41467-020-17033-7.
[2] Anderson, Norman, and N. Leigh Anderson. “The Human Plasma Proteome.” Molecular and Cellular Proteomics, https://www.mcponline.org/article/S1535-9476(20)34246-8/fulltext.
[3] Messner, Christoph B., et al. “Ultra-Fast Proteomics with Scanning Swath.” Nature News, Nature Publishing Group, 25 Mar. 2021, https://www.nature.com/articles/s41587-021-00860-4.
[4] Biosciences, OpenPIP | InterVenn. “OpenPIP: Intervenn Biosciences.” OpenPIP | InterVenn Biosciences, https://intervenn.com/enabling-technologies/openpip/.

89 •Multi-Omics

Scientists Are Creating Methods To Detect Previously Hidden Proteins

Powerful New Methods Could Detect and Quantify
95% of the Proteome by 20245• Few diseases have single-protein
signatures, necessitating the use ofmultiprotein tests.6

1.000%
Nautilus (2024)• NGS-based tests that include many
genes could pave the way for protein”panels.”5%[Log Scale]

Percentage (%) of Proteome Not Detectable

NGS massively parallelized the analysis of DNA and RNA data, enabling a significant increase in research experiments.1 Several new
detection technologies could parallelize the detection and analysis of proteins.2,3,4 ARK estimates that scientists will be able toquantify more than half* the human plasma proteome in a single experiment by the end of 2022.2

10.000%• Multivariate machine learning (ML) andbioinformatics could help scientists
understand the surge in proteomics
data—accelerating the translation fromproof-of-concept to clinical practice.

Somalogic (2022)50%

100.000%

1920

1940

1960

1980

2000

2020

2040

*Refers to half of the set of canonical human proteins (>10,000 proteins), not proteoforms—which will be elaborated on in the next slide.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] “DNA Sequencing Costs: Data.” Genome.gov, https://www.genome.gov/about-genomics/fact-sheets/DNA-Sequencing-Costs-Data.
[2] “Technology.” SomaLogic, 15 Nov. 2021, https://somalogic.com/technology/.
[3] “Technology.” Nautilus Biotechnology, https://www.nautilus.bio/technology/.
[4] “Olink Explore 3072.” Olink, 29 Nov. 2021, https://www.olink.com/products-services/explore/.
[5] ARK Investment Management LLC, 2021, Data sourced from the Journal of Molecular and Cellular Proteomics[6] Anderson, Norman, and N. Leigh Anderson. “The Human Plasma Proteome.” Molecular and Cellular Proteomics, https://www.mcponline.org/article/S1535-9476(20)34246-8/fulltext.

90 •Multi-Omics

Each Layer Of The Central Dogma Adds To Its Complexity

Post-Translational Modifications (PTMs)
Chemical modifications to the outside of proteins
creates enormous diversity in the proteome.
(Drawn to Scale)

Increasing Biomolecular Diversity

While the ~20,000 genes in our genomes create ~20,000 canonical proteins, our transcriptomes and proteomes can harbor hundredsof thousands of unique molecules.1 Biological processes like alternative splicing and post-translational modification, for example, add
diversity and complexity, as shown below.

• The scalability and maturity ofsemiconductor and nanopore-based
sequencing technologies may helptranslate novel research findings into
clinical practice.

Alternative Splicing
Protein-coding segments of genes (exons)can be rearranged, enabling one gene tobecome many RNA isoforms.

Genome20,000 Genes

Transcriptome
20,000 Transcripts>100,000 RNA Isoforms• ARK believes that semiconductor andnanopore-based sequencing
technologies are best suited to analyze
full-length RNA isoforms, protein
sequence variants, and other processes
like alternative splicing and PTMs.2,3,4Proteome
20,000 Proteins>1,000,000 Proteoforms• Algorithms like AlphaFold v.2 cantransform protein sequence data into
accurate 3D predictions of proteoform
structure, creating a quick andinexpensive path to hypotheses anddrug discoveries.5

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] September 12, 2017, et al. “Intro to Proteogenomics.” National Cancer Institute, https://www.cancer.gov/about-nci/organization/ccg/blog/2020/intro-proteogenomics-central-dogma.
[2] Al’Khafaji, Aziz M., et al. “High-Throughput RNA Isoform Sequencing Using Programmable Cdna Concatenation.” BioRxiv, Cold Spring Harbor Laboratory, 1 Jan. 2021, https://www.biorxiv.org/content/10.1101/2021.10.01.462818v1.
[3] “See beyond Color - Quantum-Si Products and Technology.” Quantum, 21 June 2021, https://www.quantum-si.com/products-and-technology/.
[4] https://orcid.org/0000-0003-2083-6027, Winston Timp, et al. “Beyond Mass Spectrometry, the next Step in Proteomics.” Science Advances, 10 Jan. 2020, https://www.science.org/doi/10.1126/sciadv.aax8978.
[5] Jumper, John, et al. “Highly Accurate Protein Structure Prediction with Alphafold.” Nature News, Nature Publishing Group, 15 July 2021, https://www.nature.com/articles/s41586-021-03819-2.

91•Multi-Omics

New Tools And Methods Can Solve Biological Mysteries

Using population-scale genomic and plasma proteomic data, biostatisticians
can uncover pQTLs—DNA mutations that alter protein abundance.1

Transcription

DNA

Translation

RNA

ProteinPhenotype
Using LRS-enabled RNA isoform analysis,
scientists can compute protein sequences andunderstand alternative splicing—a key regulatory
process that gives rise to RNA diversity.2

Nucleus

Nuclear Membrane

Cell Interior

Cell Membrane

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] Malone, Cindy S. “Central Dogma of Genetics - CSUN.EDU.” csun.edu, https://www.csun.edu/~cmalone/pdf360/Ch13-1transcription.pdf.

