1、BIG IDEAS 2023January 31,2023www.ark-ARK Investment Management LLCTECHNOLOGICALCONVERGENCEROBOTICS AND3D PRINTINGARTIFICIAL INTELLIGENCEDIGITAL CONSUMERSDIGITALWALLETS PUBLICBLOCKCHAINSSMART CONTRACTNETWORKS PRECISION THERAPIES MOLECULAR DIAGNOSTICS ELECTRICVEHICLES ORBITAL AEROSPACEAUTONOMOUS LOGIS
2、TICS AUTONOMOUS RIDE-HAIL For Informational Purposes OnlyARK 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 p
3、urposes 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 RETU
4、RNS ARE NOT GUARANTEED.BITCOINRisks of Investing in InnovationPlease 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 p
5、otential 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
6、 areas.Please read risk disclosure carefully.2DISRUPTIVE INNOVATIONRAPID PACE OF CHANGEUNCERTAINTY AND UNKNOWNS EXPOSURE ACROSS SECTORS AND MARKET CAPRISK OF INVESTING IN INNOVATIONREGULATORY HURDLESCOMPETITIVE LANDSCAPEPOLITICAL OR LEGAL PRESSURESources:ARK Investment Management LLC,2023.Aim to und
7、erstand the regulatory,market,sector,and company risks.(See Disclosure Page)Aim for a cross-sector understanding of technologyand combine top-down and bottom-up research.BIG IDEAS 2023:DISCLOSUREBig Ideas 2023Innovation is Taking OffARK aims to deliver long-term capital appreciation by investing in
8、the leaders,enablers,and beneficiaries of disruptive innovation.We believe every investor should have a strategic allocation to innovation,not only to access potential exponential growth opportunities typically absent from broad-based indices,but also to hedge against the increasing risk that incumb
9、ents will be disrupted.To enlighten investors on the long-term impact of innovation,we began publishing Big Ideas in 2017.This annual research report seeks to highlight the technological breakthroughs evolving today and creating the potential for super-exponential growth tomorrow.We believe that inn
10、ovation is taking off now,corroborating our original research and boosting our confidence that ARKs strategies are on the right side of change.We hope you enjoy Big Ideas 2023!3BIG IDEAS 2023:INTRODUCTIONTechnological ConvergenceArtificial IntelligenceDigital ConsumersDigital WalletsPublic Blockchai
11、nsBitcoinSmart Contract NetworksPrecision TherapiesMolecular Cancer DiagnosticsElectric VehiclesAutonomous Ride-HailAutonomous LogisticsRobotics and 3D PrintingOrbital Aerospace203041485566058696106115126136754BIG IDEAS 2023:TABLE OF CONTENTSTechnological ConvergenceCreating The Potential For Super-
12、Exponential GrowthResearch by Brett Winton,Chief Futurist&ARK Venture Investment Committee MemberAccording to ARKs research,five innovation platforms are converging to create unprecedented growth trajectories.Artificial Intelligence is the most important catalyst,its velocity cascading through all o
13、ther technologies.The market value of disruptive innovation platforms could scale 40%at an annual rate during this business cycle,from$13 trillion today to$200 trillion by 2030.In 2030,the market value associated with disruptive innovation could account for the majority of the global equity market c
14、apitalization.Sources:ARK Investment Management LLC,2023.As of year end 2022.Numbers are rounded.ARK estimates that$13.4 trillion of market value is attributable to the disruptive technologies it covers today.By 2030 ARK estimates that market value attributable to these technologies will exceed$206
15、trillion.Market value includes public companies,private companies,cryptocurrencies and smart contract protocols.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 partic
16、ular security or cryptocurrency.Past performance is not indicative of future results.BIG IDEAS 20235Five Converging Innovation Platforms Define This Technological EraNode size:Log prospective 2030 Market ValueSources:ARK Investment Management LLC,2023.Forecasts are inherently limited and cannot be r
17、elied 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.Past performance is not indicative of future results.Public BlockchainsUpon large-scale adoption,all money and contracts will mi
18、grate onto Public Blockchains that enable and verify digital scarcity and proof of ownership.The financial ecosystem is likely to reconfigure to accommodate the rise of Cryptocurrencies and Smart Contracts.These technologies increase transparency,reduce the influence of capital and regulatory contro
19、ls,and collapse contract execution costs.In such a world,Digital Wallets will become increasingly necessary as more assets become money-like,and corporations and consumers adapt to the new financial infrastructure.Corporate structures themselves may be called into question.Artificial IntelligenceCom
20、putational systems and software that evolve with data can solve intractable problems,automate knowledge work,and accelerate technologys integration into every economic sector.The adoption of Neural Networks should prove more momentous than the introduction of the internet and create 10s of trillion
21、dollars of value.At scale these systems will require unprecedented computational resources,and AI-specific compute hardware should dominate the Next Gen Cloud datacenters that train and operate AI models.The potential for end-users is clear:a constellation of AI-driven Intelligent Devices that perva
22、de peoples lives,changing the way that they spend,work,and play.The adoption of artificial intelligence should transform every sector,impact every business,and catalyze every innovation platform.MultiomicSequencingThe cost to gather,sequence,and understand digital biological data is falling precipit
23、ously.Multiomic Technologies provide research scientists,therapeutic organizations and health platforms with unprecedented access to DNA,RNA,protein,and digital health data.Cancer care should transform with pan-cancer blood tests.Multiomic data should feed into novel Precision Therapies using emergi
24、ng gene editing techniques that target and cure rare diseases and chronic conditions.Multiomicsshould unlock entirely new Programmable Biology capabilities,including the design and synthesis of novel biological constructs with applications across industries,particularly agriculture and food producti
25、on.Energy Storage Declining costs of Advanced Battery Technology should cause an explosion in form factors,enabling Autonomous Mobility systems that collapse the cost of getting people and things from place to place.Electric drivetrain cost declines should unlock micro-mobility and aerial systems,in
26、cluding flying taxis,enabling business models that transform the landscape of cities.Autonomy should reduce the cost of taxi,delivery,and surveillance by an order of magnitude,enabling frictionless transport that will increase the velocity of e-commerce and make individual car ownership the exceptio
27、n rather than the rule.These innovations combined with large-scale stationary batteries should cause a transformation in energy,substituting electricity for liquid fuel and pushing generation infrastructure towards the edge of the network.RoboticsCatalyzed by artificial intelligence,Adaptive Robots
28、can operate alongside humans and navigate legacy infrastructure,changing the way products are made and sold.3D Printing should contribute to the digitization of manufacturing,increasing not only the performance and precision of end-use parts but also the resilience of supply chains.Meanwhile,the wor
29、lds fastest robots,Reusable Rockets,should continue to reduce the cost of launching satellite constellations and enable uninterruptible connectivity.A nascent innovation platform,robotics could collapse the cost of distance with hypersonic travel,the cost of manufacturing complexity with 3D printers
30、,and the cost of production with AI-guided robots.TECHNOLOGICAL CONVERGENCEBIG IDEAS 2023:6Node size:Log prospective 2030 Market CapitalizationEdge size:Estimated catalyzing impactEdge color coded to the catalyzing technologyThe converging innovation platforms involve 14 investable technologies unde
31、rgoing steep cost declines,impacting multiple sectors,and serving as launching pads for more innovation.ARKs Convergence Scoring Framework And Network Graph:Technology scores are a function of their potential to generate super-exponential growth as they catalyze other technologies.The thickest lines
32、 correspond to expectations for an order of magnitude increase in another technologys potential.Edges are directional.Neural networks should catalyze autonomous mobility(thick purple line),for example,and the data generated by autonomous mobility systems should improve neural network capability(thin
33、 teal line).Node size corresponds to estimate of 2030 enterprise value attributable to the technology on a log scale.The innovation platform taxonomy emerges organically from this network graph.ConvergenceSources:ARK Investment Management LLC,2023.Information provided on this slide is based on ARKs
34、research and views and subject to change.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.Past performance is not indicative of f
35、uture results.BIG IDEAS 2023:7TECHNOLOGICAL CONVERGENCE0.30.30.50.50.60.60.91.11.21.21.34.31.62.0Adaptive Robotics3D PrintingPrecision TherapiesProgrammable BiologyReusable RocketsSmart contractsNext Gen CloudIntelligent DevicesCryptocurrenciesMultiomic TechnologiesAutonomous MobilityAdvanced Batter
36、y SystemsDigital WalletsNeural NetworksNeural Networks Are The Most Important CatalystRelative Importance as a CatalystRepresents an order of magnitude increase in the commercial potential of another technology.Sources:ARK Investment Management LLC,2023.ARKs convergence scoring framework measures th
37、e scale of impact that advances in one technology are likely to have on the potential market value of another.”Relative importance as a catalyst”measures the sum of convergence scores for each technology.Scoring is tuned such that a score of 1 corresponds to the potential to increase another technol
38、ogys market value by an order of magnitude.Scores are subject to ARKs views and research and are subject to change.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 par
39、ticular security or cryptocurrency.Past performance is not indicative of future results.BIG IDEAS 2023:8TECHNOLOGICAL CONVERGENCEAutonomous Mobility Epitomizes The Convergence Among TechnologiesRelative Sensitivity to Other Catalysts2.22.01.71.61.51.51.21.20.80.80.70.60.50.2Autonomous MobilitySmart
40、contractsIntelligent DevicesAdaptive RoboticsPrecision TherapiesNext Gen CloudNeural NetworksCryptocurrenciesMultiomic Technologies3D PrintingDigital WalletsProgrammable BiologyAdvanced Battery SystemsReusable RocketsLog of potential increase in addressable market based on other technological advanc
41、es.Sources:ARK Investment Management LLC,2023.ARKs convergence scoring framework measures the scale of impact that advances in one technology are likely to have on the potential market value of another.”Relative sensitivity to other catalysts”measures the inbound sum of convergence scores for each t
42、echnology.Scoring is tuned such that a score of 1 corresponds to an order of magnitude potential increase in the technologys market value.Scores are subject to ARKs views and research and are subject to change.Forecasts are inherently limited and cannot be relied upon.For informational purposes only
43、 and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.BIG IDEAS 2023:9TECHNOLOGICAL CONVERGENCEAI Chatbots Will Drive RobotaxisThe pace of AI innovation has increased our
44、confidence in the commercial viability of robotaxis and other autonomous mobility systems.Neural networks are beginning to exceed human performance in multiple areas.Autonomous transportation should prove no different.Performance improvements in neural networks should enable scalable robotaxi system
45、s that are safer than humans in almost all situations.Tesla applies transformer neural networksintroduced as a solution for language translationto help its vehicles understand complicated intersections and drivable pathways.Sources:ARK Investment Management LLC,2023.Tesla 2022.Forecasts are inherent
46、ly 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.Past performance is not indicative of future results.BIG IDEAS 2023:10TECHNOLOGICAL CONVERGENCEDeep Ne
47、ural Networks Enable More Accurate Long-Read DNA SequencingIn 2021,Google researchers applied transformers,typically used for state of the art language models,to long-read genomic data from PacBios Sequel II machine.Not only did they reduce errors and improve quality-adjusted yields,but they also lo
48、wered long-read genome sequencing costs.In 2023,PacBio will build AI-specific compute hardware into its long-read sequencer,delivering the first high-quality,whole long-read genome for less than$1,000.Sources:ARK Investment Management LLC,2023.Baid,G.et al.2022;Carroll,A.2022;Lopez,L.2022.Forecasts
49、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.Past performance is not indicative of future results.051015202530State of the ArtBefore AI
50、2021 AIError Rate Reduction2022 AIError Rate ReductionCurrentState of the ArtBase Pair Errors Per ReadNeural Networks Lower Long-Read DNA Sequencing Error Rates by 59%BIG IDEAS 2023:11TECHNOLOGICAL CONVERGENCERobots Learn From Experience Thanks To Advances In AI Language ModelsAlready useful for lan
51、guage generation,the advanced transformer AI architecture now is controlling robots,instructing and enabling them to encode complex actions into discrete tasks.Transformer architecture also helps robots generalize from examples and perform never-seen tasks.Sources:ARK Investment Management LLC,2023.
