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

Description of LTC

History of LTC

Litecoin (LTC), like many other altcoins, was developed to tackle the shortcomings of the first cryptocurrency, Bitcoin. It takes approximately 10 minutes to mine one new block of transactions on the Bitcoin network. Litecoin was proposed as a Bitcoin spinoff that would increase the transaction speed and solve the network’s scalability issue.

Charles Lee, a crypto pioneer and a former Google and Coinbase employee, launched Litecoin in 2011. Litecoin was able to reduce the block confirmation time from 10 minutes to only two and a half minutes.

What is LTC used for

Litecoin (LTC) has the same use cases as the first and the largest cryptocurrency, Bitcoin. It is a global peer-to-peer payment network that uses LTC as its native currency. Anyone on the internet can use Litecoin to make fast and secure payments without relying on a bank or financial service provider. Today, many online as well as brick-and-mortar stores accept Litecoin payments.

How LTC works

Similar to Bitcoin, Litecoin runs on the proof-of-work consensus protocol. However, it uses the Scrypt hash algorithm instead of SHA-256 to increase the transaction speed of LTC.

Litecoin has a limited supply of 84 million LTC coins. New coins are mined with every new block of transactions that is added to the network. At launch, the Litecoin network offered 50 LTC to the miners who mined the blocks.

But the network automatically halves the mining rewards after every 840,000 new blocks, which happens approximately every four years. The network will continue to halve the rewards until all 84 million coins are mined.

As of December 2020, the network rewards 12.5 LTC for every new block. The next halving, expected to occur in August 2023, will further reduce the rewards to 6.25 LTC.

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 LTC. 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 LTC below.

Concentration of LTC Holdings

The largest LTC addresses hold a very large portion of the LTC currently outstanding. Market volatility may result when large holders of LTC decide to sell significant amounts of their LTC positions.  

Decrease in Block Reward

A LTC halving is an event where the block reward for mining new LTC is halved, meaning that LTC miners will receive 50% less LTC for every transaction they verify. LTC halving occurs every 840,000 blocks, which equates to a halving occurring approximately once every 4 years. In 2019, a LTC halving occurred which reduced the amount of LTC miners receive from 25 LTCs per block to 12.5 LTCs per block. Some miners left the LTC network after this halving. Another halving event is scheduled to occur in 2023. If the LTC network lacks miners to develop the network, processing speeds may decrease and the network may be more vulnerable to security threats (such as a 51% attack).

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

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