In a surprising move, ARK Invest has reduced its exposure to the first U.S. bitcoin futures ETF, BITO, and increased its stake in its own innovation-focused ETF, ARKK. According to data from ARK’s daily trading activity, the firm sold $42.8 million worth of BITO shares and bought $62.3 million worth of ARKK shares in the last week.
This decision may indicate that ARK is more confident in the long-term prospects of its own portfolio of disruptive companies than in the short-term performance of bitcoin futures. BITO, which launched in October 2021, tracks the price of bitcoin futures contracts rather than the spot price of bitcoin itself. This means that it is subject to contango, a situation where futures prices are higher than spot prices, which can erode returns over time.
ARKK, on the other hand, invests in companies that are expected to benefit from technological innovation across various sectors, such as Tesla, Shopify, Roku, Coinbase and Spotify. ARK’s founder and CEO, Cathie Wood, has been a vocal proponent of bitcoin and has predicted that it will reach $500,000 in the next five years.
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However, she has also stated that she prefers to invest in companies that are building on top of the blockchain technology rather than in bitcoin itself.
By selling BITO and buying ARKK, ARK may be signaling that it sees more value and growth potential in its own ETF than in a bitcoin futures ETF that may not fully capture the upside of the cryptocurrency market.
ARK may also be taking advantage of the recent dip in ARKK’s price, which has fallen by about 20% since the start of the year, amid rising interest rates and market volatility. ARK may be betting that its ETF will rebound strongly as the innovation cycle continues and its holdings deliver on their promises.
Celo developers evaluating proposals for migration to become Ethereum layer 2.
Celo is a blockchain platform that aims to create a more inclusive and accessible financial system for everyone. Celo leverages a proof-of-stake consensus mechanism, a native stablecoin (cUSD), and a mobile-first approach to enable fast and low-cost transactions, as well as decentralized applications (DApps) that can reach billions of users.
However, Celo also faces some challenges in terms of scalability, interoperability, and security. As the demand for Celo’s services grows, so does the need for higher throughput, lower latency, and greater compatibility with other blockchains. Moreover, Celo has to ensure that its network remains secure and resilient against potential attacks or failures.
One possible solution to these challenges is to migrate Celo to become a layer 2 solution on top of Ethereum. Layer 2 solutions are protocols that run on top of an existing blockchain (layer 1) and provide additional functionality or performance improvements. By becoming a layer 2 solution, Celo could benefit from Ethereum’s network effects, security guarantees, and ecosystem of tools and developers.
However, migrating Celo to become a layer 2 solution is not a trivial task. It requires careful evaluation of various technical, economic, and social factors. For instance, Celo would have to decide which layer 2 protocol to adopt, how to ensure compatibility with its existing features and users, how to manage the transition process and governance, and how to deal with potential trade-offs or risks.
To address these issues, Celo developers are currently evaluating different proposals for migration to become Ethereum layer 2. These proposals include:
Optimistic rollups: A layer 2 protocol that uses fraud proofs to verify transactions on the layer 1 chain. Optimistic rollups can achieve high scalability and low latency, but also require complex dispute resolution mechanisms and incur high withdrawal costs and delays.
ZK-rollups: A layer 2 protocol that uses zero-knowledge proofs to verify transactions on the layer 1 chain. ZK-rollups can achieve high scalability and low latency, but also require advanced cryptographic techniques and incur high computation costs.
Plasma: A layer 2 protocol that uses exit games to verify transactions on the layer 1 chain. Plasma can achieve high scalability and low latency, but also require users to monitor the network and challenge invalid exits or withdrawals.
State channels: A layer 2 protocol that uses off-chain communication and signatures to verify transactions between participants. State channels can achieve high scalability and low latency, but also require users to lock up funds and be online at all times.
Each of these proposals has its own advantages and disadvantages, as well as different implications for Celo’s vision and values. Celo developers are carefully weighing the pros and cons of each option, as well as soliciting feedback from the community and stakeholders. The goal is to find the best solution that can enhance Celo’s performance, security, and interoperability, while preserving its mission of creating a more inclusive and accessible financial system for everyone.