92 •Multi-Omics: The Future of Molecular Biology

Multi-Omics Could Evolve From $110 Billion
To A $300 Billion Revenue Opportunity
We believe the future of molecular biology is based on multi-omics techniques that integrate pillars of the Central Dogma.
Based on our research, multi-omics—including life science tools, basic and translational research, population health efforts, andmolecular diagnostics—could impact oncology, organ health, and population health, scaling at a 22% annual rate from $110 billion
to roughly $300 billion during the next five years.1
Projected Market Opportunities For Multi-Omics
As costs decline, molecular diagnostic tests thatcombine DNA, RNA, and proteins should detect
disease more accurately and comprehensively thanexisting tests.
Over the next five years, ARK expects that liquidbiopsies for cancer, organ health, and populationscale studies should scale exponentially, thanks to
the declining costs of genomics, transcriptomics, andproteomics technologies.

(Billions, USD)
Oncology
Organ Health$8B

Population Health

$298B

$170B

$120B

MRD = Minimal Residual Disease
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
[1] ARK Investment Management LLC, 2021, Data sourced from Surveillance, Epidemiology, and End Results (SEER), SomaLogic (SLGC), and the American Society of Human Genetics (ASHG)

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2 0 2 2

Electric Vehicles
En Route to Sticker-Price Parity
with Gas-Powered Cars
Research by Sam Korus, ARK Analyst

As their range increases, the prices of electric vehicles (EVs) are declining,overcoming the most significant barriers to customer adoption.
Based on Wright’s Law, ARK forecasts that EV sales will increase roughly eightfold,
or a 53% annual rate, from 4.8 million in 2021 to 40 million units in 2026. In our view,
the biggest downside risk to our forecast is whether traditional automakers will beable to transition successfully to electric autonomous vehicles.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

94 •Electric Vehicles

Wright’s Law Has Modeled The Decline In Battery Costs Accurately
The largest cost component of an EV is its battery, the declining cost of which will be critical to reaching sticker-price parity with gas-powered
vehicles. According to Wright’s Law, for every cumulative doubling of units produced, battery cell costs will fall by 28%. Lithium iron
phosphate (LFP) cells, which are less expensive and at a lower production base than nickel cells, could hasten the cost and price declines.
Battery Cost Decline
Nickel Cells

LFP Cells

Nickel Forecast

EV Units Needed To Reach a
Cumulative Doubling of Production*

LFP Forecast(by Battery Chemistry)$10,000
25,000,000$1,000$/kWh20,000,000$100

15,000,000

10,000,000$10

5,000,000$1
100,000

1,000,000

10,000,000

100,000,000

Cumulative kWh

1,000,000,000

10,000,000,000-

LFP

Nickel*EV units needed to reach a cumulative doubling of production from todays levels are higher than one might expect from the current size of the EV fleet because of the use of batteries outside the EV industry.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: Data from: ARK Investment Management LLC, 2021, EV Volumes, Avicenne Energy, Bloomberg New Energy Finance, Snow Bull Capital, ICCSino, GGII, JP Morgan, CIAPS, https://onlinelibrary.com/doi/10.1002/ese3.47,
https://pushevs.com/2021/08/10/this-is-why-byd-blade-battery-is-ahead-of-competition/

95 •Electric Vehicles

Electric Vehicle Costs Could Rival Gas-Powered Options In 2023
The total cost of ownership for a like-for-like EV dropped below that of a Toyota Camry in 2019.1 EV production costs and sticker prices
are likely to drop below those of gas-powered vehicles in the next one to two years and undercut them by 25-35% in 2025.
Vehicle Production Cost Comparison2
Toyota Camry

350-Mile Range EV$60,000$50,000$50,000$40,000

USD$40,000$30,000$23,000$24,000$24,000$24,000$25,000$20,000$16,000$10,000
$-

2019

2021

2023

2025

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC., 2021. Assumes a 5% gross margin relative to MSRP (Manufacturer Suggested Retail Price)[1] Total cost of ownership includes savings from gas, maintenance, insurance, and resale value.
[2] Numbers may differ from projections in previous years as this year's Big Ideas focuses on costs rather than price and incorporates new battery cost decline estimates.

96 •Electric Vehicles

Wright’s Law Also Models Improvements in EV Charging Rates
The ability to charge an EV quickly is impacted by both the vehicle and the charging infrastructure. Once EV charging rates reach an
acceptable level, ARK expects the industry will optimize for other features like autonomous driving, safety, and possibly entertainment.

Historic Improvement in EV Charging Rate
Historic Data Points

2026 Forecast

Charging Rate

(Miles of Range/Minute)

100.0

2026 (F)

10.0

2018

1999

2021

1.0

0.1

1915
0.0
1

10

100

1,000

10,000100,000

1,000,000

10,000,000

Cumulative Electric Vehicle Production

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021

100,000,000

97 •Electric Vehicles

EV Performance Is Improving
ARK’s research shows that the median performance of EVs in 2021 is approaching Tesla’s performance in 2018.
Both should continue to improve.

2013 Tesla Model S (85kWh)2018 Tesla Model 3 LR AWD

2021 EV Distribution

2021 Tesla Models

Forecasted ARK EV Platform Performance Index 2026

7

ARK Electric Vehicle Platform Performance Index

ARK Electric Vehicle Platform Performance Index

ARK EV Platform Performance Index Today

6
5
4
3
2
1
0
2012

2014

2016

2018

2020

2022

2013 Tesla Model S (85kWh)2018 Tesla Model 3 LR AWD

2021 EV Distribution

Forecast 2026 Tesla

Forecast 2026 EV Industry Median
60
50
40
30
20
10
0
2012

2014

2016

2018

2020

2022

2024

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Note: Index is calculated by dividing the charging rate (range added per minute) by vehicle cost. ARK believes charging rate is a good metric as it encapsulates efficiency, range, and power capabilities of the system.
Source: ARK Investment Management LLC, 2021.

2026

2028

98 •

Electric Vehicles

Electric Vehicle Sales Continue To Take Share
While sales of gas-powered vehicles recovered slightly in 2021, EV sales soared and continued to gain share globally.

Vehicle Sales Growth
Gas-Powered

Electric

112%

120%

Percent Change (YOY)

100%
80%

69%

60%

33%

40%

18%

20%

1.7%*

0%
-20%

-1.2%

-16.0%

-7.2%

-40%

2018

2019

2020

2021

* Estimates. At the time publication official sales numbers were not available yet.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: ARK Investment Management LLC, Data from: “EV Data Center.” EV, https://www.ev-volumes.com/datacenter/, Automotive Industry Outlook. https://www.cargroup.org/wp-content/uploads/2019/02/Wall.pdf.

