Hyperliquid (HYPE) Crypto Asset Statement

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

Description of HYPE

History of HYPE
HYPE is the native token of Hyperliquid, a purpose-built layer-one blockchain designed to support fully on-chain spot and perpetual futures order books through “HyperCore” and a general-purpose smart contract execution environment through “HyperEVM.” Hyperliquid publicly introduced HYPE through a late-2024 genesis event that emphasized community distribution, and public reporting described the launch as having no allocations for private investors, centralized exchanges, or market makers. Public materials and third-party reporting have described HYPE as having a maximum supply of 1,000,000,000 tokens, with allocations including a genesis distribution, future emissions and community rewards, and allocations for core contributors and a foundation budget.

What is HYPE used for
HYPE is used as the native staking token on HyperCore and as the native gas token on HyperEVM. Holders may delegate HYPE to validators in Hyperliquid’s delegated proof-of-stake system in order to support network security and earn staking rewards sourced from the protocol’s future emissions reserve. HYPE is also used operationally within HyperEVM to pay transaction fees for smart contract activity. More broadly, HYPE is tied to the network’s economic design because Hyperliquid’s documentation describes fee flows that direct value to the community through mechanisms such as protocol vaults and an assistance fund that converts certain trading fees into HYPE and burns those tokens.

How HYPE works
Hyperliquid operates as a custom layer-one blockchain using a consensus mechanism called HyperBFT, with execution split between HyperCore and HyperEVM. HyperCore handles the on-chain spot and perpetual order books, where every order, cancel, trade, and liquidation is intended to happen transparently on-chain with one-block finality. HyperEVM is secured by the same consensus and uses HYPE as its native gas token. HYPE can be transferred between HyperCore and HyperEVM through protocol-defined mechanics, and on the EVM side it is received as the native gas asset rather than as an ERC-20 token. Within staking, HYPE may be delegated to validators, who become active once they meet the protocol’s self-delegation requirement; delegators are subject to a one-day lockup and a seven-day unstaking queue back to spot balance. Staking rewards accrue frequently and are automatically redelegated. Hyperliquid’s documentation also states that certain trading fees are converted into HYPE through the assistance fund and that the HYPE held there is burned, reducing circulating and total supply.

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 HYPE. Each of these risks are 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 HYPE below.

Specific risks associated with HYPE may include smart contract risk, layer-one risk, market liquidity risk, and oracle manipulation risk, all of which are expressly identified in Hyperliquid’s own documentation. Hyperliquid also relies on bridge infrastructure and associated smart contracts for certain asset movements, which means a bridge exploit or other failure could affect user funds or overall system integrity. In addition, Hyperliquid’s architecture is specialized for on-chain financial markets, and liquidation mechanics may behave differently during periods of high volatility or on highly leveraged positions. From a governance and staking perspective, HYPE holders rely on a delegated proof-of-stake validator set, and although validators may be jailed for non-performance or poor responsiveness, Hyperliquid’s staking documentation states that there is currently no automatic slashing implemented generally at the protocol level. HYPE is also exposed to ecosystem and market-structure risk because its value is tied not only to general crypto market conditions but also to the adoption and stability of the Hyperliquid exchange and developer ecosystem. Finally, while Hyperliquid has disclosed a bug bounty program and has published bridge-contract audit materials, the publicly available audit coverage described by the project is limited in scope and should not be interpreted as a comprehensive review of the entire ecosystem

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

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

Last Updated: 9/25/2025