52、Gopalakrishnan,K.et al.2022;Brohan,A.et al.2022;Jang,E.et al.2022.Compares performance of RT-1,the robotics transformer architecture to BC-Z,based on a recurrent neural net architecture.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be consi
53、dered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.72%19%97%76%0%10%20%30%40%50%60%70%80%90%100%Previously Seen TasksNew TasksGeneral Task Completion Success RateRobot without AI language mode
54、l architecture(2021)Robot with AI language model architecture(2022)BIG IDEAS 2023:12TECHNOLOGICAL CONVERGENCEBattery Advances Will Be Critical To Augmented RealityImprovements in battery capacity and energy density will be critical to advances in intelligent devices.To preserve battery life,the firs
55、t four versions of Apples smartwatch displays powered off unless wearers raised their wrists.Similarly,smart glasses will be power-constrained until advances in battery energy density increase their utility.0.050.100.1500.020.040.060.080.10.120.140.16200820152022Wh/iPhone Cubic cmEnergy density4.126
56、.5512.40246810121416200820152022Watt Hours(Wh)Battery CapacityiPhone Battery EvolutionSources:ARK Investment Management LLC,2023.Apple,data as of 01/27/23.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be considered investment advice or a re
57、commendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.BIG IDEAS 2023:13TECHNOLOGICAL CONVERGENCEReusable Rockets Deliver Satellite Power To Traditional SmartphonesSatellite connectivity providers like Iridium and Starlink have
58、 made worldwide connectivity a reality by taking advantage of the cost declines in re-usable rockets.The cost of satellite bandwidth has fallen 7,500-fold over 19 years,enabling the launch of a record number of communication satellites in 2022.Intelligent devices rely on connectivity.Inexpensive con
59、nectivity is key to universal access.Sources:ARK Investment Management LLC,2023.Gregson,R.1999;Glasner,J.1999;Hasenstab,B.1998.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
60、hold any particular security or cryptocurrency.Past performance is not indicative of future results.15x1x40 x1x051015202530354045Original Iridium1998T-Mobile+SpaceX2023Multiple of Terrestrial Cellular PriceSatellite Price Premium to Terrestrial CellularHandsetPrice per minute/textBIG IDEAS 2023:14TE
61、CHNOLOGICAL CONVERGENCECryptocurrency Mining Can Support Larger Solar-Battery InstallationsBitcoin mining machines are a useful energy tool:modular,moveable,and flexible,they pair well with intermittent energy resources like wind and solar installations.Incorporating bitcoin mining into solar storag
62、e systems can enhance the scaling and reliability of grids without increasing the levelized cost of electricity(LCOE).A bitcoin miner can”buy”any excess energy.According to ARKs research,by increasing the size of its battery 4.6x and incorporating a bitcoin miner,a solar system could provide 99%+of
63、end-user demand without sacrificing profitability.-200 400 600 800 1,000 1,200 1,400 1,600 1,8000%20%40%60%80%100%Solar-Battery System Size(kWh)Percent of End-user Electricity Demand Met by SystemBattery Size for a Solar Installation Providing Equivalent Levelized Cost of Electricity(LCOE)Circle siz
64、ed proportional to the amount of bitcoin mining power included No bitcoin miningSources:ARK Investment Management LLC,2023.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
65、 any particular security or cryptocurrency.Past performance is not indicative of future results.BIG IDEAS 2023:15TECHNOLOGICAL CONVERGENCEDiscontinuous Changes In Macroeconomic Growth Are The Norm,Thanks to Technology0.01%0.10%1.00%10.00%3%0.6%0.3%0.14%0.037%100,000BC 1 1000 1500 1900 2021 2040Conse
66、nsusForecastForecast Consistent with Technological History8.5%2.6%2.6%Global Real GDP*GrowthLog Years Until 2050*2021*$100 trillion$12,500 per capita3.7%growth2030$170 trillion$20,000 per capita6.1%growth2030$130 trillion$15,000 per capita3.0%growth2040$470 trillion$20,000 per capita10.7%growth2040$
67、160 trillion$18,000 per capita2.1%growthCompared to Consensus forecastProjections Consistent with Technological History*Gross Domestic Product.*X-axis scaled by log years until 2050.Sources:ARK Investment Management LLC,2023.Bolt,J.et al.2022;The World Bank Group,data as of 01/27/23;Nalley,S.et al.2
68、021;DeLong,B.1998.Numbers are rounded.Consensus forecast is the reference economic case for the EIAs International Energy Outlook.X-axis of log years until 2050 is tuned to the best fit against the historical data.Forecasts are inherently limited and cannot be relied upon.For informational purposes
69、only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.Historical dataCompound Annual Growth RateBIG IDEAS 2023:16TECHNOLOGICAL CONVERGENCEDisruptive Innovations Compli
70、cate The Meaning Of Economic StatisticsConsumers paying up for an electric vehicle are lowering future costs for better performing vehicles at a lower total cost of ownership(TCO).An EV purchase today leads to lower“output”in the future.Cutting the cord from a cable package and shifting to streaming
71、 services could hurt economic measures but boost the value of entertainment.Sources:ARK Investment Management LLC,2023.E,Inc.,data as of 01/27/23;Afonso,C.2022.Cost of ownership as measured over 5 years at 15,000 miles per year.Assumes IRA tax credit.Assumes same depreciation rate for Model 3 versus
72、 Camry.Assumes EV maintenance costs at 45%of internal combustion.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.Past performanc
73、e is not indicative of future results.1.5x.7x.9x.0 x.2x.4x.6x.8x1.0 x1.2x1.4x1.6xVehicle purchaseAnnual Cost to Operate5 Year TCOTesla Model 3 Versus Toyota CamryCost DifferentialHuluDisney+ESPN+NetflixHBO MaxApple TVAmazon Prime$-$20$40$60$80$100$120Standard cable TV packagePremium streaming packag
74、eMonthly Cost for Video EntertainmentVehicle PurchaseBIG IDEAS 2023:17TECHNOLOGICAL CONVERGENCEAnnual Operating CostStandard Cable TV PackagePremium Streaming PackageTodays Innovation Platforms Could Lift Consensus GDP*Growth Toward GDP Growth Suggested By Technological History*Gross Domestic Produc
75、t.Sources:ARK Investment Management LLC,2023.Nalley,S.et al.2022.Energy storage forecast is primarily driven by expectations for robotaxi service penetration.Robotics forecast assumes 1 robot per manufacturing employee delivering a 15%productivity uplift and imbeds the indirect benefit of household
76、robots reducing housework burdens for consumers by 16%.Multiomics sequencing GDP impact corresponds to a 2%increase in working populations above expectations due to health advances.Public blockchain forecast assumes that the rent charged by intermediaries falls 2/3rds for public blockchain assets as
77、 compared to traditional financial assets,and that the GDP impact of digital wallet penetration in emerging markets continues to yield incremental GDP growth.AI GDP forecast assumes that AI software increases knowledge-worker productivity by 4.5x by 2030.Forecasts are inherently limited and cannot b
78、e 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.Past performance is not indicative of future results.130261631170$0$20$40$60$80$100$120$140$160$180$200Consensus GDP 2030Ener
79、gy StorageARK ForecastRoboticsARK ForecastProjection Consistentwith TechnologicalHistoryMultiomics SequencingARK ForecastPublic BlockchainARK ForecastAIARK ForecastReal GDP in 2030140According to ARKs research,breakthroughs associated with Energy Storage and Robotics alone could add 30%to real GDP b
80、y 2030,and AI could dwarf both their contributions.GDP impact of these technologies is less likely to be captured by traditional economic production statistics.In particular,though AIs impact on knowledge worker productivity should result in substantial improvements in software,administration,and ma
81、nagement of complex systems,it is unclear how those improvements will be reflected in traditional measures of macroeconomic growth.TrillionsBIG IDEAS 2023:18TECHNOLOGICAL CONVERGENCEDisruptive Innovation Platforms Could Constitute The Majority Of The Global Equity Market Value By 2030AI,Energy Stora
82、ge,Robotics,Multiomics Sequencing,and Public Blockchains could scale 15-fold to$200 trillion in equity value over the course of this business cycle.Even if non-innovation exposures to the market continue to accrue value,disruptive innovation is likely to dominate equity market values by 2030.Includi
83、ng cryptoassets,disruptive innovation exposures could constitute roughly 68%of risk asset value by 2030.8497$0$50$100$150$200$250$300$35020222030 ForecastTotal Equity Market ValuePublic Blockchains 50%Multiomics Sequencing 27%Robotics*68%Energy Storage 56%AI36%Innovation PlatformCAGR13InnovationPlat
84、forms$206 trillion41%CAGROther$96 trillion2%CAGR*CAGR:Robotics including home robots as opposed to industrial robots.Sources:ARK Investment Management LLC,2023.Equity market value includes the value of public blockchain protocols.Forecasts are inherently limited and cannot be relied upon.For informa
85、tional purposes only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.In this specific estimation,2022 and 2030 total equity market values and CAGRs for Public Blockch
86、ains are inclusive of three technology platforms:Cryptocurrencies,Smart Contracts,and Digital Wallets.TrillionsBIG IDEAS 2023:19TECHNOLOGICAL CONVERGENCECreating The Assembly Line For Knowledge Workers20Generative AI made waves this year,from DALL-E-2 to ChatGPT.These tools are improving the product
87、ivity of knowledge workers2x in the case of AI coding assistants.AI training cost declines continued at an annual rate of 70%,the cost to train a large language model to GPT-3 level performance collapsing from$4.6 million in 2020 to$450,000 in 2022.We expect cost declines to continue at a 70%rate th
88、rough 2030.AI should increase the productivity of knowledge workers more than 4-fold by 2030.At 100%adoption,AI could increase global labor productivity$200 trillion,dwarfing the$32 trillion in total knowledge worker salaries.Artificial IntelligenceSources:ARK Investment Management LLC,2023.Forecast
89、s 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.Past performance is not indicative of future results.BIG IDEAS 2023Research by William Summerlin,Co-Lead,A
90、RK Venture&AnalystFrank Downing,Director of Research,Next Generation InternetPrompted by a short text,generative AI models can produce images,code,text,audio,and video.In less than one year,dozens of generative AI projects created models that progressed from grainy images to high-quality 3D models a
91、nd videos.2022 Was The Year Of Generative AIDALL-E 2:An astronaut riding a horse”Publicly available September 2022Open-Source Stable Diffusion 2.0:Released November 2022Meta Make-A-VideoAnnounced September 2022Sources:ARK Investment Management LLC,2023.Bleeding Edge,data as of 01/23/23;Stability 202
92、3;Singer,U.et al.2022;OpenAI,data as of 01/23/23.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.Past performance is not indicative of future resu
93、lts.ARTIFICIAL INTELLIGENCE21BIG IDEAS 2023:HumanCost$150 Time5 HoursGenerative AICost$0.08 Time 4 billion people live under authoritarian regimes.2 billion people suffer from double-digit inflation.1 billion people cannot use traditional payment transfer apps.1 billion people rely on remittances.Bi
94、tcoin is censorship-resistant.The barriers to transacting on Bitcoin are low,the only requirement being possession of a private key.Bitcoin is inflation-resistant.The number of bitcoin created is mathematically metered and predictable,according to a predefined schedule.The supply of bitcoin outstand
95、ing is 19 million now and capped at 21 million units.Bitcoin is seizure-resistant.Bitcoin combines elliptic curve cryptography and secure custody to ensure independent property rights.Bitcoin is auditable and transparent.Bitcoin decision making is transparent and decentralized.Running a full node,a