99 •Electric Vehicles

Electric Vehicles Are Breaking Traditional S-Curve Dynamics
In a typical s-curve adoption cycle, the growth of a new technology decelerates as penetration increases.
In contrast, growth in global EV unit sales accelerated from 60% in 2013 to an estimated 100%+ in 2021.

Typical Adoption S-Curve
Adoption Curve

Global Battery Electric Vehicle Sales

YOY Growth5160%140% 138%

140%

135%

4

127%

100%

Units (Millions)

111%

120%

86%

80%
55%

60%
40%

3

2

30%
14%

20%

1
6%

3%

1%

0%

0%

12

13

14

15

YOY Percent Change:
60%

0%
1

2

3

4

5

6

7

8
Years

9

10

11

2013

66%

2014

46%

2015

71%

2016

79%

2017

16%

2018

112%

33%

2019

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021. For right chart: data from Evvolumes.com

2020

2021

100 •

Electric Vehicles

If Traditional Automakers Navigate The Shift From Gas-Powered Vehicles
Successfully, EV Sales Could Scale 8-Fold From 4.8 Million to
40 Million During The Next Five Years.
ARK expects that sales of smaller, cheaper “neighborhood electric vehicles” will take off by 2026.
Global Battery Electric Vehicle Sales (Forecast)40
35

Equivalent to~$1.2 Trillion in Revenue*

Units (Millions)

30
25
20

53% CAGR

15
10
5
0
2013

2014

2015

2016

2017

2018

2019

2020

2021*

*Note: This assumes a $30,000 ASP.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021. Data from: Evvolumes.com

2026 Forecast

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2 0 2 2Autonomous
Ride-Hailing
Driving Unprecedented Economic Productivity
Research by Tasha Keeney, ARK Analyst

We believe autonomous ride-hailing will reduce the cost of mobility to
one-eighth the average cost of ride-hail today, spurring widespread adoption
and unleashing unprecedented economic productivity.
ARK’s research suggests that autonomous ride-hailing platforms will add
roughly $26 trillion to global GDP and $2 trillion in profits per year by 2030.
For perspective, global GDP approached $89 trillion in 2021.1[1] Estimate based on data sourced from “GDP (Current US$).” Data, https://data.worldbank.org/indicator/NY.GDP.MKTP.CD and “The Global Economic Outlook in Five Charts.” World Bank
Blogs, https://blogs.worldbank.org/voices/global-economic-outlook-five-charts-1. Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

102 •

Autonomous Ride-Hailing

Autonomous Ride-Hail Is Likely To Be Extremely Affordable
Adjusted for inflation, the cost of owning and operating a personal car has not changed since the Model T rolled off the first assembly
line. ARK estimates that, at scale, autonomous taxis could cost consumers as little as $0.25 per mile, spurring widespread adoption.

Cost Per Mile of a Personally Owned Vehicle(2020, USD)

$1.70

$0.70

1871

1934

$0.70

1950

$0.70

2016

$0.25

2030
2021

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021; Morton Salt Company Records, American Automobile Association (AAA).

103 •

Autonomous Ride-Hailing

Autonomous Ride-Hail Is Likely To Win Share Of Miles Traveled,
Even From Car Owners
ARK’s research suggests that consumers value the time they spent
driving in the $0.60 - $1.10 per mile range. On average, they value timein work-related travel more highly than non-work travel.

Cost Per Mile of Ride Choices Today$2

Today, consumers pay $2 per mile on average for ride-hail, significantly
more than the marginal cost of driving a personal car and the perceived
value of their time.
ARK's research suggests that the value consumers place on their timeand on convenience will support prices for autonomous ride-hail higher
than our estimated price floor of 25 cents per mile. We expect tiers ofservice to emerge at different price levels.

Additional
Convenience Factor$1.28
Marginal Cost To Drive$0.34

Perceived Value Of
Time
$0.72

Personal Car

Ride-hail

Note: The marginal cost to drive includes insurance, fuel, maintenance, and tires, and excludes allother fixed vehicle costs. Our $0.70 per mile cost to drive includes these fixed costs.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: ARK Investment Management LLC, Revised Departmental Guidance 2016 - Transportation. https://www.transportation.gov/sites/dot.gov/files/docs/2016%20Revised%20Value%20of%20a%20Statistical%20Life%20Guidance.pdf. ,Summary of Travel Trends - National Household Travel Survey. https://nhts.ornl.gov/assets/2017_nhts_summary_travel_trends.pdf. Goldszmidt, Ariel, et al. “The Value of Time in the United States: Estimates from Nationwide Natural Field
Experiments.” EconPapers, 2020, https://econpapers.repec.org/RePEc:feb:natura:00720. “Average Hourly Earnings for Private Payrolls Increased 3.1 Percent for Year Ended January 2020.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor
Statistics, 11 Feb. 2020, https://www.bls.gov/opub/ted/2020/average-hourly-earnings-for-private-payrolls-increased-3-point-1-percent-for-year-ended-january-2020.htm. Your Driving Costs 2021. AAA, https://newsroom.aaa.com/wpcontent/uploads/2021/08/2021-YDC-Brochure-Live.pdf.

104 •

Autonomous Ride-Hailing

Ride-Hail Demand Is Likely To Create An $11 Trillion Addressable Market
At $0.25 cents per mile, autonomous ride-hail could attract a wider population than ride-hail serves today.
ARK also expects significant demand at higher price points based on the value that consumers place on their time.

