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

Description of LINK

History of LINK

ChainLink's origin can be traced back to 2014 when Steve Ellis and Sergey Nazarov founded its parent company SmartContract. They aimed to bridge the gap between blockchains and external data sources. In 2017, they developed ChainLink to address the problem — of relying on third parties for external data—in Smart Contracts' original oracle.

ChainLink held an ICO in Sep 2017 and raised $32 million.

What is LINK used for

The first of its kind, ChainLink, is used for providing information from off-blockchain resources to on-blockchain smart contracts via oracles.

The LINK token is used for paying Node operators on the off-blockchain architecture, and its value depends on the number of operators working on the network.

ChainLink’s growth has been directly proportional to its partnership with some of the industry’s big names, including Google, Oracle, Dapps Inc., Matic, and Reserve.

How LINK works

ChainLink works by connecting the internal blockchain system of the network to external applications. One end of ChainLink is connected to the blockchain, and the other end is integrated with an API. The base of the solution is built on oracles to limit the trust in a single party to work seamlessly in a decentralized infrastructure.

Its core function depends on both, off-chain and on-chain capabilities. The on-chain architecture is developed on the Ethereum blockchain, whereas off-chain architecture has nodes connected to reserves via APIs to gather responses. Both the architectures interact with each other to execute contracts. The off-chain data is translated by ChainLink’s software in a way that it can be read on-chain, too.

The nodes have to stake LINK tokens which could be forfeited upon providing bad data. Unlike Bitcoin, it is not possible to mine LINK. Instead, users can earn LINK by contributing to the ChainLink’s network.

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 LINK. These risks include: (i) short history; Like other crypto assets, there are some general risks associated with investing in LINK. 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 LINK below.

Concentration and Supply

The largest LINK addresses hold a very large portion of the LINK currently outstanding. The actions of these significant holders of LINK could have an impact on LINK’s valuations. It should also be noted that a large portion of LINK’s total supply of one billion tokens is not currently in circulation.

LINK’s Dependence on the Chainlink Network and Ethereum Blockchain

The strength of LINK is heavily dependent on the strength of the Chainlink Network. If Chainlink were to experience a serious issue, LINK’s price could be severely impacted in a negative way. 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.

While we have tried to describe the key risks associated with LINK 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 LINK. You should also do your own research on LINK to make sure you are comfortable investing in such crypto assets.

Regulatory Information  

Ndax is offering Crypto Contracts in accordance with the terms of a pre-registration undertaking dated March 23, 2023, that we entered into with the Canadian securities regulators, while our application for registration in certain Canadian jurisdictions is reviewed. Please note that Ndax is not currently registered under securities or derivatives legislation of Canada and there is no guarantee that registration will be granted.  

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

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