96、user is free to validate transactions and audit supply.Bitcoin Network Stats2022Transfer Volume($Trillions)+$38.7Total Addresses(Millions)Transaction Count(Millions)Addresses With A Balance(Millions)Cumulative1$105.3+95.4791.4+147.51,100+3.7543.2Miner Revenue($Billions)+$9.5$47.4THE PROBLEMTHE DATAT
97、HE REVOLUTION1 Cumulative since inception in January 3,2009.Sources:ARK Investment Management LLC,2023.Kasparov,G.et al.2017;Hall,J.2022;The World Bank 2021;International Fund for Agricultural Development 2022;Glassnode,data as of 01/20/23,figures not entity-adjusted.Forecasts are inherently limited
98、 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.Past performance is not indicative of future results.PUBLIC BLOCKCHAINSBIG IDEAS 2023:51Financial Revolution|Dec
99、entralized Finance Powered Through The Crypto Crisis$0.1$1.5$1.2$0$1$2202020212022Trading Volume(Trillions)DeFi Trading Volume$1.2 trillion in DeFi trading volume,up 12x from 2020 to 2022.52%increase in DeFi trading volume relative to total crypto trading volume after the FTX collapse.$9 trillion in
100、 on-chain stablecoin transfers,more than card networks Mastercard,Amex,and Discover combined in 2022.$32 billion in withdrawals and nearly$1 billion in liquidations in 2022.DeFi eliminates traditional intermediaries.Automated smart contracts guarantee execution without the need for trusted toll-take
101、rs.DeFi is global.Financial services deployed on open protocols enable anyone with an internet connection access to custody,trading,and lending facilities.DeFi is interoperable.Financial services are open-source and interoperable,allowing for rapid innovation and experimentation.DeFi is auditable an
102、d transparent.Users govern risk and functions,while collateralization and asset flows are open for inspection.Sources:ARK Investment Management LLC,2023.The World Bank 2016;The Block,data as of 01/17/23;Johnson,P.2022.Forecasts are inherently limited and cannot be relied upon.For informational purpo
103、ses only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.THE PROBLEMTHE DATATHE REVOLUTIONMore than 2 billion people lack access to basic banking services,including a
104、ccount management and credit.The opacity of traditional financial institutions has caused catastrophic financial collapses.Counterparty risk among traditional financial institutions results in single points of failure,and centralized decision making enables rampant rent-seeking.PUBLIC BLOCKCHAINSBIG
105、 IDEAS 2023:52Internet Revolution|The Case For Web3 Is Reaching A Tipping Point5 million unique IDs issued across the Ethereum Name Service and Unstoppable Domains.$22 billion in annual NFT1trading volume,up 15%in 2022.127 million in cumulative NFT creations.Major brands,including Starbucks,Adidas,N
106、ike,Coca-Cola,and the NBA,partnering with Web3 protocols.Major social platforms including Instagram,Twitter,Reddit launching NFT-powered capabilities.Web3 is user owned.Web3 introduces digital property rights for the first time.Web3 relies on protocols,not platforms.Decentralized protocols enable th
107、e governance ofand open access to distributed data,limiting central aggregator control.Web3 enables new monetization paradigms.Web3 embeds economics into software,enabling users to monetize and participate in network development.Web3 enables the convergence between consumption and investment.Consume
108、r behavior is shifting as the economy becomes digitally native,enabling a new paradigm for purchasing,owning,and using goods and services.1 Non-fungible token(NFT),a unique,programmable blockchain-based digital object that proves ownership of digital assets.Sources:ARK Investment Management LLC,2023
109、.Malwa,S.2023;Unstoppable Domains,data as of 01/16/23;CryptoSlam,data as of 01/17/23;Dune Analytics,data as of 01/17/23.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 an
110、y particular security or cryptocurrency.Past performance is not indicative of future results.THE PROBLEMTHE DATATHE REVOLUTIONThe Internet relies on tech monopolies that exploit,own,and monetize user data.Online identity and reputation are not interoperable.Centralized decision makers dictate the di
111、scovery of information,subjectively moderating content and communication.PUBLIC BLOCKCHAINSBIG IDEAS 2023:53Cryptoassets Could Rival And Redefine Traditional Asset Classes$280$123$98$97$12$1$20$5$0$50$100$150$200$250$300Global Real EstateGlobal DebtGlobal M2Global EquitiesGoldCryptoassets(2022)Crypt
112、oassets(Estimated for 2030)Trillions Market Capitalization:Traditional Asset Classes And Cryptoassets2030CryptocurrenciesSmart Contracts$25 trillion25xAccording to our research,cryptocurrencies and smart contracts could create$20 trillion and$5 trillion in market value,respectively.Sources:ARK Inves
113、tment Management LLC,2023.Bank for International Settlements,data as of 01/25/23;Bloomberg,data as of 01/25/23;8MarketCap,data as of 01/17/23;TradingView,data as of 01/17/23;Desjardins,J.2020.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be
114、 considered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.PUBLIC BLOCKCHAINSBIG IDEAS 2023:54BitcoinA Durable NetworkWe believe Bitcoins long-term opportunity is strengthening.Despite a turbule
115、nt year,Bitcoin has not skipped a beat.Its network fundamentals have strengthened and its holder base has become more long-term focused.Contagion caused by centralized counterparties has elevated Bitcoins value propositions:decentralization,auditability,and transparency.The price of one bitcoin coul
116、d exceed$1 million in the next decade.Sources:ARK Investment Management LLC,2023.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
117、.Past performance is not indicative of future results.BIG IDEAS 202355Research by Yassine Elmandjra,Crypto LeadFrank Downing,Director of Research,Next Generation InternetDavid Puell,Research Associate-100%-90%-80%-70%-60%-50%-40%-30%-20%-10%0%15099148197246295344393Percent Drawdown From Peak To Trou
118、ghDuration(Days)Bitcoin Percent Drawdowns In Bear MarketsJun 2011-Nov 2011Nov 2013-Jan 2015Dec 2017-Dec 2018Nov 2021-?Bitcoin found a bottom at$15,800 in 2022,down 77%from its all-time high in November 2021The Drawdown From Bitcoins All-Time High Was The Fifth Largest And Second Longest In History$1
119、,242January 2015$152-87.7%$19,891December 2018$3,128-84.3%June 2011DatePriceDatePriceDrawdownPeakTrough$31.91November 2011$2.00-93.7%November 2013December 2017November 2021$69,000November 20221$15,797-76.7%Bitcoins Bear Market DrawdownsPeak-to-PeakAverage CAGR157.9%Trough-to-TroughAverage CAGR153.6%
120、Note:Bitcoin experienced an 81%drawdown in April 2013 that is not included in the chart or table given the duration lasted only 6 days and,in this context,is considered an outlier.1 The trough in November 2021 is assumed to be the lowest mark in price as of December 31,2022.Lower price levels may de
121、velop during 2023 or after.Sources:ARK Investment Management LLC,2023.Glassnode,data as of 01/17/23.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 securit
122、y or cryptocurrency.Past performance is not indicative of future results.Nov 2022BITCOINBIG IDEAS 2023:56Bitcoins volatility has obscured its long-term returns.Despite five drawdowns greater than 75%since its inception in 2009,bitcoin has delivered positive annualized returns over 3-,4-,and 5-year t
123、ime horizons.Despite Severe Drawdowns,Bitcoin Has Outperformed Every Major Asset Class Over Longer Time Horizons5Year CAGRBitcoin Has OutperformedTraditional Asset Classes Since Its Inception2022Average1Asset ClassesAverage1Global Equities10.6%GoldGlobal DebtBitcoin2022Average120224.9%1.5%-4.5%2.4%6
124、.3%152%35.6%10.1%10.2%1.5%-1.8%2.5%9.2%187%49.4%6.1%6.1%1.4%-1.7%2.2%7.0%272%8.7%3Year CAGR4Year CAGR0%100%200%300%400%500%600%700%800%201420152016201720182019202020212022Compound Annual ReturnBitcoins Compound Annual Returns(CAGR)Are Positive Over 3-,4-,and 5-Year Time Horizons*5-year CAGR4-Year CA
125、GR3-year CAGR*Average CAGRs are calculated since bitcoins price inception.Sources:ARK Investment Management LLC,2023.Glassnode,data as of 01/17/23;Bloomberg,data as of 01/27/23.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be considered inv
126、estment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.BITCOINBIG IDEAS 2023:57Bitcoins Fundamentals Are Stronger Today Than In Past Drawdowns$400$1,600$6,400$25,600$102,400201720182019202020212022Bitcoin
127、In Perspective At$15,800 After 77%DrawdownsABCD:BTC hits a 2-year low at$15,800,after 77%drawdown from its all-time highA:BTC hits$15,800 for the first timeB:BTC draws down 77%from its all-time highDC:BTC reclaims$15,800Long-Term Holder Supply(%)4Bitcoin MetricsADec.10,2017BNov.20,2018Market Cost Ba
128、sis(Realized Cap,$,Billions)1$58.2$3,485$85.1$4,713Hash Rate(EH/s)312.644.1%44.551.8%BTC Addresses With Non-Zero Balance(Millions)24.051.9%22.567.5%Cost Basis Per BTC(Realized Price,$)2Supply Of BTC LastMoved 1 Year Ago(%)DNov 21,2022$393$20,459262.466.5%43.571.8%CNov.11,2020$126.3$6,811127.861.8%32
129、.666.3%Lightning Network Capacity(BTC)5N/A3404,7001,040Price:$15,800Price Drawdown:77%from all-time high$15,800 price line:current cycle low as of December 31,20221 Market cost basis:The on-chain volume-weighted average price of the market,calculated by aggregating the value of all bitcoins in circu
130、lation at the time when they last moved.Also known as realized cap.2 Cost basis per BTC:The market cost basis divided by total outstanding supply.Also known as realized price.3 Hash rate:The number of computations per second produced by miners and a proxy for network security.4 Long-term holder supp
131、ly:The number of coins that last moved 155 days or longer.155 days is the threshold when the probability of a bitcoin being spent in the future diminishes substantially.5 Lightning Network capacity:The number of bitcoins locked in the Lightning Network.Sources:ARK Investment Management LLC,2023.Glas
132、snode,data as of 01/17/23.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.Past performance is not indicative of future results.B
133、ITCOINBIG IDEAS 2023:58$1$10$100$1,000$10,000$100,0000%20%40%60%80%100%2011201320152017201920212023Bitcoin PricePercent Supply in LossThe Percentage Of Bitcoin Trading At A Loss Reached An All Time High in 20221Percent Supply In LossPriceIn 2022,the percent of bitcoins supply trading at a loss peake
134、d at 68.3%,exceeding that in every previous bear market.In 2022,bitcoin holder capitulation was proportionate to that at previous cycle lows.Bitcoin Capitulation Has Hit Levels Associated With Price Troughs In The Past$0$50$100$150$200$250$300$350$400$450$5002016201720182019202020212022Annual Realiz
135、ed Profits and Losses(Billions)Bitcoin Holders Realized Record Losses Of$200 Billion In 20222Realized LossRealized ProfitIn 2022,realized profits declined by a record 75%,as investors capitulated.1 The percent of bitcoin at loss is adjusted by discounting coins that have not moved in 7 years or long
136、er.This serves as a heuristic to remove potentially lost coins from calculation.2 Realized losses:The number of coins moved on-chain at a price lower that when they last moved.Sources:ARK Investment Management LLC,2023.Glassnode,data as of 01/20/23.Forecasts are inherently limited and cannot be reli
137、ed upon.For informational purposes only and shouldnot be considered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.BITCOINBIG IDEAS 2023:59Bitcoin Holders Are More Long-Term Focused Than At Any
138、Point In HistoryDespite extreme market fear fueled by the collapse of several major crypto entities,on-chain data suggest that bitcoin holders remained focused on long-term fundamentals.$0$10$1,000$100,000024681012142010201220142016201820202022Bitcoin Price Log ScaleNumber of BTC(Millions)Bitcoin Su
