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1. Tesla’s New Mobile App Facilitates the Handoff of Virtual Car Keys

A Tesla software update is stirring speculation that it is planning a ride-hailing network. The update appears to enable Tesla owners to allow multiple drivers access to their cars through the mobile app, which was previously only possible through the website.

ARK has detailed how Tesla could launch a competitive and profitable human-driven ride-hail service before rolling out an autonomous taxi network. Such a strategy could add a tremendous amount of training data to its autonomous neural network and lay the groundwork for the routing and payment infrastructure necessary for an autonomous ride-hail service.

While its unclear that this update signals greater car-sharing or ride-hailing ambitions, it could allow family members, car renters (think Turo), and/or professional ride-hail drivers to share virtual keys. Facilitating the hand-off of virtual keys could help increase the utilization of Tesla vehicles – one step toward transforming the personal car from a stranded asset into a revenue generating machine.

 

2. The Invalidation of an Illumina Patent Could Increase Competition in Next-Generation Sequencing

Last week, a California judge invalidated Illumina’s (ILMN) ‘444 patent, inviting increased competition from the Beijing Genomics Institute (BGI). Based on Illumina’s patent protection, BGI has not been able to access the US market with fluorescently-labeled DNA bases that are used during sequencing. The patent invalidation may give BGI the green light to sell sequencing instruments with its own CoolMPS chemistry in the US as soon as August of 2022, increasing competition and, in all likelihood, accelerating the cost declines in next-generation sequencing (NGS).  Illumina is likely to appeal the decision.

Based on our research, BGI’s NGS technology compares favorably to that of Illumina in terms of cost, throughput, and accuracy. Even if BGI does not take significant share, customers probably will leverage the potential competition to demand lower sequencing prices and erode the 80%+ gross margins associated with Illumina’s reagents and other consumables.

BGI is not the only competition. Nascent NGS competitors like Singular Genomics (OMIC) have circumvented the ‘444 patent by in-licensing a different set of nucleotide bases. Without the threat of patent litigation, the number of new NGS companies could increase, stimulating further innovation, lowering costs, and benefitting researchers, sequencing providers, and patients.

 

3. BadgerDAO Hack Highlights the Risks in Decentralized Finance

BadgerDAO is a protocol on the Ethereum network that deploys strategies to maximize the yield on Wrapped Bitcoin, a tokenized form of BTC on smart contracting blockchains like Ethereum. Last week, despite multiple audits and a successful track record, BadgerDAO suffered a hack that cost users $120 million, the fourth largest decentralized finance (DeFi) loss on record.

Unlike most DeFi hacks that target bugs in smart contract code, the BadgerDAO hack targeted the centrally-hosted website through which most users engage with the underlying protocol. By manipulating the user interface, hackers tricked users into approving malicious transactions, allowing the thieves to direct funds into their own accounts instead of BadgerDAO’s. This type of attack illustrates the risk of central points of failure even in protocols built on decentralized base layers. Even savvy users with insurance policies that protect against smart contract risks are likely to lose, as front-end attacks are considered “user errors” not covered by their policies.

Nearly half the stolen BTC belonged to Celsius, a centralized crypto lending platform that has attracted almost $30 billion in assets under management with high yields––6% on BTC and 10% on stablecoins. The hack is likely to attract further regulatory scrutiny by those seeking to rein in crypto lending.