Addressable Market at Each Price Point

4.50
$4B

4.00
3.50

Price Per Mile ($)

4.00

Existing addressable market for ride-hailcompanies with prices $2-$4 per mile

3.00

$30B

2.50
2.00

$100B

1.50

3.00

0.50
1

0.60

0.50

0.25

$2.4T: Non-commuting miles in higher income
countries priced around $0.60 per mile
$2.75T: A long tail of demand priced similarly to ride-hailprices of $0.50 per mile in lower income countries

0

1.10

$990B: Addressable ridership in Western markets
supplanting commuting miles, priced just above $1

1.00

0.00

2.00

5

10

Miles (Trillions)$5T: Low cost, accessible autonomous travel at$0.25 per mile
30

Note: Each rectangle represents a pocket of demand for a specific number of miles (its width) at a particular price point (its height measured in price per mile).
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, Revised Departmental Guidance 2016 - Transportation. https://www.transportation.gov/sites/dot.gov/files/docs/2016%20Revised%20Value%20of%20a%20Statistical%20Life%20Guidance.pdf. ,Summary of Travel Trends - National Household Travel Survey. https://nhts.ornl.gov/assets/2017_nhts_summary_travel_trends.pdf. Goldszmidt, Ariel, et al. “The Value of Time in the United States: Estimates from Nationwide Natural Field
Experiments.” EconPapers, 2020, https://econpapers.repec.org/RePEc:feb:natura:00720. “Average Hourly Earnings for Private Payrolls Increased 3.1 Percent for Year Ended January 2020.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor
Statistics, 11 Feb. 2020, https://www.bls.gov/opub/ted/2020/average-hourly-earnings-for-private-payrolls-increased-3-point-1-percent-for-year-ended-january-2020.htm. Your Driving Costs 2021. AAA, https://newsroom.aaa.com/wpcontent/uploads/2021/08/2021-YDC-Brochure-Live.pdf.

105 •

Autonomous Ride-Hailing

Autonomous Mobility Could Increase Traffic
And Create An Opportunity For Air Taxis
Priced at $0.25 per mile, autonomous ride-hail is likely to expand the customer base and increase traffic congestion significantly.
Our research suggests that autonomous air taxis will offer faster travel options at price points roughly the same as ground taxis today.
Global Vehicle Miles Travelled
40

Non-Autonomous Miles

Travel Options From Manhattan to JFK Airport

Autonomous Miles

Cost

$250

35
30

$200

25

$150

20

$195

$100

15

$74

$50

10

5min

80min*$65 70min
18min

60min
$10

$8

$-

5

Helicopter

Air Taxi

Taxi

Autonomous
Autonomous Taxi
Taxi($0.25per mile)(at scale)

NYC Subway

2021

2030

2021

(at scale)

0

2021

Time (min)

2022

2023

2024

2025

2026

2027

2028

2029

2030

2021

2030

*ARK expects traffic to increase with autonomous vehicles.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021.

106 • Autonomous Ride-HailingBy 2026, The Enterprise Value Of Autonomous Ride-Hail Platforms
Could Be Much Higher Than That Of Automakers Today
According to our research, companies that own the autonomous technology stack could dominate enterprise values in the future auto
ecosystem. We believe that many of today’s ride-hail, auto manufacturing, and car rental companies will not survive the transition.

2026 Enterprise Value Estimate

Current Enterprise Value(Trillions, As of November 2021)(Trillions, USD)

$14
$12

$11.7T

$10
$8
$6

$4.1T

$4

$300B
Ride-hail$100B
Automakers

Car Rental

$1.6T

$2

$300B

$0

Autonomous
Platform Provider

Autonomous ElectricAuto Manufacturers

Note: Assumes a multiple of 19X earnings for platform providers, 13X for autonomous electric auto manufacturers, and 5X for fleet owners | Note: Values are rounded to the nearest billion.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, data from CapitalIQ

Fleet Owners

107 •

Autonomous Ride-Hailing

Autonomous Ride-Hail Could Have More Economic Impact Than Any
Innovation In History, Adding Roughly $26 Trillion To Global GDP By 2030
Potential Global Economic Impact of Autonomous Ride-Hail,
2030 Forecast

Annual GDP Productivity Impact(Percentage points)
4%

Total Gain: $30T
+ 16T Productivity Uplift+ 10T Service Revenue+ 3T Economic Gain From Preservation of Life
+ 1T Incremental Autonomous Car Sales

3%

Net Gain: $26T
Total Loss: -$4T
- 60B Medical Revenue- 210B Property Repair Revenue- 470B Maintenance Revenue- 660B Fuel Revenue- 700B Insurance Revenue- 1.8T Personal Car Sales

2%

1%

0%

Steam engine

RobotsIT

Robotaxis(1850-1910)(1993 - 2007)(1995 - 2005)(2021 - 2030e)

Notes: IT = Information Technology. Figures in graphs are rounded.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: ARK Investment Management LLC, 2021; Bughin, Jacques, et al. MGI Notes from the AI Frontier Modeling the Impact of AI ...McKinsey, 2018 https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/Artificial%20Intelligence/Notes%20from%20the%20frontier%20Modeling%20the%20impact%20of%20AI%20on%20the%20world%20economy/MGI-Notes-from-the-AI-frontier-Modeling-the-impact-of-AI-on-the-world-economy-September-2018.ashx.

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2 0 2 2Autonomous
Logistics
Reshaping the Global Supply Chain
Research by Tasha Keeney, ARK Analyst

Autonomous logistics, including trucks, drones, and rolling robots, could
lower costs and offer faster and more convenient delivery of goods.
ARK believes that autonomous logistics revenues could scale from nil today
to $900 billion in 2030.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

109 •

Autonomous Logistics

Autonomous Vehicles That Roll And Fly
Could Lower Costs Across The Supply Chain
According to our research, autonomous vehicles will operate at higher utilization rates than human-in-the-loop systems,
creating more cost-effective delivery systems, particularly for small volumes in the last mile.
Truckload Delivery Cost

Local Batch Delivery Costs(Per Ton-Mile)(Per Trip)

Local Small Item Delivery Costs(Per Trip)
$5.40

$2.40
$0.07

2X

6.5X

$0.03

22X

$0.40

$0.25
Human Driven Diesel Truck

Autonomous Electric Truck

Autonomous electric trucks should benefit fromhigher utilization and lower maintenance andlabor costs than human-driven diesel trucks.

Human Driving Cost

Rolling Integrated Traffic Robot

Rolling grocery robots should enable inexpensive
and convenient delivery, reshaping consumer
shopping habits.