139、pply Held By Long-Term Holders Hit An All Time High in 20221Long Term Holder SupplyPriceThe number of bitcoin not moved in 6 months is the threshold at which the probability of selling diminishes dramatically.At year-end 2022,long term holders owned 71%of total bitcoin supply outstanding.1 Long-term
140、 holder supply:The number of coins that last moved 155 days or longer.155 days is the threshold when the probability of a bitcoin being spent in the future diminishes substantially.Sources:ARK Investment Management LLC,2023.Glassnode,data as of 01/20/23.Forecasts are inherently limited and cannot be
141、 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.Past performance is not indicative of future results.BITCOINBIG IDEAS 2023:60Exchanges Have Increased Transparency In Response
142、 To The Collapse Of Trust In Centralized Crypto EntitiesA“run on the bank”forced a record number of exchanges to publish auditable financials and cryptographically verifiable attestations of solvency,otherwise known as“proof-of-reserves”(PoR).Exchange“PoR”Publication Year2Binance2022BitMEX2021ByBit2
143、022Coinbase32021C2022Deribit2022Gate.io2020Kraken2014Kucoin2022Luno2021OKX2014-800-40004008001,2000123420152016201720182019202020212022Annual Net Flows(Thousands BTC)BTC Balance On Exchanges(Millions)In 2022,Net Outflows From Centralized Exchanges Totaled560,000 BTC,The Largest In History1Annual Net
144、 FlowBTC Balance On ExchangesThe percent of bitcoin on centralized exchanges hit a 5-year low of 2.2 million BTC,accounting for 11.7%of circulating supply,at year-end 2022.1 Outflows from exchanges saw historical values in 2022 and so did the market share between these.For instance,Coinbase saw an i
145、ncrease of 11 percentage points in market share amongst fiat exchanges during 2022,from 29%to 40%(as per The Block),remaining as the premier regulated retail on-ramp in the US.2 The proofs-of-reserves herein vary in quality and standard.3 While Coinbase has not conducted a cryptographic proof of res
146、erves,its status as a public company requires it to publish extensive proof of solvency reporting.Sources:ARK Investment Management LLC,2023.Glassnode,data as of 01/20/23;Carter,N.2022.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be consid
147、ered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.BITCOINBIG IDEAS 2023:61Bitcoins Hash Rate Hit An All-Time High In 2022Bitcoins hash ratethe number of computations per second produced by min
148、ers and a proxy for network securityhas increased for twelve consecutive years,hitting an all-time high of 272 exahashes/second in 2022.0501001502002503002016201720182019202020212022Exahashes/SecondBitcoin Hash RateAverage Annual Hash RateHash RateSources:ARK Investment Management LLC,2023.Glassnode
149、,data as of 01/17/23.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.Past performance is not indicative of future results.BITCOI
150、NBIG IDEAS 2023:62140 125 25 -20 40 60 80 100 120 140 160 180 200Flared EmissionsVented MethaneEmissionsAnnual MethaneNeeded for CurrentBitcoin Hash RateCubic Meters(Billions)Over 265 Billion Cubic Meters Of Natural Gas1Are Wasted Each YearBitcoin Mining Is Harnessing And Containing Natural Gas Emis
151、sionsBitcoin mining is ideal for oil and gas well sites:it is distributed and highly scalable with modular hardware that can be transported to and shifted among operating well sites.Because oil and gas well lifespans often are limited,bitcoin mining could make the difference between high and low ret
152、urns on investment.Natural Gas Generator+Gas Venting0.000.020.040.060.080.100.120.140.160.180.20$-$0.02$0.04$0.06$0.08$0.10$0.12$0.14Miner Revenue/Hashrate(TH/S)Levelized Cost Of Energy($/kWh)With The Introduction Of Bitcoin Mining At Oil And Gas Well Sites,Independent Bitcoin Miners2Could Become Un
153、profitableNet Present Value Breakeven30 Day Trailing Average Miner Revenue/HashratePublic mining companiesDirectional with any carbon pricing1 Flared emissions:The wasteful burning of excess gas released during oil production.Vented methane:The intentional and controlled release of gases containing
154、alkane hydrocabrons,predominately methane,into the earths atmosphere.2 Independent bitcoin miners:Refers to mining operations that solely mine bitcoin as business model and revenue source.Forecasts are inherently limited and cannot be relied upon.Sources:ARK Investment Management LLC,2023.Chen,Y.et
155、al.2022;Glassnode,data as of 01/17/23.For informational purposes only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.BITCOINBIG IDEAS 2023:63Institutions Are Committ
156、ing To Bitcoin During A Bear MarketEntityOctober 2022:Eaglebrook Advisors and ARK Investment Management partnered to offer financial advisors access to actively-managed crypto strategies,including direct cryptoasset ownership,low minimums,and portfolio reporting integration.June 2022:BlackRocks Alad
157、din partnered with Coinbase Prime to provide institutional clients with direct access to crypto,starting with bitcoin.Connecting to Coinbase Prime,Blackrocks Aladdin could usher trillions of dollars into the asset class in the coming years.October 2022:BNY Mellon launched a cryptoasset custody platf
158、orm to safeguard assets for institutional investors.Touching more than 20%of the worlds investable assets,BNY Mellon could use bitcoin to scale financial services cost-effectively.November 2022:Fidelity officially launched retail bitcoin and ether trading accounts enabling investors to trade and cus
159、tody them on its platform.Market ValidationBlackRockEaglebrook AdvisorsBNY MellonFidelitySources:ARK Investment Management LLC,2023.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,sel
160、l,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.BITCOINBIG IDEAS 2023:64Bitcoin Is Likely To Scale Into A Multi-Trillion Dollar MarketBull0%Corporate TreasuryTAM:Cash&EquivalentsRemittance AssetTAM:Global Remittance VolumeNation State Treasury
161、TAM:Global Treasury ReservesEmerging Market CurrencyTAM:M2 Base Outside of Top 4Economic Settlement NetworkTAM:US Bank Settlement VolumesBitcoin Use CaseBearBaseDigital GoldTAM:Gold Market CapSeizure-Resistant AssetTAM:Global HNWI WealthInstitutional InvestmentTAM:Institutional Asset Base2.5%5%5%10%
162、25%0%1%5%0.5%3%10%1%5%10%1%3%5%1%2.5%6.5%20%40%50%Penetration RateARKs research estimates that the price of one bitcoin could exceed$1 million by 20301Price Target Assumptions$0$200,000$400,000$600,000$800,000$1,000,000$1,200,000$1,400,000$1,600,0002030 Bitcoin Price Target(12/31/22 to 12/31/30 CAGR
163、)$258,500CAGR:40%$682,800CAGR:60%$1.48 millionCAGR:75%2030 Price TargetBear Case2030 Price TargetBase Case2030 Price TargetBull Case1 In this years presentation of bitcoin price target,ARK has added bear,base,and bull price targets as opposed to the single price target given in 2022s Big Ideas repor
164、t.Sources:ARK Investment Management LLC,2023.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.Past performance is not indicative
165、of future results.BITCOINBIG IDEAS 2023:65Smart Contract NetworksEnabling Financial And Internet RevolutionsIn the aftermath of catastrophic failures of centralized crypto intermediaries last year,automated self-executing contracts on decentralized public blockchains offer the alternative of transpa
166、rent and non-custodial financial services.Decentralization is proving more critical to maintaining the original value proposition of public blockchain infrastructure.According to ARKs research,as the value of tokenized financial assets grows on-chain,decentralized applications and the smart contract
167、 networks that power them could generate$450 billion in annual revenue and reach$5.3 trillion in market value by 2030.Sources:ARK Investment Management LLC,2023.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be considered investment advice o
168、r a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.BIG IDEAS 202366Research by Frank Downing,Director of Research,Next Generation InternetYassine Elmandjra,Crypto LeadDavid Puell,Research AssociateOnce dominated by si
169、mple asset transfers,activity on public blockchains like Ethereum has diversified into decentralized financial services(DeFi)and the NFT-based creation and ownership of digital goods,among other applications.0%10%20%30%40%50%60%70%80%90%100%Sep-15Sep-16Sep-17Sep-18Sep-19Sep-20Sep-21Sep-22Share Of Ga
170、s Usage(Excluding Unknown Txns)Ethereum Utilization By Transaction Type1BridgesDeFiERC20MEV BotsNFTsStablecoinsETH TransfersThe Utility Of Smart Contract Networks Is Expanding And Diversifying1 30-day Simple Moving Average(SMA).Sources:ARK Investment Management LLC,2023.Glassnode,data as of 01/17/23
171、.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.Past performance is not indicative of future results.SMART CONTRACT NETWORKSBIG
172、 IDEAS 2023:67Abandoning centralized intermediaries and moving to self-custody solutions,traders increasingly favor the transparency of decentralized exchanges.Since 2020,decentralized exchange(DEX)trading volume as a percentage of total crypto trading volume has been rising.The ratio fell during th
173、e summer,perhaps as speculative trading around long-tail assets limited to DEXs died down after the collapse of Terra/Luna,Celsius,and Three Arrows Capital.After FTX collapsed in November,however,DEX market share shot up 52%,from 9%to 14%of total trading volume.0%2%4%6%8%10%12%14%16%$0$50$100$150$20
174、0$250Jan-20Apr-20Jul-20Oct-20Jan-21Apr-21Jul-21Oct-21Jan-22Apr-22Jul-22Oct-22Share Of Total Crypto Trading VolumeDecentralized Trading Volume(Billions)Decentralized Trading Volume And ShareMonthly DEX VolumeDEX Market ShareDecentralized Finance Is A Promising Alternative To Centralized Intermediarie
175、sSources:ARK Investment Management LLC,2023.The Block,data as of 01/17/23.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.Past p
176、erformance is not indicative of future results.SMART CONTRACT NETWORKSBIG IDEAS 2023:68As insolvencies mounted across crypto lending businesses like Celsius and Voyager,decentralized lending markets like Aavecontinued to operate as designed.They processed deposits,withdrawals,originations,and liquid
177、ations without service interruption.Since November 2020,Aave has processed more than$75 billion in inflows and$66 billion in outflows,all autonomously via smart contracts.Risk controls and full transparency of deposits,loans,and collateralization ratios have contributed to DeFis stability.-$80,000,0
178、00,000-$60,000,000,000-$40,000,000,000-$20,000,000,000$0$20,000,000,000$40,000,000,000$60,000,000,000$80,000,000,000-$1,000,000,000-$800,000,000-$600,000,000-$400,000,000-$200,000,000$0$200,000,000$400,000,000$600,000,000$800,000,000$1,000,000,000Nov-20Jan-21Mar-21May-21Jul-21Sep-21Nov-21Jan-22Mar-2
179、2May-22Jul-22Sep-22Nov-22Cumulative inflows/OutflowsDaily Inflows/Outflows Aave v2 Lending Market FlowsCumulative InflowsCumulative OutflowsDaily InflowsDaily OutflowsAs Centralized Crypto Lenders Failed,DeFi Lending Protocols Functioned As DesignedSources:ARK Investment Management LLC,2023.DefiLlam
180、a,data as of 01/03/23.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.Past performance is not indicative of future results.SMART
181、 CONTRACT NETWORKSBIG IDEAS 2023:69During the Merge in September 2022,Ethereum transitioned from Proof-of-Work(PoW)to Proof-of-Stake(PoS).No longer required to pay energy-intensive miners for security,Ethereum strengthened its monetary policy and reduced new token issuance.With its new token model,E
182、thereums net annual issuance has flattened and is now lower than Bitcoins 1.7%and the 4%in Ethereums prior PoW model.With the sustained network,the supply of ether will fall.02,0004,0006,0008,00010,00012,00014,00016,00018,000Jul-22Aug-22Sep-22Oct-22Nov-22Dec-22Ether Daily Issuance-0.02%1.17%0.51%-0.
