AAVE - Crypto Asset Statement
PLEASE READ THIS CAREFULLY. BY PROCEEDING TO TRANSACT IN AAVE, YOU ACKNOWLEDGE AND ACCEPT THE STATEMENTS SET OUT BELOW.
About this Summary
Ndax believes that our users should understand the crypto assets that they are able to trade and stake using our crypto trading platform (the “Platform”). One of the crypto assets we offer on the Platform is AAVE. We created this summary to help you understand the basics of AAVE as well as some of the risks involved in trading it. While we tried to describe the key features of AAVE here, this summary isn’t meant to tell you everything you’d want to know before investing in AAVE. You should also do your own research on AAVE to make sure you are comfortable investing in it.
Description of AAVE
History of AAVE
The origins of AAVE can be traced back to the year 2017 when its founder Stani Kulechov and a team of developers got together to take on the DeFi world. The idea was to create a decentralized platform that allows users to lend and borrow cryptocurrencies. This project was initially called ETHLend. The firm managed to raise $16.2M in an initial coin offering (ICO), during which it sold 1B of its native crypto tokens called LEND. After this initial high, however, ETHLend started to spiral down due to lack of liquidity and difficulties processing loan requests. So, the founders revamped the entire platform and launched AAVE in January 2020.
What is AAVE used for
Anyone can use AAVE to lend and borrow cryptocurrencies without the need for middlemen. There are 24 different ERC-20 tokens to choose from, and the lenders on this platform can earn interest on their crypto deposits.
AAVE is the protocol’s native token and it is quite crucial to the functioning of the platform. Token holders can participate in the governance of the platform by voting on proposals that direct its future course. Apart from this, they also get a fee discount while using the platform.
How AAVE works
Instead of directly matching lenders to borrowers like ETHLend, the revamped AAVE platform follows a different approach.
Lenders on this platform deposit the funds they wish to lend to other users. These funds are then collected into liquidity pools. Borrowers can draw from these pools by locking collateral greater than the amount they wish to borrow. The borrowers pay a rate of interest and the lender receives interest on their funds.
Lenders on this platform receive aTokens (AAVE interest bearing tokens). These tokens can be stored and traded. They have a value equivalent to the tokens deposited and can be redeemed on a 1:1 basis.
Risks
Before entering into an agreement (a “Crypto Contract”) with Ndax to buy or sell any crypto assets through the Platform, it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
Like other crypto assets, there are some general risks associated with investing in AAVE. We describe many of these general risks in the risk statement we publish on our website that you have already acknowledged, including risks relating to: (i) short history; (ii) volatility in the price of crypto assets and loss of liquidity; (iii) potential decrease in global demand for crypto assets; (iv) The blockchains on which crypto assets operate may temporarily or permanently fork or halt; airdrops; (v) issues with the cryptography underlying the Crypto networks; (vi) custodial wallet systems; (vii) uncertainty in regulation and future financial institution support; (viii) currency risks; (ix) concentration risks; (x) electronic trading and dependence on the internet; (xi) cyber security risks; (xii) inadequate due diligence; (xiii) Ndax’s reliance on vendors and third-party service providers; (xiv) liquidity constraints; (xv) no voting rights; (xvi) lack of investor protection insurance; (xvii) commissions and other charges for trading; (xviii) no advise; (xix) transfers; (xx) beta features; (xxi) unforeseeable risks; and (xxii) conflicts of interest. We also point out a risk that is specific to AAVE below. While we tried to describe the key risks associated with AAVE here and in our risk statement, these aren’t all of the risks associated with trading in AAVE. You should also do your own research on AAVE to make sure you are comfortable investing in it.
AAVE’s Dependence on the AAVE Protocol and Ethereum Blockchain
The price of AAVE is heavily dependent on the strength of the AAVE Protocol. As a result, the risks associated with the AAVE Protocol also comprise risks to AAVE itself. The specific risks facing the AAVE Protocol (as a decentralized lending platform), which include market risk and oracle risk, are highly technical in nature. We encourage you to consult AAVE’s website, where they publish a risk framework which sets out and explains those risks, and also explains how the AAVE Protocol functions to address those risks. The AAVE Protocol relies on the Chainlink Network to help protect against oracle risk.
Also, as Chainlink runs on the Ethereum blockchain, if Ethereum were to crash or experience serious issues, LINK’s price could also be negatively impacted.
Flash Loans
The AAVE Protocol facilitates “flash loans”, which do not require upfront collateral and are instantly issued. Flash loans have previously been used to execute attacks on lending systems built on the Ethereum network. These attacks have resulted in large quantities of deposits being stolen. The AAVE Protocol relies on the Chainlink Network to help protect against the risk of flash loans.
Conflict of Interest Disclosure
Ndax has assessed potential conflicts of interest associated with the offering, and ongoing availability of AAVE through the Platform. As of the date of this statement, Ndax has not identified any actual, material, or reasonably foreseeable conflict of interest that would be expected to impair our ability to act in the best interests of clients or to make fair, objective, and independent decisions regarding AAVE. Ndax maintains policies and procedures designed to identify, manage, and address conflicts of interest on an ongoing basis and will update our disclosures if any material conflict is identified in the future. For additional information about the material conflicts of interest identified by us, please refer to our Conflicts of Interest Statement, the latest version of which can be found on our Website.
Regulatory Information
Ndax is a registered investment dealer under securities legislation in all provinces and territories of Canada, and is a member of the Canadian Investment Regulatory Organization (CIRO) and of the Canadian Investor Protection Fund (CIPF). Ndax is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re NDAX Canada Inc. dated December 19, 2024 (found here) and under the terms and conditions imposed by CIRO on Ndax’s membership with CIRO (found here). Any fiat currency held in users’ accounts is protected by CIPF’s Investment Dealer Fund in accordance with its Coverage Policy. However, CIPF coverage does not extend to any virtual assets held in users accounts. These assets are not eligible for deposit insurance or any protection from the Canada Deposit Insurance Corporation (CDIC) or CIPF.
Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada do not apply in respect of a misrepresentation in this Crypto Asset Statement.
Prior to offering a Crypto Contract on AAVE, Ndax assesses whether AAVE is a security and/or a derivative under the securities and derivatives laws of Canada. Ndax’s assessment includes a review of the history of AAVE (such as how it was created and its governance structure), its characteristics, its market capitalization and any regulatory concern regarding AAVE. Based on its assessment, Ndax concluded that AAVE is not a security or a derivative. However, there is a risk that this conclusion could change in the future. In that case, Ndax may be required to halt or withdraw AAVE from trading on the Platform and stop any future trading of Crypto Contracts based on AAVE, and users holding AAVE may be required to liquidate their positions, potentially at a significant loss. In this event, users holding positions in AAVE will be notified via the Platform or other electronic means and advised of the options available to them and any applicable period to sell or withdraw their positions in AAVE.
No Canadian securities regulatory authority has expressed an opinion about AAVE, including an opinion that AAVE is not itself a security and/or derivative.
Last Updated: August 10, 2026