App Delivery Service

Drone

Autonomous drones are likely to deliver a
substantial share of e-commerce parcels andonline food sales.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, Source: ARK Investment Management LLC, 2021; “National Statistics and Maps.” National Statistics and Maps - FHWA Freight Management and Operations,
https://www.ops.fhwa.dot.gov/Freight/freight_analysis/nat_freight_stats/index.htm. ; “Average Truck Speeds.” Energy.gov, https://energy.gov/eere/vehicles/fact-671-april-18-2011-average-truck-speeds. ; Fleet Owner.
https://www.fleetowner.com/. ; Ferguson, Dave. “Introducing R2, Nuro's next Generation Self-Driving Vehicle.” Medium, Nuro, 6 Feb. 2020, https://medium.com/nuro/introducing-r2-nuros-next-generation-self-driving-vehicle-a9974ff6c2e0. ;“Most U.S. Households Do Their Main Grocery Shopping at Supermarkets and Supercenters Regardless of Income.” USDA ERS - Most U.S. Households Do Their Main Grocery Shopping at Supermarkets and Supercenters Regardless of Income,https://www.ers.usda.gov/amber-waves/2015/august/most-us-households-do-their-main-grocery-shopping-at-supermarkets-and-supercenters-regardless-of-income/. ; Your Driving Costs. https://newsroom.aaa.com/wpcontent/uploads/2021/08/2021-YDC-Brochure-Live.pdf. ; “Phantom 2 Vision+ v3.0.” DJI Store - Official Store for DJI Drones, Gimbals and Accessories (United States), https://store.dji.com/product/phantom-2-vision-plus. ; Chen, Brian X. “Up to
91% More Expensive: How Delivery Apps Eat up Your Budget.” The New York Times, The New York Times, 26 Feb. 2020, https://www.nytimes.com/2020/02/26/technology/personaltech/ubereats-doordash-postmates-grubhub-review.html.

110 •

Autonomous Logistics

Autonomous Trucks Are Likely To Be More Cost Effective Than Rail,Expanding Their Addressable Market
Door-to-door trucks should offer significant speed advantages over rail and take share from intermodal transport.

Cost Per Ton-Mile by Mode

Log scale

$1.23

$0.07

Air

Human Driven Diesel Truck

$0.04

$0.03

$0.03

Rail

Autonomous EV Truck

Barge

Note: Intermodal transport is the movement of freight by two or more modes of transportation.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, data sources: “National Statistics and Maps.” National Statistics and Maps - FHWA Freight Management and Operations, https://www.ops.fhwa.dot.gov/Freight/freight_analysis/nat_freight_stats/index.htm. ;“Table 3-21: Average Freight Revenue per Ton-Mile (Current Cents).” Bureau of Transportation Statistics, https://www.bts.gov/archive/publications/national_transportation_statistics/table_03_21. ; “Average Freight Revenue per Ton-Mile.” Average Freight
Revenue per Ton-Mile | Bureau of Transportation Statistics, https://www.bts.gov/content/average-freight-revenue-ton-mile.

111 •

Autonomous Logistics

Robot Grocery Delivery Could Lower Costs By 6X
And Convert Unpaid Labor Into Paid Services
ARK estimates that, as electric robots replace gas-powered cars, robot grocery delivery could convert roughly $40 billion of
unpaid labor into paid services and erase $6 billion in gasoline demand. In other words, robot delivery could prevent roughly
18 million metric tons of CO2 emissions per year, the equivalent of taking 4 million gas-powered cars off the road.

$69 Billion

US Grocery Trip Costs

Unpaid Wages$43 B

Other Driving Costs$20 B
Gas $6 B

CostGroceryof Grocery
Trips
Trips
Today
Today

$12 Billion$4 Billion
Robot Robot
Grocery
Grocery
Delivery
Delivery
Opportunity
Today Today

Robot Grocery Delivery Potential

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: ARK Investment Management LLC, 2021; “FMI's 2019 U.S. Grocery Shopper Trends Examines Personalized Grocery Shopping.” FMI, 18 June 2019, https://www.fmi.org/newsroom/news-archive/view/2019/06/18/fmi-s-2019-u.s.-groceryshopper-trends-examines-personalized-grocery-shopping. “U.S. Energy Information Administration - EIA - Independent Statistics and Analysis.” Environment - U.S. Energy Information Administration (EIA) - U.S. Energy Information
Administration (EIA), https://www.eia.gov/environment/emissions/co2_vol_mass.php.

112 •

Autonomous Logistics

Drones Could Deliver The Majority Of E-Commerce Sales
And Push Food Delivery Into An S-Curve
Drone delivery should be more efficient and cost-effective in transporting goods and meals, especially for suburban and rural
residents, increasing food delivery as a percent of total spending on food.

Global Food Delivery
as a Percent of Total Food Spend (Forecast)

Retail Share by Mode (Forecast)
Ecommerce (Non-Drone)

Ecommerce (Drone Delivered)Rest of Retail

Food Delivery as a % of Total Food Spend

47%

40%

41%

40%

82%

24%
21%

18%
2020

32%

40%

60%

20%

20%

Additional Share Gain With Drones

19%

8%
2%

15%

2020

2026

22%

0%

2026

2030

2030

Sources: ARK Investment Management LLC, 2021. “Pitney Bowes Parcel Shipping Index.” Pitney Bowes, https://www.pitneybowes.com/us/shipping-index.html#. , “Data and Research on Digital for Business Professionals.” Insider Intelligence,
http://www.emarketer.com/. , Euromonitor, https://www.euromonitor.com/. , “Food Expenditure Series.” USDA ERS - Food Expenditure Series, https://www.ers.usda.gov/data-products/food-expenditure-series/.

