61 Monolithic Chains Like Solana Offer An Alternative To Vertical Scaling Smart contract network designs offer tradeoffs. By prioritizing base-layer decentralization, the Ethereum ecosystem became more complex as it scaled. By prioritizing scalability in a single layer, Solana maintained a simple architecture for users and app developers and has gained traction. Vertical Scaling Horizontal Scaling DAPP 1 DAPP 2 DAPP 3 … DAPP 1 DAPP 2 DAPP 3 … S T C A R T L2 L2 L2 N … O Arbitrum Optimism Base C T R A SM L1 L1 Ethereum Solana +Minimizes L1 validation cost - Requires asset bridging between L1 +Simplifies the environment for - Raises L1 validation costs and L2, fragmenting liquidity developers and users +Supports multiple approaches for - Increases complexity for developers +Maximizes composability and - Potentially requires L2s to scaling, encouraging flexibility & and users interoperability maximally scale innovation +Leverages the network effect and - Introduces additional reliability and + Lowers fees and increases - Requires apps depend L1 execution liquidity advantages of Ethereum security considerations across L2s throughput for base layer environment mainnet transactions Sources: ARK Investment Management LLC, 2024. This ARK analysis is based on a range of underlying data from external sources, which are available upon request. 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.