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

Description of NEAR

History of NEAR

NEAR started as a machine learning project before it became a blockchain development platform. Former Google exec Illia Polosukhin and Alexander Skidanov, who was a lead engineer at MemSQL, started NEAR.ai in 2017.

Researching program synthesis led the team to explore programmable smart contract platforms and crypto payments. Realizing that the current state of blockchain tech didn’t meet their needs, Illia and Alex gathered a team of engineers and began building NEAR Protocol in August 2018 with the vision of offering developers an easy path to building decentralized applications that can scale to mass usage.

The network launched in April 2020, became community-operated in September 2020 and passed a vote to enable token transfers in October 2020.

What is NEAR used for

NEAR Protocol is a decentralized application (dApp) platform being built by the NEAR Collective, a worldwide community of researchers, developers, and thinkers that focuses on developer and user-friendliness. Its native NEAR tokens are used to pay for transaction fees and storage on the Near crypto platform.

Building a “base-layer blockchain,” or a layer-one, makes Near similar to the same level of the ecosystem as projects like Ethereum or Cardano. By doing so, everything in the ecosystem is built on top of the NEAR blockchain, including all developer applications.

How NEAR works

Unlike most blockchain-based platforms, NEAR is built from the ground up to be the easiest in the world for developers and their end users, while still providing the scalability and security needed to serve those users. Specifically, NEAR is designed to make it easier to build decentralized applications, onboard users with a smooth experience, and scale applications seamlessly.

NEAR uses a technology known as Nightshade to achieve its massive throughput capabilities. The scaling solution sees individual sets of validators process transactions in parallel across multiple sharded chains to improve the overall transaction carrying capacity of the blockchain. This solution differs somewhat from the sharding system used by other blockchains, in that each shard produces a fraction of the next block—known as a "chunk". These are processed and immutably stored on the NEAR blockchain to finalize transactions contained within.

Certain Staking Services Terms Applicable to NEAR

You can cancel your opt-in to the staking services for any crypto-asset within the first four hours of your initial opt-in.

In addition to the other staking terms that you agree to when you opt-in to our staking services, please consult the table below for additional terms that currently apply to the staking service for NEAR at this time. Note that the annual percentage yield (“APY”) is an estimate, and terms are subject to change. All terms in effect are maintained on our website. 

Example: If you have 100 coins staked at 3% APY, the gross reward will be 3 coins for the year. Ndax will earn a fee of 20%, in this case, 0.6 coins, and 2.4 coins will be credited to your account based on the payout frequency.

For purposes of the above table:

• “Instant Redemption” may be available for flexible plans on a first come, first serve basis, subject to availability. If elected, your opt-out is effective immediately, and you are not entitled to any rewards generated within the reward period. This is subject to Ndax liquidity management provisions to fulfill client instructions to sell or transfer crypto assets prior to the Unbonding Period.
• “Standard Redemption” means that your opt-out is delayed for the period of time indicated in the above table, but you collect any rewards generated up to and including those generated within the reward period.
• “Ndax Admin Fee” refers to the percentage fee on the total amount of the reward generated through staking.
• “Bonding Period” refers to the amount of time it takes before you begin to generate staking rewards for that crypto asset from the time you have started staking.
• “Unbounding Period” refers to the amount of time you need to hold your eligible staked crypto assets after opting-in to the staking service before you are able to opt-out.

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 crypto assets.

Like other crypto assets, there are some general risks associated with investing in NEAR. 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 NEAR 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 NEAR. You should also do your own research on NEAR to make sure you are comfortable investing in such crypto asset.

Risks Specific to Staking NEAR  

• In addition to the risks described above, prior to staking NEAR, you acknowledge that:  
• given the volatility of crypto assets, the value of your staked NEAR when you sell or withdraw it, and the value of any reward you earn through staking, may be significantly less than their current value;    
• there is no guarantee that you will receive any reward on staked NEAR;    
• past rewards are not indicative of expected future rewards;  
• the rewards you are entitled to may be changed at the discretion of NDAX;  
• you may lose all or a portion of your staked NEAR if the validator does not perform as required by the network; and  
• additional risks can be found in the Risk Statement.  

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

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