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

Description of AXS

History of AXS

The game is the brainchild of Vietnamese startup Sky Mavis. The game studio developed Axie Infinity with the aim of creating a future where work and pay go hand in hand. In 2020, the developer launched the game’s governance token called Axie Infinity Shards (AXS). The token allows users to vote on key decisions.

What is AXS used for

Axie Infinity Shard (AXS) is an ERC-20 governance token of the Axie Infinity ecosystem launched in November 2020. AXS holders can receive rewards for playing/breeding, voting, and staking the token and will get paid dividends from Axie Infinity's community treasury.

AXS rewards are given out to the top-ranking players after each season.

How AXS works

Axie Infinity Shards (AXS) are the glue that binds all Axie community members together. Axie Infinity has two in-game currencies, Small Love Potion (SPL) and Axie Infinity Shard (AXS). SPL is used for trading Axies and can be converted into real-life money. AXS, in turn, is a proposed governance token. When implemented, it will allow players to have a say in game development.

In addition to being a governance token, the AXS coin also lets holders stake and receive AXS rewards. Rewards come from the Community Treasury, which is filled by marketplace fees and in-game purchases.

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 AXS. 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.

In addition to the general risks set out in the Risk Statement, we also point out other specific risks to AXS below.

AXS’s Dependence on the Ethereum Network

As an ERC-20 token, the strength of AXS is dependent on the strength of the Ethereum network. If the Ethereum network were to experience a serious issue, AXS’s price could decline significantly.

AXS’s Dependence on Axie Infinity

The success of the AXS is predicated on individuals choosing to play Axie Infinity. While Axie Infinity has seen significant user engagement, there is no guarantee that interest in the game will continue at current levels. The price of AXS is likely to decline if Axie Infinity declines in popularity.

While we have tried to describe the key risks associated with AXS 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 AXS. You should also do your own research on AXS 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 the 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 AXS, Ndax assesses whether AXS 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 AXS (such as how it was created and its governance structure), its characteristics, its market capitalization, and any regulatory concerns regarding AXS. Based on its assessment, Ndax concluded that AXS 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 AXS from trading on the Platform and stop any future trading of Crypto Contracts based on AXS, and users holding AXS may be required to liquidate their positions, potentially at a significant loss. In this event, users holding positions in AXS 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 AXS.

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