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

Description of HBAR

History of HBAR

Leemon Baird, the co-founder of Swirlds Inc. and a former Computer Science Professor, founded Hashgraph technology in 2016. However, the project "Hedera Hashgraph" was launched in 2018 in partnership with Mance Harmon, who helped Leemon develop the proof of concept, commercialize Hashgraph to implement in private businesses, and battle-test it in permissioned environments.

The new form of distributed ledger technology promised to process upwards of 2,510,000 transactions per second. This is in stark contrast to blockchains that were struggling to process even 10 or 20 transactions per second at that time.

In 2017, Swirlds raised its seed investment round to bootstrap the development of Hedera. A year later, the project's mainnet went live. Hedera Governing Council now includes over seventeen companies, including Boeing, Google, IBM, Tata Communications, and LG Electronics, to name a few.

The native token of Hedera Hashgraph, HBAR was launched in Sep 2019.

What is HBAR used for

The Hedera Hashgraph protocol comprises four primary services which work together to allow the transfer of value, the development and deployment of smart contracts, and file transfers. The platform also offers consensus services for getting quick, fair, and secure consensus in any application built on top of Hedera Hashgraph.

The network uses a utility token called HBAR, which fuels services like smart contracts, transactions, and file storage. The token also helps secure the network as token holders can stake their tokens to maintain the integrity of the network. Furthermore, HBAR holders can use it to access Hedera Hashgraph-based distributed application.

How HBAR works

Hedera Hashgraph works on two protocols called "Gossip about Gossip" and "Virtual Voting" to achieve speed, efficiency, and high security.

The platform's governance works uniquely. It is divided into two tiers: Open Consensus and The Governing Board. The Open Consensus governs how nodes can connect to become part of Hedera's hashgraph. The Governing Board, on the other hand, is a centralized control system.

To access distributed apps on Hedera, developers need HBAR tokens to pay for network services. Nodes can also use HBAR for staking and get compensation for providing bandwidth, compute, and storage.

HBAR has a maximum supply of fifty billion units. About two billion HBAR tokens are allocated to its two founders over a six-year vesting schedule.

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 HBAR. 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 HBAR 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 HBAR. You should also do your own research on HBAR to make sure you are comfortable investing in such a crypto asset.

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

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