113 •

Autonomous Logistics

Autonomous Logistics Revenues Could Scale From Nil Today To MoreThan $900 Billion in 2030
ARK’s research suggests that autonomous logistics will reshape the global supply chain completely, giving consumers faster and moreconvenient ways to receive goods. Shopping habits and homes could be reshaped in ways that will save consumers time and money.
Global Autonomous Logistics Revenue* (Forecast)(Gross Revenue in Billions)
TrucksParcel Drones

Food Drones

$920
$120
$110

$480
$40

$690

$50
$390

2026

2030

*ARK's research on the market size and timeline for rolling robots is still evolving and has not been included in our estimate for autonomous logistics global revenues by 2030.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021

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2 0 2 2

3D Printing& Robotics
The Next Generation of Manufacturing
Research by Tasha Keeney and Sam Korus, ARK Analysts

3D printing and adaptable robots shorten supply chain footprints, allow for digitalinventory, and reduce materials waste while cutting costs and time-to-production.
Supply chain shocks and labor shortages should accelerate the use of 3D printing androbotics. ARK estimates that 3D printing and robotics could scale at a 56% annual rate,from nearly $70 billion in public enterprise value in 2020 to over $6 trillion in 2030.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

115 •

3D Printing & Robotics

Supply Chain And Labor Force Disruptions Could Accelerate
The Adoption Of Automated Manufacturing
We believe that 3D printing and robotics will increase manufacturers’ flexibility and responsiveness to demand spikes,
supply chain fluctuations, and labor shortages.

US Manufacturing Job Openings(Seasonally adjusted, Thousands)
Faster Delivery

1,200
1,000
800
600
400
200

20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21

20
10

20
09

20
08

20
07

20
06

20
05

20
04

20
03

20
02

20
01

0
20
00

Slower Delivery

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: Williamson, Chris. “Understanding ... PMI Suppliers' Delivery Times: A Widely Used Indicator of Supply Delays, Capacity Constraints and Price Pressures.” IHS Markit, IHS Markit, 21 July 2021, https://ihsmarkit.com/research-analysis/understanding-pmi-suppliers-delivery-times-a-widely-used-indicator-of-supply-delays-capacity-constraints-and-price-pressures-Jul21.html. “Jolts News Releases.” U.S. Bureau of Labor Statistics, U.S. Bureau of Labor Statistics, https://www.bls.gov/jlt/.

116 •

3D Printing & Robotics

The Adoption Of Automation Typically Accelerates In Crises
The adoption of industrial robots accelerated after the 2002 dot-com bust and again after the 2008-2009 crisis. In response to the
China/US trade conflict in 2019 and supply chain bottlenecks during 2020 and 2021, the penetration of industrial robots probably
will gain more momentum.
Industrial Robot Penetration
1996-2001

Unit Sales of Industrial Robots

450,000

2003-2008

2002,
2002,2009,2009,20192019,and
and
2020
2020

2010-2018

400,0002017

350,000
2016

250,000

2015
2014

200,000

2011

150,000

2007

100,000

-

2020
2019

300,000

50,000

2018

1997

1996
$120

1998

1999
$100

2000

2001 2002

2003

$80

2004

2005

2006

2010

2013
2012

2008
2009

$60

$40

$20

Unit Price of an Industrial Robot (in Thousands)

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: ARK Investment Management LLC, 2021; Executive Summary World Robotics 2021 Industrial Robots. https://ifr.org/img/worldrobotics/Executive_Summary_WR_Industrial_Robots_2021.pdf.

$0117 •

3D Printing & Robotics

3D Printing Enables Digital Inventory
And Distributed Manufacturing, Adding Flexibility To Supply Chains
Manufacturers can produce 3D-printed parts on
demand, in single or small batch runs, eliminating
the need to hold physical inventory of spare andlow volume parts.
A “digital inventory” of part designs and printing
instructions can combine with physical inventory of
raw material, shrinking the footprint of warehouses.
Manufacturers can place 3D printers near thedestinations of final products, reducing supply
chain footprints and shipping costs.
3D Printing allows manufacturers to verticallyintegrate, reducing reliance on outside suppliers
while saving time and cost.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: “Schubert: A Digital Warehouse for on-Demand Manufacturing.” Ultimaker.com, https://ultimaker.com/learn/schubert-a-digital-warehouse-for-on-demand-manufacturing.

118 •

3D Printing & Robotics

Automation Is Consistent With Job Growth
Amazon deployed its first 200,000 robots over seven years and another 150,000 in just two years. During those nine years, Amazon's
workforce grew nearly fifteen-fold. Despite the elimination of retail positions, we believe automation will enable new products andservices that otherwise would not exist, on balance increasing the demand for labor.

Number of Amazon Employees and Robots
RobotsEmployees at Start of Year

1,400

1,298

Number in Thousands

1,200
1,000
798

800
600
341

400
200
-

648

566

88

1
2013

117
15
2014

231

154
30
2015

45
2016

100

2017

140e

2018

200

2019

265e

2020

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021; Amazon 10-ks.

350

2021

119 •

3D Printing & Robotics

3D Printing Enhances Product Performance
And Accelerates The Pace Of Innovation
According to our research, as electric vehicle sales scale from nearly 5 million to roughly 40 million over the next five years,
auto manufacturers will have to adapt by retooling and reinventing manufacturing lines. 3D printing allows for rapid
prototyping, the elimination of tooling, a reduction in the number of parts, and faster time-to-market.

At its main plant in Germany, Volkswagen
reduced the weight of an A-pillar by 74%,
cut part count by 2/3, and plans to produce
100,000 3D-printed parts per year by 2025.

Dana, the auto supplier, used 3D printing toachieve a 10x improvement in speed.

Moving from outsourcing to 3D printing its partsin house, Nissan reduced costs by 200x
and wait times for parts by 7X.

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: “Open Visual Engineering Platform: Bionic Design of Volkswagen Golf A-Pillar.” ELISE, 10 Dec. 2020, https://www.elise.de/industries/automotive/volkswagen-a-pillar/. Markforged Investor Presentation.
https://static.markforged.com/downloads/Markforged+Investor+Presentation.pdf. “Nissan Accelerates Assembly, Lowers Costs with 3D Printing.” Control Engineering, 8 July 2021, https://www.controleng.com/articles/nissan-acceleratesassembly-lowers-costs-with-3d-printing/. “Volkswagen Plans to Use New 3D Printing Process in Vehicle Production in the Years Ahead.” Volkswagen Newsroom, https://www.volkswagen-newsroom.com/en/press-releases/volkswagen-plans-touse-new-3d-printing-process-in-vehicle-production-in-the-years-ahead-7269.

120 •

3D Printing & Robotics

3D Printing Still Is In Its Infancy
ARK’s research indicates that 3D printing for end-use parts is the next frontier.

