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

Description of INJ

History of INJ

Injective is a unique layer-one blockchain built for finance, known for its robust, decentralized financial modules and interoperability. It's a smart contract-enabled platform using the Cosmos SDK with a Tendermint PoS consensus mechanism, enabling instant transaction finality and high transaction throughput.

What is INJ used for

INJ, the native utility token of Injective, is integral to the network's governance, security, and operability. It empowers community members to participate in governance decisions, validate transactions, engage in burn auctions, and contribute to the network's PoS security. INJ also plays a crucial role in incentivizing developers and securing the decentralized applications within the ecosystem.

How INJ works

Injective facilitates advanced DeFi applications, offering infrastructure primitives like a decentralized on-chain orderbook resistant to MEV. It supports various financial markets and a cross-chain bridging infrastructure compatible with major networks. Its smart contract platform, based on CosmWasm, further enhances interchain capabilities, backed by a robust community and prominent investors.

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 INJ. 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 INJ below.

INJ relation to the Cosmos Network  

Although Injective is a Layer-1 network, it is heavily intertwined with the Cosmos Network. Injective was developed using the Cosmos SDK, and it utilizes CosmWasm for its smart contract and dApp development on the network. CosmWasm was originally developed for the Cosmos ecosystem but has evolved to be used with other IBC-compatible networks. While INJ tokens and the Injective blockchain are not reliant on the Cosmos network as an ERC-20 token is reliant on the Ethereum network, there are still clear links between Injective and Cosmos as explained above. This relation between the two networks could have the potential to impact the market price of either asset based on news or movements in the other asset. Potential investors should be aware of the link between Injective and Cosmos and consider this when evaluating INJ for investment.  

INJ relation to the Ethereum Network 

The INJ ERC20 token that is offered by Bitbuy is dependent on the stability and security of the Ethereum Mainnet. Any fundamental issues with this network could impact the value of ERC20 INJ, or the operation of the Injective Hub bridge which allows the interconversion of the ERC20 token with the native INJ blockchain asset.

INJ Burning  

Injective employs a mechanism whereby 60% of all fees from dApps are entered into a buy-back-and-burn event. In these events, the basket of fees, which is typically comprised of various assets, is auctioned off to the highest bidder in exchange for INJ tokens. The proceeds of the auction (the INJ tokens) are then burned, which reduces the total supply of INJ. On June 6, 2023, the official Injective Twitter account posted, saying that Injective had the highest burn rate in crypto and that nearly 5.7 million INJ tokens had been burned to date. Potential investors should be aware of the deflationary impact of burning, and also be aware that there has been increasing regulatory scrutiny from the United States SEC on tokens that employ a burning mechanism.  

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

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