183、05%0.15%0.35%0.55%0.75%0.95%1.15%1.35%Sep-22Oct-22Nov-22Dec-22Comparative Supply Growth Post MergeEthereum Net IssuanceEthereum POW Issuance*Bitcoin IssuanceThe Merge Ushered Ethereum Into A New EraThe Merge1 Token issuance is the process of creating new tokens that then are added to the total suppl
184、y of the cryptocurrency.2 Compound Annual Growth Rate(CAGR).Sources:ARK Investment Management LLC,2023.Glassnode,data as of 01/17/23.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,se
185、ll,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.1.7%CAGR4%CAGR2-0.07%CAGRPoW IssuancePoS Issuance1SMART CONTRACT NETWORKSBIG IDEAS 2023:70Once challenged by significant congestion,Ethereum has developed a solution to scaling“layer 2”networkst
186、hat is gaining meaningful traction.The number of transactions on Arbitrum and Optimism,two popular layer 2 networks,now matches that on Ethereums base layer,and the number of active addresses on each grew 11x and 19x,respectively,in 2022.0200,000400,000600,000800,0001,000,0001,200,0001,400,0001/1/22
187、2/1/223/1/224/1/225/1/226/1/227/1/228/1/229/1/2210/1/2211/1/2212/1/22Average Daily Transactions1EthereumArbitrum+Optimism010,00020,00030,00040,00050,00060,00070,0001/1/222/1/223/1/224/1/225/1/226/1/227/1/228/1/229/1/2210/1/2211/1/2212/1/22Average Daily Active Addresses1ArbitrumOptimismStill In Early
188、 Days,Ethereums Layer 2 Networks Are Beginning To Scale1 30-day Simple Moving Average(SMA).Sources:ARK Investment Management LLC,2023.Dune Analytics,data as of 01/17/23.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be considered investment
189、advice or a recommendation to buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.SMART CONTRACT NETWORKSBIG IDEAS 2023:71Concerns About Network Censorship Intensified After The MergeAs stakers prioritize convenience over decentralization,t
190、he top three staking services now account for roughly two thirds of total Ether staked.As financial incentives to maximize rewards begin to outweigh censorship resistance,Flashbots and other services that censor transactions are growing as a share of new blocks.Validator ConcentrationTransaction Cen
191、sorshipProviderStaked ETHShareLido Finance4,642,43229%Unknown3,844,57924%Coinbase2,066,97613%Kraken1,205,5368%Binance1,012,8646%Staked.us561,4084%Bitcoin Suisse459,4883%Rocket Pool410,5603%Figment396,0322%Other1,270,0328%Total14,730,023100%0%10%20%30%40%50%60%70%80%Sep-22Oct-22Nov-22Dec-22Share Of N
192、ew Blocks Proposed By Flashbots In 2022Sources:ARK Investment Management LLC,2023.Nansen,data as of 01/17/23;Flashbots,data as of 01/17/23.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be considered investment advice or a recommendation to
193、buy,sell,or hold any particular security or cryptocurrency.Past performance is not indicative of future results.SMART CONTRACT NETWORKSBIG IDEAS 2023:72On layer 1 blockchains,the percentage of token supply allocated to insidersfounding teams,private investors,and privately controlled foundations and
194、 ecosystem fundshas been increasing.Since 2017,founders have been increasing war chests to compete with incumbents,and venture capital has been investing aggressively in base layer protocols.Additionally,regulatory concerns have hindered the Initial Coin Offering as an open distribution model.Conseq
195、uently,new networks cannot claim they are sufficiently decentralized on a token holder basis and could be susceptible to pressure by insiders.0%10%20%30%40%50%60%70%80%90%100%Bitcoin-2009Stellar-2014Ethereum-2014Cardano-2017Tezos-2017Tron-2017Polygon-2019Algorand-2019Solana-2020Avalanche-2020Polkado
196、t-2020Near-2020Aptos-2022Blockchain-Year Of Last Funding RoundPercent Of Supply AllocatedTo Insiders In Notable L1 Launches True Decentralization Is More Difficult For New NetworksSources:ARK Investment Management LLC,2023.Messari,data as of 01/25/23.Forecasts are inherently limited and cannot be re
197、lied 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.Past performance is not indicative of future results.SMART CONTRACT NETWORKSBIG IDEAS 2023:73Smart contracts could facilitate the
198、 origination,ownership,and management of tokenized assets for a fraction of the cost of traditional financial services.If financial assets were to migrate to blockchain infrastructure at a rate similar to the adoption of the early internet,and decentralized financial services charged a third of trad
199、itional financial services take rates,smart contracts could generate$450 billion in annual fees and create$5.3 trillion in market value by 2030.$-$200$400$600$800$1,000$1,200202220232024202520262027202820292030Total Asset Value(Trillions)Tokenized Assets Vs.All Financial AssetsGlobal Financial Asset
200、sTokenized Assets$-$50.000$100.000$150.000$200.000$250.000$300.000$350.000$400.000$450.000$500.00020222030Fees(Billions)Fees Generated By Smart ContractsSmart Contract Networks Could Facilitate$450 Billion In Annual Fees By 2030$11B$450B5%1 Compound Annual Growth Rate(CAGR).Sources:ARK Investment Ma
201、nagement LLC,2023.Token Terminal,data as of 01/03/22;McKinsey&Company 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 or cryptocurrency.Past
202、performance is not indicative of future results.59%CAGR1SMART CONTRACT NETWORKSBIG IDEAS 2023:74Precision TherapiesPrecision therapies are patient-centric and target the root cause of disease,not symptoms.Designed using novel experimental and computational methods,precision therapies could develop f
203、aster and more cost-effectively than traditional therapies.Rapid advances in technologies like artificial intelligence(AI),DNA and RNA sequencing,CRISPR gene editing,and laboratory automation have spawned new therapies,enabling the treatment of diseases previously considered intractable.Increasingly
204、,precision therapies are becoming multiomic,with mechanisms of action spanning DNA,RNA,proteins,and more.Based on ARKs research,the enterprise value of companies focused on precision therapies could appreciate 29%at an annual rate from$500 billion in 2022 to$3 trillion by 2030.1Expanding Medicine To
205、 Treat And Cure DiseaseSources:ARK Investment Management LLC,2023.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.Past performance is not indicati
206、ve of future results.BIG IDEAS 202375Research by Ali Urman,Analyst&Pierce Jamieson,Research AssociatePharmaceuticals Need InnovationProtein(Targeted Protein Degradation)DNA(CRISPR/Cas,Base,Prime)RNA(RNA editing,ASOs,et al.)OthersInnovative Precision Therapies More Treatments For Rare DiseasesFewer O
207、ff Target EffectsMore Preselection BiomarkersBetter Safety ProfilesFaster Development TimesOthersAdvantagesModalityUnlike the last 30 years,the change in death rates associated with cancer and cardiovascular diseases during the past five years has not improved significantly,suggesting that existing
208、approaches have reached diminishing returns,as shown on the left below.Emerging precision therapy modalities could become best-in-class,lowering death rates across many diseases,including neurological,as shown on the right below.Compared to older pharmaceuticals,innovative precision therapies have a
209、dvantages that could cause significant shifts in market share.Precision therapy toolkits arebroadening with techniques that target DNA,RNA,proteins,and moregiving researchers unprecedented flexibility to tackle different diseases.Increased Likelihood of ApprovalSources:ARK Investment Management LLC,
210、2023.World Health Organization,data as of 01/17/23.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.Past performance is not indicative of future re
211、sults.-6%-5%-4%-3%-2%-1%0%1%2%1991199419972000 20032006 20092012201520182021Percent Change in Deaths/100,000 PeopleDeath Rate by Disease Area(Annual Percent Change)CardiovascularCancerNeurologicalPRECISION THERAPIESBIG IDEAS 2023:76The Central Dogma Of Biology The central dogma describes the flow of
212、 information through biologicalsystems.With DNA as the template,our cells transcribe RNA molecules,which translate into proteins.DNA mutations migrate through thisprocess,sometimes producing dysfunctional proteins.Although proteinsare the main causes of disease,scientists can target any moleculeDNA,
213、RNA,or proteinswith precision therapies.We believe that more therapeutic targets could result in better healthoutcomes for patients.Cell NucleusCell MembraneDNARNAProteinSources:ARK Investment Management LLC,2023.Malone,C.2007.Forecasts are inherently limited and cannot be relied upon.For informatio
214、nal purposes only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.DNARNAPROTEIN77PRECISION THERAPIESBIG IDEAS 2023:77DNARNAPROTEINInnovative Therapies Are Targeting Each Part Of The Ce
215、ntral DogmaResearchers can target DNA1using gene editing to cure or prevent heart disease,silence RNA2to control polyneuropathy,and degrade proteins3to limit the growth of tumors.DNA Editing Is Preventing Cardiovascular Disease in Non-Human Primates(NHPs)VERVE-101 is a gene editing therapy for the t
216、reatment of hypercholesterolemia under clinical investigation by Verve Therapeutics.RNA Silencing Is Reversing Neurological DiseasesDeveloped by Alnylam Pharmaceuticals,Patirisanwas approved recently by the FDA for hATTRAmyloidosis leading to polyneuropathy.Targeted PROTEIN Degraders Inhibit Tumor G
217、rowthIbrutinib is a small molecule drug for treatment of several cancer types.NX-2127 is Nurix Therapeutics targeted protein degrader currently under clinical investigation.-80%-60%-40%-20%0%20%0200400Percent Change in LDL CholesterolDays Post TreatmentControlVERVE-101-10-50510152025303501020Percent
218、 Change In SeverityMonths Post-TreatmentPlaceboPatirisan0100200300400500-551525Tumor Size(mm3)Days Post TreatmentIbrutinibNX-2127Sources:ARK Investment Management LLC,2023.1 Musunuru,K.et al.2021;2 Adams,D.et al.2018;3 Robbins,D.et al.2020.DNARNAPROTEINPRECISION THERAPIESBIG IDEAS 2023:78Gene Editin
219、g Is Close To CommercializationGene editingthe ability to modify,insert,or delete genescould stop disease at its source.Gene editing-based therapies are in the clinic for rare diseases,neurology,oncology,ophthalmology,among others.For some diseases,an ex-vivo approach modifying a patients cells outs
220、ide the body and then transplanting them back is sufficient.More versatile,an in-vivo approach modifies a patients cells inside the body.In-vivo gene editing should be more cost-effective and easier to manufacture and scale and will expand access to the liver,eye,central nervous system(CNS),and musc
