About this Summary

Ndax Canada Inc. (“Ndax”, “we” and “our”) 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 ARB. We created this summary to help you understand the basics of ARB as well as some of the risks involved in trading in ARB. While we tried to describe the key features of ARB, this summary isn’t meant to tell you everything you’d want to know before investing in ARB. You should also do your own research on ARB to make sure you are comfortable investing in it.

Description of ARB

History of ARB

The Arbitrum project was established in 2018 by a group of computer scientists and entrepreneurs, including Ed Felten, Harry Kalodner, and Steven Goldfeder. Offchain Labs, a blockchain research and development firm, initially incubated the project.

Following his tenure as Deputy CTO at the White House during the Obama administration, Felten returned to Princeton University to resume his research and be a professor. There, he collaborated with two of his Ph.D. students, Kalodner and Goldfeder, to build Offchain Labs.

In May 2021, Offchain Labs launched the mainnet beta version of Arbitrum One for developers. The "soft launch" aimed to ensure that dApp clients would have a seamless onboarding experience before public users' funds were at stake. By August 2021, over 400 dApps had been onboarded, making Arbitrum one of the most prominent Ethereum L2 scaling solutions and the largest optimistic L2 by TVL.

What is ARB used for

• The ARB token is the native token of the Arbitrum network. ARB is used for:
• Paying transaction fees on the network
• Rewarding validators for participating in network consensus
• Staking (to secure the network) and block reward remuneration
• Governance, allowing holders to vote on proposals and changes to the network

How ARB works

1. Arbitrum has an ‘inbox’ that receives transaction requests from users and smart contracts; it acts as the blockchain’s ‘to-do’ list.
2. Arbitrum outputs a transaction receipt once transactions are processed.
3. Arbitrum utilizes an approach known as optimistic rollups to process transactions, which are denoted as their 'chain state' in Arbitrum's ecosystem. This involves aggregating Ethereum transactions into optimistic rollup packets and settling them on a sidechain. This results in a streamlined, efficient, light transaction data package reported back to Ethereum.

What’s special about an optimistic rollup?

Rollup technology compresses multiple transactions (off-chain) into one transaction (on-chain) to enhance a network’s speed, congestion, efficiency, etc.

An optimistic rollup assumes all transactions are valid before validating, ‘rolling them up’, and settling them on the Ethereum main chain. (As opposed to its better-known counterpart, the ZK–or zero knowledge–rollup)

In optimistic rollups, validators can contest transactions through a dispute resolution mechanism after the fact if they suspect fraudulent behavior. This is in contrast to zero knowledge rollups, which do not require a dispute resolution mechanism as they validate transactions before consolidating them.

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 ARB. Each of these risks is described in more detail in the Risk Statement provided to you at the time that you open your account with us and is also available online on the Ndax website and app. You should review the Risk Statement.  

While we have tried to describe the key risks associated with ARB here and in our Risk Statement, we emphasize that this Crypto Asset Statement is not exhaustive of all of the risks associated with trading in ARB. You should also do your own research on ARB to make sure you are comfortable investing in such a crypto asset.

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 accordance with the terms of the Decision Document dated December 19, 2024 that we entered into with the Canadian securities regulators. Any fiat currency held in user's accounts are protected by the CIPF's Investment Dealer Fund in accordance with its Coverage Policy. However, CIPF coverage does not extend to any virtual assets held in user's accounts. These assets are not eligible for deposit insurance or any protection from the Canada Deposit Insurance Corporation (CDIC) or CIPF.

The statutory rights of action for damages and the right of rescission in securities legislation of each province and territory of Canada would not apply in respect of a misrepresentation in this Crypto Asset Statement.

Prior to offering a Crypto Contract on ARB, Ndax assesses whether ARB 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 the ARB (such as how it was created and its governance structure), its characteristics, its market capitalization, and any regulatory concerns regarding ARB. Based on its assessment, Ndax concluded that ARB 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 ARB from trading on the Platform and stop any future trading of Crypto Contracts based on ARB, and users holding ARB may be required to liquidate their positions, potentially at a significant loss. In this event, users holding positions in ARB 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 ARB.

No Canadian securities regulatory authority has expressed an opinion about ARB, including an opinion that ARB is not itself a security and/or derivative.