MOLDS & TOOLSEND-USE PARTS

Market Potential:$12.5 Billion$30 Billion$490 Billion

Current Penetration

60-70%

6%

1%

Expected Penetration 2026

80-90%~30%~20%

First Applications

1980’s1990’s

Early 2000’sMarket Size (Billions, USD)

PROTOTYPES

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, data sourced from; McKinsey; Stratasys; “3D Printing History.” AV Plastics, 14 June 2018, https://arkinv.st/2TC57H1

121 •

3D Printing & Robotics

ARK Expects The Enterprise Value For 3D Printing And Robotics
To Scale From $70 Billion Today To Over $6 Trillion By 2030.
3D printing and robotics offer cost reductions, tools for innovation, and increased productivity. Supply chain and labor disruptions
could accelerate the shift to next generation manufacturing technologies.
Enterprise Value for Next Generation ManufacturingEnterprise Value (Billions, USD)

3D Printing$5,000 B

Robotics$1,100 B

$52B

$16B
2020

2030 Expected

Note: Enterprise value calculation assumes a 5% cash flow yield for 3D Printing and Robotics. Robotics does not include home-based robotics.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Sources: ARK Investment Management LLC, 2021; CapitalIQ data

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2 0 2 2

Orbital
Aerospace
Enabling Global Connectivity
Research by Sam Korus, ARK Analyst

Aerospace costs are declining thanks to advancements in deep learning, mobile
connectivity, sensors, 3D printing, and robotics. As a result, satellite launches androcket landings are proliferating.
According to ARK’s research, satellite broadband revenues could approach $10 billion
per year in the US and $40 billion globally during the next 5-10 years. In addition, thehypersonic flight market could scale from nil to $270 billion in annual revenues.

Forecasts are inherently limited and cannot be relied upon.
For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.

www.ark-invest.com

123 •

Orbital Aerospace

Rocket Reusability Should Lower Launch Costs By An Order Of Magnitude
SpaceX put an end to soaring launch costs with its Falcon 9 reusable rocket, flying the same booster 11 times.

Launch Cost (Million) Inflation Adjusted to 2015

Historic Rocket Launch Costs
Soyuz

$250

Atlas V

Low Earth Orbit Rocket Launch Costs
Falcon 9$210(USD/kg)$15,000$12,500$200$10,000$164$150$7,500

$118
$100

$71

$71

$5,000$2,500$50$-

2016 Atlas V

$0

2006

2015

2014 Arianne 52015 Falcon 92020 Reusable
Falcon 9

Rapidly
ReusableStarship(Modeled)

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, http://spacenews.com/40006spacex-says-requirements-not-markup-make-government-missions-more-costly/, https://oig.nasa.gov/audits/reports/FY13/IG-13-019.pdf, http://spacenews.com/risingengine-costs-uncertainty-drive-atlas-5-prices-nasa/, http://www.ulalaunch.com/faqs-launch-costs.aspx , http://www.spacex.com/about/capabilities, http://spacenews.com/rising-engine-costs-uncertainty-drive-atlas-5-prices-nasa/,

124 •

Orbital Aerospace

SpaceX Is Refurbishing Rockets In Record TimeIn ARK’s view, a crucial variable determining their cost declines will be the time in which rockets can be refurbished.

Rocket Turnaround Time
400

356

350

Number of Days

300
250

252

200
150
100

54

27

50
-

Space Shuttle: Average

Space Shuttle: Fastest

First SpaceX Reuse 2017

SpaceX Reuse 2021

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, https://www.reddit.com/r/spacex/wiki/cores#wiki_b1049, http://www.nasa.gov/pdf/537939main_ss-launches-080311.pdf

125 •

Orbital Aerospace

Lower Satellite Launch Costs Could Enable
Continuous Global Coverage With Low Latency
When satellites launched into geostationary orbit (GEO) offered global coverage, latency limited their ability to provide a compelling
broadband internet offering. Today, companies including SpaceX, OneWeb, Amazon, and others are launching or have plans to launch
thousands of low cost satellites into low earth orbit (LEO), enabling continuous global coverage with low latency.

LEO~300 miles<40 ms latency*

GEO~22,000 miles
700 ms latency**Latency is measured in milliseconds (ms).

Source: ARK Investment Management LLC, 2020, based on data sourced from: “Satellites 101: LEO vs. GEO.” Iridium Satellite Communications, 9 September 2018, www.iridium.com/blog/2018/09/11/satellites-101-leo-vs-geo/, Jon Brodkin
Nov 2, 2020, 9:09 pm UTC. “SpaceX Starlink Users Provide First Impressions and Unboxing Pictures.” Ars Technica, 2 Nov. 2020, arstechnica.com/information-technology/2020/11/spacex-starlink-beta-tester-takes-user-terminal-intoforest-gets-120mbps/?utm_social-type=owned.

126 •

Orbital Aerospace

Antenna Costs Could Drop Below $500 In The Next Few Years
Based on limited data, including our modeled adoption curve for Starlink users, ARK’s research suggests that the cost of end user
antennas could drop from roughly $1,000 today to $500 after cumulative production reaches one million units by the end of 2023.
Starlink Antenna Cost Decline

Starlink Users

Forecast$100,000

160,000
140,000$10,000

120,000
Unit Cost

100,000
80,00060,00040,000$1,000$100$1020,000
-

$1

0

50

100

150

200

250

300

Days

1

10

100

1,000

10,000100,000

1,000,000

Cumulative Production

Note: ARK uses Starlink for its antenna cost decline model because it has the most satellites in orbit and the data is most readily available.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, https://twitter.com/elonmusk/status/1408558492009566214, https://twitter.com/elonmusk/status/1429907171639103489, https://www.tesmanian.com/blogs/tesmanian-blog/starlink-users-fcc,
https://www.engadget.com/spacex-starlink-satellite-internet-global-coverage-084815155.html, https://twitter.com/Free_Space/status/1379459724991725571

127 •

Orbital Aerospace

Cost Declines Should Increase The Number of Satellites Scheduled For Orbit
The number of active satellites orbiting earth nearly doubled during in the past two years. According to public data, companies
are planning an order of magnitude increase in satellite launches during the next ten years. The 75,000 of launches planned by2030 has tripled since last year.
Potential Satellite Launches by ~2030

