Polygon (POL) - Crypto Asset Statement

PLEASE READ THIS CAREFUL. BY PROCEEDING TO TRANSACT POL, YOU ACKNOWLEDGE AND ACCEPT THE STATEMENTS SET OUT BELOW.

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

Description of POL

History of POL

Founded in 2017, the Polygon Network is the brainchild of developers Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun. Before its rebranding to Polygon, the project was called Matic Network, and it was a massive contributor to the Ethereum ecosystem. 

Matic Network was a side chain solution that used Plasma technology to process transactions off-chain before sending them off to the Ethereum mainnet. The main aim was to decrease the load on the mainnet, increase its efficiency, and, therefore, increase its scalability. 

Revamped in 2019, the present-day Polygon is a full-fledged platform for developing Ethereum compatible, interoperable blockchains. It is often described as a network of blockchain scaling and infrastructure solutions for the Ethereum ecosystem. The network has seen significant growth since its launch and has become widely adopted by developers, users, and decentralized applications seeking scalable blockchain infrastructure. The Polygon ecosystem continues to evolve through ongoing technological development, network enhancements, and the expansion of its products and services.

What POL is used for

As the primary utility token of the network, POL is used primarily as a means of payments and settlements on the platform. POL, whose maximum supply is 10B coins, is also used as an incentive to encourage participants to contribute to the network. 

Apart from this, POL is used to run the network’s consensus mechanism where users stake tokens to validate blocks.

How POL works

As mentioned above, the newly revamped Polygon network is a layer-2 solution for building interoperable blockchain networks. These blockchain networks are capable of communicating with each other as well as the Ethereum mainnet. They can use Polygon’s core architecture and yet be custom-made to meet individual developer’s needs. When blockchain networks of different capabilities communicate, they overcome their shortcomings and become one fully capable network. 

To make all this possible, Polygon has a robust architecture in place. It has four important layers that carry out all the functions of the network. Firstly, there’s the Ethereum layer that allows all the blockchain networks to communicate with the mainnet. It is also responsible for checking finality, resolving disputes, and staking. 

The second layer is an optional security layer. It offers validators on-demand service for any blockchain on the Polygon network for a fee. The third is the Polygon Networks Layer. This layer is like the meeting point for all the blockchains and is responsible for block production and local consensus. The final one is the execution layer that interprets and executes transactions.

Certain Staking Services Terms Applicable to POL

You can cancel you 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 particular crypto assets 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% annual APY equal to 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 generated within the reward period.” 

“Ndax Admin Fees” 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 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 a crypto asset.

Like other crypto assets, there are some general risks associated with investing in POL. We describe many of these general risks in the risk statement we publish on our website that you have already acknowledged, including risks relating to: (i) short history; (ii) volatility in the price of crypto assets and loss of liquidity; (iii) potential decrease in global demand for crypto assets; (iv) The blockchains on which crypto assets operate may temporarily or permanently fork or halt; airdrops; (v) issues with the cryptography underlying the Crypto networks; (vi) custodial wallet systems; (vii) uncertainty in regulation and future financial institution support; (viii) currency risks; (ix) concentration risks; (x) electronic trading and dependence on the internet; (xi) cyber security risks; (xii) inadequate due diligence; (xiii) Ndax’s reliance on vendors and third-party service providers; (xiv) liquidity constraints; (xv) no voting rights; (xvi) lack of investor protection insurance; (xvii) commissions and other charges for trading; (xviii) no advise; (xix) transfers; (xx) beta features; (xxi) unforeseeable risks; and (xxii) conflicts of interest. We also point out some risks that are specific to POL below. While we tried to describe the key risks associated with POL here and in our risk statement, these aren’t all of the risks associated with trading in POL. You should also do your own research on POL to make sure you are comfortable investing in it.

Dependence on Polygon Developers  

While many contributors to Polygon are employed by companies in the industry, most of them are not directly compensated for helping to maintain the network. As a result, there are no contracts or guarantees that they will continue to contribute to Polygon.

Concentration of POL Holdings

More than half of the POL currently in circulation is controlled by the founders and other persons associated with the development of Polygon. As a result, these persons controls a significant vote related to planning and decision making of Polygon. A concentrated level of ownership by these persons may adversely affect the price of POL itself.

Risks Specific to Staking POL  

Prior to staking your crypto assets, you acknowledge that:

• staked POL begins to start earning rewards after one day; 
• staked POL may be withdrawn at any time; 
• given the volatility of crypto assets, the value of your staked POL when you sell or withdraw it, and the value of any rewards you earn through staking, may be significantly less than their current value; 
• there is no guarantee that you will receive any rewards on staked POL; 
• 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 POL if the validator does not perform as required by the network; and 
• additional risks can be found in the Risk Statement.

Conflict of Interest Disclosure

Ndax has assessed potential conflicts of interest associated with the offering, and ongoing availability of POL through the Platform. As of the date of this statement, Ndax has not identified any actual, material, or reasonably foreseeable conflict of interest that would be expected to impair our ability to act in the best interests of clients or to make fair, objective, and independent decisions regarding POL. Ndax maintains policies and procedures designed to identify, manage, and address conflicts of interest on an ongoing basis and will update our disclosures if any material conflict is identified in the future. For additional information about the material conflicts of interest identified by us, please refer to our Conflicts of Interest Statement, the latest version of which can be found on our Website.

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 reliance on a prospectus exemption contained in the exemptive relief decision Re Ndax Canada Inc. dated December 19, 2024 (found here) and under the terms and conditions imposed by CIRO on Ndax’s membership with CIRO (found here). Any fiat currency held in users’ accounts is protected by CIPF’s Investment Dealer Fund in accordance with its Coverage Policy. However, CIPF coverage does not extend to any virtual assets held in users accounts. These assets are not eligible for deposit insurance or any protection from the Canada Deposit Insurance Corporation (CDIC) or CIPF. 

Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada do not apply in respect of a misrepresentation in this Crypto Asset Statement. 

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

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

Last Updated: August 17, 2026