221、les.Gene-editing clinical trials could triple by the end of the decade,accelerating the first product approvals,as shown in the lower chart.Sources:ARK Investment Management LLC,2023.Biomedtracker,data as of 01/17/23.Forecasts are inherently limited and cannot be relied upon.For informational purpos
222、es only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.DNARNAPROTEIN0255075100Rare DiseaseNeurologyOncologyMetabolic/DiabetesOpthalmologyHematologyMusculoskeletalInfectiousRespiratory
223、ImmunologyCardiovascularDermatologyNumber Of Active TrialsGene-Editing Trials by Disease Area(Year-End 2022)Ex VivoIn Vivo0510150200400600800100012002015201620172018201920202021202220232024202520262027202820292030Projected Number Of Gene Editing Product Approvals(Dash)Number Of Active Trials Using G
224、ene Editing(Bars)Number of Gene-Editing Trials and Product ApprovalsPRECISION THERAPIESBIG IDEAS 2023:79Gene editing therapies could command a median price of$2.5 million dollars,and much more for certain indications.Indeed,a recently approved gene therapy for Hemophilia B costs$3.5 million per dose
225、.ARKs base case forecast for gene editing revenue is$30 billion,though approvals for diseases like Type 1 diabetes could scale the category to$60 billion by 2030.Gene-Editing Therapies Could Command Premium Pricing$0$10$20$30$40$50$60$70$80202420272030Gene Editing Annual Revenue(Billions)Gene Editin
226、g Revenue Projections*BaseHigh*Forecast assumes that the annual direct cost associated with treating these diseases is between$15,000-$34,000 and the age range of patients is 20-50 years.Payers may consider indirect costs,such as quality of life and/or lost labor,which could drive reimbursement high
227、er.To arrive at the total cost of treatment,we average annual direct costs of treatment by the years treated.For a potential cure we assume a median of the approved drugs.Sources:ARK Investment Management LLC,2023.Irvine,A.2019.Forecasts are inherently limited and cannot be relied upon.For informati
228、onal purposes only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.DNARNAPROTEIN$1,352,736$2,363,641$5,780,000$28,500,000$-$5,000,000$10,000,000$15,000,000$20,000,000$25,000,000$30,000
229、,000Sickle CellHereditary AngioedemaMucopolysaccharidosis Type IIHemophiliaLifetime Direct Cost of Treatment for Hereditary DisordersPRECISION THERAPIESBIG IDEAS 2023:80RNA-Based Therapeutics Are Gaining TractionRNA-based medicines alter the structure,function,quantity,or localization of RNA and/or
230、other molecules.This class ofmedicine can treat”undruggable”targets.While traditional small molecule therapies target the active binding site of aprotein,only 14%of proteins have such sites.RNA-based medicines could help close this gap.1During the past 20 years,the number of annual RNA patent grants
231、 has increased 10-fold and the number of RNA-based therapies in clinical pipelines has more than quintupled to 500.0100200300400500600199520002005201020152020RNA-Based Therapies By Clinical StageClinical Pipeline of RNA-Based Therapies Over TimePreclinicalPhase 1Phase 2Phase 301,0002,0003,0004,0005,
232、0006,0007,0008,0001990199520002005201020152020Number of Patents Granted per YearRNA Technology Patents Granted Over TimeSources:ARK Investment Management LLC,2023.Clarivate,data as of 01/17/23;Biomedtracker,data as of 01/17/23.Forecasts are inherently limited and cannot be relied upon.For informatio
233、nal purposes only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.DNARNAPROTEINPRECISION THERAPIESBIG IDEAS 2023:81RNA-Based Therapeutics Should Lower Costs and Improve Time To MarketT
234、raditional clinical development costs,including the cost of failures,have averaged$2 billion over ten years,before anycommercialization costs.Thanks to recent multiomic breakthroughs like next generation sequencing,CRISPR gene editing,andartificial intelligence,drug failure rates and commercializati
235、on timelines are likely to decline.Compared to other modalities,the production of RNA-based therapeutics is faster and less expensive.RNA-based development,including failures,averages five years and costs$1.25 billion,compared to small molecule and antibody trials that average 10years and cost more
236、than$2 billion.Years0510152025Clinical Development Time by Therapeutic Class*AntibodySmall MoleculeRNA-Based*This is a box and whisker plot used to display data that includes error bars.Sources:ARK Investment Management LLC,2023.Wouters,O.et al.2020;Brown,D.et al.2021;Lindeborg,R.et al.2021.Forecast
237、s 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.Past performance is not Indicative of future results.DNARNAPROTEIN$0$500$1,000$1,500$2,000$2,500$3,000$3,5
238、00AnyRNA-BasedMillionsCost of Clinical DevelopmentPRECISION THERAPIESBIG IDEAS 2023:82Targeted Protein Degraders(TPD)Could Treat Many Diseases83Targeted Protein Degraders(TPDs)leverage the bodys system to lower the number ofdisease-causing misfolded proteins.TPDs have doubled the number of druggable
239、proteins and are in the clinic for oncology,autoimmune,and fibrotic diseases,sometimes in combination with cell therapies.During the period of 2015-2020,the number of TPD patent publications increased ten-fold.According to our research,88%of TPD trials are in early phases,and the number ofTPD licens
240、ing deals has increased more than 10-fold to 50+.05010015020025030020002002200420062008201020122014201620182020Number of PublicationsTPD Patent PublicationFirst TPD complex crystal structure$-$1,000$2,000$3,000$4,000$5,000$6,000$7,00001020304050602015201620172018201920202021Capital Invested(Millions
241、)Number of Licensing DealsCumulative Investment in the Targeted Protein Degrader SpaceLicensing DealsTotal Invested0510152025IND-ePhase 1Phase 2Phase 3Number of Clinical TrialsMaturity of TPD Clinical LandscapeSources:ARK Investment Management LLC,2023.Koppal,T.2020;Nasir,M.et al.2022;Biomedtracker,
242、data as of 01/17/23;Samarasinghe,K.et al.2021;Bks,M.et al.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.Past performance is not indicative
243、of future results.DNARNAPROTEINPRECISION THERAPIESBIG IDEAS 2023:83TPD Therapy Could Address The“Undruggable ProteomeTargeted Protein Degraders(TPDs)have more than doubled the number of druggable human protein targets.One TPD molecule can degrade hundreds of target proteins(iterative mechanism of ac
244、tion)over its lifetime,whereas traditional small molecule inhibitors can target only one.As a result,TPDs have a very attractive safety profile relative to small molecules.Benefit of Therapeutic ModalitySmall-Molecule InhibitorsTPDsPotential to Treat Undruggable ProteinsNoYesIterative Mechanism of A
245、ctionNoYesOrally BioavailableYesYesEase of ManufacturingYesYesPreclinical ValidationYesYesClinical ValidationApprovedPhase 2More Than Half of Protein Targets Under Investigation Are TPD-EnabledTargets Under Investigation(TPD-Enabled)Targets Under Investigation(Non-TPD-Enabled)Targets With An Approve
246、d Drug(Not TPDs)Remaining Targets(n=24,000)Sources:ARK Investment Management LLC,2023.Biomedtracker,data as of 01/17/23.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 an
247、y particular security.Past performance is not indicative of future results.DNARNAPROTEINPRECISION THERAPIESBIG IDEAS 2023:84Innovation Is Key To The Efficiency Of Research And Development85ARK Big Ideas 2023In our view,innovative precision therapies are undervalued,with a more attractive risk-adjust
248、ed net present value(rNPV)relative to large pharmaceutical companies that focus on traditional therapeutics like small molecules.Based on our research,the total enterprise value of innovative precision therapy companies should appreciate at a 29%compound annual growth rate(CAGR)from$500 billion in 2
249、022 to$3 trillion by 2030.*”Progress-normalized”refers to the average completeness(preclinical registration)of the clinical programs in the sampled datasets*Progress-Normalized.Sources:ARK Investment Management LLC,2023.Biomedtracker,data as of 01/17/23.Forecasts are inherently limited and cannot be
250、 relied upon.For informational purposes only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.DNARNAPROTEIN0%1%2%3%4%5%6%7%$0$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000$9,000$10,00
251、0$11,000$12,000Percentage of Candidate Drugs in PipelinerNPV of Sales(Millions)Innovative Drugs Offer More Attractive Risk-Adjusted NPVsProbability(Conventional)Probability(Innovative)$-$100$200$300$400In Vivo Gene EditingEx Vivo Gene EditingTargeted ProteinDegradersInnovative(Average)Large Cap Smal
252、lMoleculeMarket-Implied rNPV/Program(Millions)The Market Ascribes Little Value to Innovative Therapeutics Relative to Traditional MedicinesPRECISION THERAPIESBIG IDEAS 2023:85Molecular Cancer DiagnosticsTransforming Biological Signals Into Better Patient OutcomesNext-generation sequencing(NGS)costs
253、have collapsed,making molecular diagnostic tests more feasible and turbocharging our understanding of tumor biology.1By leveraging artificial intelligence(AI),cancer diagnostics labs have created less invasive tests like liquid biopsies to supplement tissue biopsies.2As proof of clinical utility acc
254、umulates,ARK estimates that the total addressable market(TAM)for molecular cancer diagnostic tests in the US is$95 billion,its revenue increasing more than 20%annually during the next five to ten years,from$5 billion in 2022 to$24 billion in 2030.Moreover,the collective enterprise value of molecular
255、 cancer testing companies should expand at a similar rate from$30 billion in 2022 to$145 billion in 2030.Sources:ARK Investment Management LLC,2023.1 Wetterstrand,K.2021;2 ASCO,data as of 01/19/23.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should n
256、ot be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.BIG IDEAS 202386Research by Simon Barnett,Director of Research,Life SciencesCancer Could Be The Next Victory In Public HealthSince 1990,while the ag
257、e-adjusted mortality rate for cardiovascular diseases has dropped more than 50%,1that for cancer has declined only 19%.2Alongside improved therapies,emerging diagnostics could result in a dramatic drop in cancer mortality.The need to focus on cancer has never been greater,especially because the COVI
258、D-19 pandemic severely disrupted cancer care,causing patients to miss more than 30 million screenings and 60,000 diagnoses.35%-26%-50%-40%-30%-20%-10%0%10%20%Pre-Pandemic 3/1/206/1/209/1/2012/1/203/1/216/1/219/1/21Percent Change in Volume Relative to Pre-PandemicCOVIDs Impact on Global Oncology Prac