Active Satellites
5,000

80,0004,500

70,0004,000

60,0003,500

50,000

3,000
2,500

75,000 +40,0002,000

30,0001,500

20,0001,000

10,000

500
-

-

2005

2018

2019

2020

2021

Planned

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021; Union of Concerned Scientists Satellite Database, https://www.cnbc.com/2021/11/05/space-companies-ask-fcc-to-approve-38000-broadband-satellites.html,
https://digitalcommons.usu.edu/cgi/viewcontent.cgi?article=5092&context=smallsat

128 •

Orbital Aerospace

Wright’s Law Forecasts The Cost Decline for Satellite Bandwidth
Since 2004, the cost of satellite bandwidth has dropped 7,500-fold, from $300,000,000/Gigabits per second (Gbps) to $40,000/Gbps.
Based on our research, it could fall another 40-fold during the next five years to ~$1,000/Gbps, thanks to Starship, SpaceX’s nextgeneration rocket and its next-generation satellites.
According to ARK’s research, 1 Gbps can serve 200 customers. At a capital cost of ~$1,000/Gbps, SpaceX could recoup its investment witha one-time charge of $5 per customer.1$/Gbps in Orbit (Gigabits per second)

Satellite Bandwidth Cost Decline
1,000,000,000
100,000,000

Anik-F2

10,000,000
1,000,000
100,000
10,000

Forecasted Starlink(Starship)

Starlink(Falcon9)

1,000
100
10
1
1

10

100

1,000

10,000100,000

1,000,000

Cumulative Gbps

[1] This assumes an oversubscription ratio of 20, which means 20 times more people are paying for the service than are actively using it at a given time.
Please also note this calculation does not incorporate satellite lifespans, satellite utilization, and ground-based infrastructure costs, all of which will impact costs and pricing decisions.
Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, https://www.spacesymposium.org/wp-content/uploads/2017/10/R.VanderMeulen_31st_Space_Symposium_Tech_Track_paper.pdf

10,000,000

129 •

Orbital Aerospace

High Paying Customers Could Be Early Adopters Of Satellite Internet
According to ARK’s research, satellite internet is likely to target two markets:a high number of low paying customers and a low number of high paying customers.

$1-$10$10-$20, 51%

Addressable Satellite Internet Users

Addressable Annual Satellite Internet Revenue

by Monthly Broadband Priceby Monthly Broadband Price$10-$20$20-$30$30-$50$50-$75$75-$100$100+$1-$10, 32%$1-$10$10-$20$20-$30$30-$50$50-$75$10-$20, 36%

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, https://www.cable.co.uk/mobiles/worldwide-data-pricing/, https://www.cable.co.uk/broadband/pricing/worldwide-comparison/$75-$100$75-$100, 35%$100+

130 •

Orbital Aerospace

Satellite Broadband Revenues Could Approach $10 Billion Per Year
In The US And $40 Billion Globally During The Next 5-10 Years
According to ARK’s research, the $40 billion opportunity to serve populations without access is just one of the addressable markets forsatellite broadband. The market for connected planes, trains, and motor vehicles is likely to reach $43 billion in 2026. In addition,
governments are likely to add to the demand for space services.

42 Million

2.6

$600

Americans without
access to broadband

PeoplePer Household

Average Annual
Broadband Bill

3 Billion

5$60

People globally without
access to broadband

PeoplePer Household

AnnualBroadband Bill~$10 Billion

Annual Addressable Market~$40 Billion

Annual Addressable Market

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2020, based on data sourced from: Dreyfuss, Emily. “Global Internet Access Is Even Worse Than Dire Reports Suggest.” Wired, Conde Nast, www.wired.com/story/global-internet-access-dire-reports/,“FCC Underestimates Americans Unserved by Broadband Internet by 50%.” BroadbandNow, broadbandnow.com/research/fcc-underestimates-unserved-by-50-percent, “Worldwide Broadband Price Research 2020.” Cable,
www.cable.co.uk/broadband/pricing/worldwide-comparison/, “Global On-Board Connectivity Market Expected to Reach $36,842.3 Million by 2025.” Allied Market Research, www.alliedmarketresearch.com/press-release/on-boardconnectivity-market.html, “Space: Investing in the Final Frontier.” Morgan Stanley, www.morganstanley.com/ideas/investing-in-space. “On-Board Connectivity Market.” Transparency Market Research,https://www.transparencymarketresearch.com/on-board-connectivity.html.

131 •

Orbital Aerospace

ARK Expects The Demand For Hypersonic Flight To Skyrocket
According to our research, passengers on
short-haul private flights are willing to
pay roughly $15,000 for every two hours
saved on private planes.
Based on the economics of the short-haul
flight market, ARK estimates that passengers
and businesses will be willing to pay $100,000
to save 13 hours on a 2–3 hour private hypersonicflight from New York City to Japan.

~4.5 Billion Passengers Flew in 2018
15% of flights were > 7 hours~680 Million Passengers Flew
on Flights Longer Than 7 Hours
0.4% of passengers flew private

If 2.7 million passengers were to pay ~$100,000
for long-haul hypersonic flights, the market
would scale to $270 billion in revenues annually.
Over time, ARK believes prices could decline tocompete with international business class flights
today.

~2.7 Million Person Potential AnnualHypersonic Flight Addressable Market$100,000 per hypersonic flight$270 Billion
Annual Revenues

Forecasts are inherently limited and cannot be relied upon. | For informational purposes only and should not be considered investment advice, or a recommendation to buy, sell or hold any particular security.
Source: ARK Investment Management LLC, 2021, based on data sourced from Gollan, Doug. “Why, When And Where The Super Rich Fly Their Private Jets.” Forbes, Forbes Magazine, 10 Oct. 2018, www.forbes.com/sites/
douggollan/2018/10/10/why-when-and-where-the-super-rich-fly-their-private-jets/?sh=215c29c822e1, Charter Market Report 2018, The Federal Aviation Administration, the Bureau of Transportation Statistics, and Flight Aware.

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