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

Description of ALGO

History of ALGO

Algorand was founded in 2017 by the Turing Award winner and MIT Professor, Silvio Micali, who had been involved in cryptography since the 1980s. Silvio initially started researching blockchain technology in 2015 when he came across Bitcoin and noticed some of its shortcomings.

Algorand is composed of a company and a foundation. Algorand Foundation manages ecosystem growth, award funding, cryptographic research primitives, on-chain governance, and decentralization of the Algorand network, including nodes. The core development of the Algorand protocol is overseen by Algorand Inc., a private corporation based in Boston. The Algorand test network was launched to the public in April 2019, and the main network was launched in June 2019.

What is ALGO used for

Algorand created the world’s first pure proof-of-stake foundational blockchain designed for the future of finance. Beyond the elementary requirement of an open, public network, Algorand’s technology enables a set of high-performing Layer-1 blockchains that provide security, scalability, complete transaction finality, built-in privacy, Co-Chains, and advanced smart contracts that are essential in a FutureFi world. The platform has been used in real estate, copyright, microfinance, and more.

The ALGO is the native cryptocurrency of the Algorand blockchain and has a maximum supply of 10 billion. It can be used for buying and selling goods or services, as well as micropayments, and staking rewards. As part of Algorand’s unique protocol design, the rewards paid to validators for producing blocks are split and distributed among all ALGO coin holders, rather than being awarded only to block producers.

How ALGO works

Algorand has a unique two-tiered blockchain structure. The base layer supports smart contracts, asset creation, and atomic swaps between assets. All of these processes take place on Layer 1 of the Algorand blockchain, which helps ensure security and compatibility.

The second layer of Algorand is reserved for more complex smart contracts and dApp development. It’s this bifurcation of the network, between Layer 1 and Layer 2, that allows Algorand to process transactions so efficiently.

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

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