259、tices3Cancer Screening(US)Oncology Visits(Global)-58%-19%-70%-60%-50%-40%-30%-20%-10%0%1991199419972000200320062009201220152018Age-Adjusted Change in Mortality Rate(Annual Deaths/100,000 People)Progress Fighting Cardiovascular Diseases and Cancer1,2Cardiovascular Disease(s)CancerSources:ARK Investme
260、nt Management LLC,2023.1 Mensah,G.et al.2017;2 Roser,M.et al.2019;3 IQVIA Inc 2022.For informational purposes only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.MOLECULAR CANCER DIAG
261、NOSTICSBIG IDEAS 2023:87Distant(Metastatic)17%of Cases55%of DeathsRegional24%of Cases28%of DeathsLocalized59%of Cases17%of Deaths0%10%20%30%40%50%60%0%10%20%30%40%50%60%70%Percentage of Cancer Deaths After Five YearsPercentage of Diagnoses Per YearAdvanced Cancers Account For The Minority of New Cas
262、es But Cause the Majority of Deaths2Diagnostics+Therapeutics Should Reduce Cancer MortalityWe believe next-generation diagnostics and therapeutics will work togetherto lower cancer mortality.1Advanced cancers account for only 17%of new diagnoses each year but 55%of deaths after five years.The import
263、ance of early detection is clear.2Molecular testing is a prerequisite for precision therapy.The tests surfacetumor-specific mutations,also called biomarkers,which point oncologiststowards specific treatments.Evidence suggests that biomarkers improve trial success rates,3so mostoncology clinical tria
264、ls now include molecular biomarkers.405001000150020002500300035002000200120022003200420052006200720082009201020112012201320142015201620172018201920202021Clinical Trial StartsThe Majority of Oncology Clinical TrialsUse Molecular Biomarkers43 Biomarkers2 Biomarkers1 Biomarker0 BiomarkersSources:ARK In
265、vestment Management LLC,2023.1 Mensah,G.et al.2018;2 National Cancer Institute,data as of 01/19/23;3 Parker,J.et al.2021;4 Vadas,A.et al.2021.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be considered investment advice or a recommendation
266、to buy,sell,or hold any particular security.Past performance is not indicative of future results.MOLECULAR CANCER DIAGNOSTICSBIG IDEAS 2023:88The Molecular Cancer Testing Market Segments By“Tumor Burden”1.Hereditary Cancer Testing2.Cancer ScreeningSurgery and First-Line Treatment3.Prognostics4.MRD T
267、esting4.Repeat MRD Testing(Recurrence Monitoring)Second-Line Treatment4.Long-Term Recurrence Monitoring5.Therapy Selection TestingThird-Line TreatmentTumor Burden(ctDNA Fraction)Time This image is not drawn to scale.The relationship between tumor burden and time is meant to be purely illustrative,no
268、t representative of a specific data set.The Molecular Testing Landscape is Governed by a Patients Tumor BurdenPrimaryRemissionRelapseSources:ARK Investment Management LLC,2023.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be considered inve
269、stment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.MOLECULAR CANCER DIAGNOSTICSBIG IDEAS 2023:89Molecular cancer tests examine biological samples like blood or tissue and use techniques like next-generation sequencing to
270、 transform biological information into digital information.Among the categories of molecular cancer testing are:(1)hereditary cancer testing,(2)screening,(3)prognostics,(4)minimal residual disease(MRD),and(5)therapy selection.Tumor burden is a rough proxy for cancers severity,typically quantified by
271、 the amount of circulating tumor DNA(ctDNA)in a patients bloodstream.Using this framework,we segment the cancer testing market,as shown below.Multiomics Is Powering Screening Tests For The Deadliest Cancers 012345671E-071E-061E-051E-041E-031E-02Tumor Diameter at 80%Detection Sensitivity cmSequencing
272、 Error Rate*1E-03 means 1-in-1,000 bases is incorrect.DNA Mutations Alone are Insufficient to Screen for Most Stage 1 Cancers Economically1LungColorectalBreast-10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000LD-CT OnlyLD-CT+LiquidBiopsyCancers Detected Through ScreeningBlood-Based Tests Could
273、 ImproveLung Cancer Screening3LocalRegional$-$2$4$6$8$10$12$14$16$18LD-CT OnlyLD-CT+LiquidBiopsyAverage Cost to Detect Lung Cancer(Thousands$)Blood-Based Tests Could Lower the Average Cost of Detecting Lung Cancer3Blood-based testing should improve patient adherence to cancer screening guidelines.2P
274、owerful tests focused on lethal cancers,like pancreatic,are likely to proliferate during the next five years.With currently available data,blood-based screening should increase early-stage lung cancer detection by six-fold.3,4Improved cancer detection,in turn,should lower average detection costs.Non
275、-invasive tests like Cologuard are supplementing standard-of-care screening technologies,a trend that should accelerate.Sequencing ctDNAmutations alone does not detect early-stage cancers reliably.1Even extremely accurate ctDNA sequencing methods struggle to find cancers until they are 1-2 cm in dia
276、meter,as shown below.1Multiomics tests incorporating other circulating cancer signalslike DNA fragmentation patternsenable better performance.LD-CT=Low-Dose CT ScanSources:ARK Investment Management LLC,2023.1 Avanzini,S.et al.2020;2 Bokhorst,L.et al.2015;3 Mathios,D.et al.2021;4 Zhao,Y.et al.2011.Fo
277、recasts 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.Past performance is not indicative of future results.MOLECULAR CANCER DIAGNOSTICSBIG IDEAS 2023:90$1
278、$10$100$1,000$10,000201420162018202020222024Unit COGS Required to Reach 50%Test Sensitivity(Stages I-III)Already Profitable,MCED Tests Are Becoming More Cost-Efficient Historical$500 Reimbursement Threshold2024 EstimateMulticancer Earlier Detection(MCED)Tests Are Cancer Moonshots$(50)$50$150$250$350
279、203040506070Incremental Cost Per Life-Year Added(Thousands)Age at First Screening$500 MCED Tests Could Be Cost-Effective For Adults Aged 4575$2,000 Test$500 Test$50K/Life-Year Reimbursement ThresholdUnlike single-cancer tests,multi-cancer earlier detection(MCED)tests detect many forms of cancer from
280、 a single blood draw.Based on current performance data,payors could reimburse MCED tests at$500 for adults aged 45-75.1A prerequisite for broad adoption,national reimbursement could take nearly a decade.2At full adoption today,MCED could reduce cancer mortality by 15%.The cost-of-goods-sold(COGS)for
281、 an MCED test has fallen 90%over the pastfive years,resulting in positive gross profit at a$500 reimbursement price.Test designs are becoming more efficient,giving MCED companies the ability toadd more sensitivity and/or profitability for each incremental dollar in cost.Inour view,vendors will opt f
282、or the former.Sources:ARK Investment Management LLC,2023.1 Rowland,T.et al.2022;2 Grail,data as of 01/19/23.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
283、 security.Past performance is not indicative of future results.MOLECULAR CANCER DIAGNOSTICSBIG IDEAS 2023:91Blood-Based Testing Could Revolutionize The Treatment Of Early-Stage Cancer0%20%40%60%80%100%0510152025303540Fraction of Patients with Relapse-Free Survival(%)Months Since RandomizationctDNA S
284、tatus is an Excellent Predictor of Relapse-Free Survival for Multiple Cancers3ctDNA PositivectDNA Negative92%94%28%15%0%20%40%60%80%100%Standard-of-CarectDNA-GuidedFraction of Patients(%)ctDNA-Guided Cancer Care Achieved Comparable Survival Rates While Halving The Percent of Patients On Chemo4With R
285、elapse-Free Survival After 24 MonthsReceiving ChemotherapyHistorically,oncologists have used a metric called minimal residual disease(MRD)the amount of cancer remaining in the body after treatmentto guide treatment for liquid tumors like multiple myeloma.1Solid tumors,which constitute 90%of annual d
286、iagnoses,require deep,expensive sequencing,making solid tumor MRD testing prohibitively expensive,until recently.2Thanks to less expensive sequencing techniques,oncologists now test solid tumor patients not only with imaging but also with molecular MRD.ctDNA can predict relapse-free survival,helping
287、 patients avoid unnecessary chemotherapy.3,4Sources:ARK Investment Management LLC,2023.1 Rawstron,A.et al.2015;2 Haque,I.et al.2018;3 Natera,Inc,data as of 01/19/23;4 Tie,J.et al.2022.For informational purposes only and should not be considered investment advice or a recommendation to buy,sell,or ho
288、ld any particular security.Past performance is not indicative of future results.MOLECULAR CANCER DIAGNOSTICSBIG IDEAS 2023:92Highly Sensitive Technologies Can Detect The Recurrence Of Cancer1 Mutation10 Mutations10,000 Mutations0%100%10-210-310-410-510-6Detection Probability(%)*Tumor Fraction*At 2,0
289、00 genome equivalents of DNA in the blood sample;*For example,10-4 means 100 ctDNA parts-per-million(PPM)MRD Panels Will Broaden and Improve as NGS Costs Decline3Time Tumor Burden(ctDNA Fraction)SurgeryContemporary MRD tests can assess response to therapy.Below a tests Limit of Detection(LoD),the pr
290、obability of false negatives increases.Highly-sensitive MRD tests can spot relapses below traditional limits of detection.Limit of DetectionFollowing successful treatment,ctDNA levels can drop far below the limit at which MRD tests can detect cancer(LoD:Limit of Detection)roughly 10 ctDNA parts per
291、million molecules.1LoD is an obstacle more common in early-stage tumors or in cancers like breast that shed little ctDNA.2New MRD tests can measure thousands of ctDNA mutations,increasing the sensitivity of detection by an order of magnitude3and helping to assess tumor reactions to treatment.4While
292、broad based MRD panels have been prohibitively expensive,competition is driving down the cost of DNA sequencing dramatically,increasing access to highly sensitive MRD tests.5Sources:ARK Investment Management LLC,2023.1 Personalis Inc,data as of 01/19/23;2 Avanzini,S.et al.2020;3 Zviran,A.et al.2020;
293、4 Abbosh,C.et al.2017;5 Rusinek,I.et al.2022.For informational purposes only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.MOLECULAR CANCER DIAGNOSTICSBIG IDEAS 2023:930%20%40%60%80%
294、100%Fraction of PatientsBlood-Based Therapy Selection Is An Alternative for Patients with Insufficient Tissue1Passing FilterFailing Filter27%73%RescuedStill Below FilterTherapy Selection Tests Add More Content And Sample TypesDesigned for patients with more advanced cancers,therapy selection tests s
295、urface cancers molecular drivers.While more mature than other molecular diagnostics,therapy selection tests are adding more sample types like blood,1more genes,and more analytes like RNA,increasing patient access and the probability of matches to targeted therapies or clinical trials.2,3For most sol
296、id tumor indications,therapy selection is likely to become standard of care,with adoption potentially doubling from 25%in 2022 to more than 50%in 2030.5%29%66%RNA Sequencing Discovers 29%More Fusion Targets Than DNA Sequencing Alone3DNA AloneRNA AloneSharedPassing filter means a patient has sufficie
297、nt,high-quality tumor tissue for molecular testing.RNA fusions are a class of druggable targets for cancer therapies.Sources:ARK Investment Management LLC,2023.1 Mackay,M.et al.2022;2 Raval,A.2022;3 Michuda,J.et al.2022.Forecasts are inherently limited and cannot be relied upon.For informational pur
298、poses only and should not be considered investment advice or a recommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.0%10%20%30%40%50%60%Small PanelComprehensive PanelFraction of PatientsComprehensive Therapy Selection Tests Surface More Acti
299、onable Information for PatientsClinically Actionable BiomarkerClinical Trial EligibilityMOLECULAR CANCER DIAGNOSTICSBIG IDEAS 2023:94Sizing The OpportunityCancer has galvanized demand for powerful diagnostics and therapeutics.Thanks to rapid cost declines,particularly in sequencing,molecular methods
300、 for screening,diagnosing,risk-stratifying,and monitoring cancer are translating into clinical practice.According to our research,the total addressable market(TAM)for molecular diagnostics is roughly$95 billion in the United States alone.Molecular cancer diagnostics revenues are likely to grow faste
301、r than 20%per year,from$5 billion today to more than$24 billion in 2030.Collectively,the enterprise value for molecular cancer testing companies should compound at a similar rate,growing from$30 billion in 2022 to$145 billion in 2030.$-$5,000$10,000$15,000$20,000$25,000$30,00020222030Annual Revenue(
302、Millions)Molecular Oncology Testing Revenue ShouldGrow 20%Annually Through 2030 and BeyondHereditary Cancer TestingCancer ScreeningMolecular PrognosticsMinimal Residual DiseaseTherapy Selection$95B Total Addressable Market(US)$5B in 2022$24B in 2030Sources:ARK Investment Management LLC,2023.Forecast
303、s 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.Past performance is not indicative of future results.MOLECULAR CANCER DIAGNOSTICSBIG IDEAS 2023:95Electric
304、 VehiclesDefying The Skeptics With Exponential Growth Investors once questioned whether the future was electric.Demand for EVs has scaled despite a pause in cost declines caused by commodity price shocks.Now investors doubt whether or not the growth will be exponential.The debate around electric veh
305、icles has shifted from demand to supply.Based on Wrights Law,ARK forecasts that EV prices will decline and sales will increase more than 7-fold,or 50%at an annual rate,from roughly 7.8 million in 2022 to 60 million units in 2027.The biggest downside risks to our forecast are supply constraints that
306、could continue to impact pricing and the speed at which traditional automakers transition to electric vehicles.Sources:ARK Investment Management LLC,2023.Forecasts are inherently limited and cannot be relied upon.For informational purposes only and should not be considered investment advice or a rec
307、ommendation to buy,sell,or hold any particular security.Past performance is not indicative of future results.BIG IDEAS 202396Research by Sam Korus,Director of Research,Autonomous Technology&RoboticsElectric Vehicle Sales Continue To Take Share*The charts“Gas-Powered”category includes hybrid vehicles
308、.Sources:ARK Investment Management LLC,2023.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.Past performance is not indicative of future results.-
309、1.2%-7.2%-16.0%1.7%-6.9%69%18%33%112%62%-40%-20%0%20%40%60%80%100%120%20182019202020212022ePercent Change Year Over YearGrowth In Global Vehicle Sales*Gas-PoweredElectricELECTRIC VEHICLESBIG IDEAS 2023:97At a historical auto industry capital efficiency of$14,000 per unit capacity,the annualized$600
310、billion earmarked for EV investment would equate to 43 million units in annual production per year.If all automakers were to realize the capital efficiency associated with EVs,$600 billion would accommodate 86 million units,approaching total auto production today.Global Automakers Have Increased Inv
311、estment Plans For EVs And Batteries More Than 10-Fold Over The Past Four Years43 86 -10 20 30 40 50 60 70 80 90 100$14,000$7,000Units(Millions)Cost Per Unit of Production CapacityAnnual EV Production CapacitySources:ARK Investment Management LLC,2023.Lienert,P.2022;Lienert,P.et al.2021;Lienert,P.201
312、8;White,J.et al.2017.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.Past performance is not indicative of future results.$0$200$400$600$800$1,000
313、$1,200$1,400201820212022BillionsGlobal Automaker Investment Plans for Electric Vehicles and Batteries Over The Next Ten YearsEV InvestmentEV and Battery InvestmentELECTRIC VEHICLESBIG IDEAS 2023:98The largest cost component of an EV is its battery,the declining cost of which will be critical to reac
314、hing sticker-price parity with gas-powered vehicles.According to Wrights Law,for every cumulative doubling in the number of units produced,battery cell costs will fall by 28%.Despite the recent commodity spikes and associated battery price increases,this relationship should persist over the long ter
315、m.At a lower production base,lithium iron phosphate cells could accelerate the cost and price declines.Wrights Law Has Modeled The Decline In Battery Costs Accurately And Points To LFP*Cells As The Dominant Chemistry*Lithium iron phosphate(LFP).Sources:ARK Investment Management LLC,2023.Forecasts ar
316、e 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.Past performance is not indicative of future results.$1$10$100$1,000$10,000 100,000 1,000,000 10,000,000 100,0
317、00,000 1,000,000,000 10,000,000,000$/kWhCumulative kWhBattery Cost DeclineNickel CellsLFP CellsNickel ForecastLFP Forecast-5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000LFPNickelUnitsEV Units Necessary for a Cumulative Doubling of ProductionELECTRIC VEHICLESBIG IDEAS 202
318、3:99ARK believes that an EV charging rate is a good proxy for overall performance,capturing the efficiency,range,and power capabilities of the system.In the past four years,charging rates have improved nearly three-fold,from 40 to 15 minutes for 200 miles of range.During the next five years,it could
319、 drop nearly four-fold to 4 minutes.As EV charging reaches an acceptable rate,ARK expects the industry to optimize for other features like autonomous driving,safety,and entertainment.Wrights Law Points To Faster EV Charging RatesSources:ARK Investment Management LLC,2023.Forecasts are inherently lim
320、ited 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.Past performance is not indicative of future results.19151999201820212022:15 min to charge 200 miles2027 Forecast:4 minutes to
321、 charge 200 miles 0.00.11.010.0100.0 1 100 10,000 1,000,000 100,000,000Miles of Range/MinuteCumulative Electric Vehicle ProductionEV Charging RatesHistorical Data Points2027 ForecastELECTRIC VEHICLESBIG IDEAS 2023:100$25,000$40,000$55,000$70,000$85,000$100,000$115,000$130,000$145,0002012201320142015
322、2017201820192020202120222023Transaction PriceNew-Vehicle Transaction Price(Average)Least Expensive EV With 300 Mile RangeNo EVs with 300 Mile RangeEVs Have Hit Price-Parity With Gas-Powered Vehicles*Model Year 2016-2022.Sources:ARK Investment Management LLC,2023.Kane,M.2022.Forecasts are inherently
323、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.Past performance is not indicative of future results.02468101214162016201720182019202020212022Number of Light-Duty ModelsMo
324、dels Of Light-Duty Electric Vehicles In The USWith Range 300 Miles*TeslaFordBMWRivianLucidKiaHyundaiMercedesGMCTesla Model 3ELECTRIC VEHICLESBIG IDEAS 2023:101Forecast Future Tesla Model2012201620210%10%20%30%40%50%60%70%80%90%100%$0$20$40$60$80$100$120Dark Teal:Global Revenue Share Addressable by M
325、SRP Light Teal:Global EV Market Share2021$ThousandsElectric Vehicle Revenue Market Share Vs.Prices2021 Global Revenue Share of All Autos Addressable by MSRPGlobal EV Market Share by Average MSRPBattery Cost Declines Should Continue To Drive Exponential Growth in EV SalesEV Price 2027(ARK Model)Sourc
326、es:ARK Investment Management LLC,2023.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.Past performance is not indicative of future results.ELECTRI
327、C VEHICLESBIG IDEAS 2023:102In 2017,ARK forecasted that global sales of EV with 200+mile range would approach 17 million in 2022.A global pandemic,supply challenges,commodity price spikes,and the consumer preference for longer ranges limited unit sales to 8 million,still 4-times the consensus estima
328、te in 2017.In other words,ARKs forecast was off by 45%,but the consensus estimate was off by 400%.Now,look at the difference in forecasts for 2027.Will EVs be 25%or 65%of total auto sales?Although EV Sales Have Scaled Exponentially,The Consensus Forecast Is LinearSources:ARK Investment Management LL
329、C,2023.Irle,R.2022;Bloomberg Finance L.P.,data as of 01/19/23.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.Past performance is not indicative o
330、f future results.1234567892010201120122013 2014 2015 2016 20172018 2019 2020 2021 2022Units(Millions)Global EV Adoption Curve In 2017Historical EV Sales Prior to 2018EV Sales From 2019 Through 2022Consensus Forecast In 2017Linear(Trajectory)10203040506070201020112012201320142015201620172018201920220
331、21202220232024202520262027Units(Millions)Global EV Adoption Curve In 2022Historical EV Sales Prior To 2023EV Adoption Forecast From 2023 Through 20272027 Consensus ForecastLinear(Trajectory)ELECTRIC VEHICLESBIG IDEAS 2023:103By 2027,auto buyers probably will conclude that used cars or new EVs will m
332、ake more economic sense than new ICE vehicles.If so,the drop in ICE vehicle sales could set in motion a death spiral for many incumbent automakers.In response to falling prices,consumers could delay EV purchases or purchase used cars at the expense of new internal combustion cars.Internal Combustion
333、 Engine(ICE)Vehicles Are Likely To Lose Significant ShareSources:ARK Investment Management LLC,2023.Irle,R.2022;S&P Global,data as of 12/29/22.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.Past performance is not indicative of future results.10
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