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

Description of Sonic (S) (Prev. Fantom) 

History of Sonic (S)

Sonic (Prev. FTM) is a DeFi project conceptualized and created by the Fantom Foundation established by the renowned South Korean computer scientist Dr. Ahn Byung Ik. This futuristic project aims to provide a platform for developers to build scalable, secure, and super fast decentralized applications for the DeFi ecosystem using smart contracts. To achieve this, the development team built their own consensus mechanism called the aBFT.

The team released the testnet in 2018 and raised $40 million through token sales to fund the project development. Following this, the Fantom mainnet was launched in 2019.  

What is Sonic (S) used for

As the native utility and governance token of the Fantom network, S is used for payments, rewards, and fees. Through a process of staking, the token is also used to secure the network and to make governance decisions for the future of the protocol.

FTM is currently available as an ERC-20 and BEP-20 token.

How Sonic (S) works

Sonic (S) (Prev. Fantom) was built to overcome the shortcomings of popular blockchain networks like Ethereum. The network congestion and high gas fees due to the proof-of-work consensus on Ethereum have made it harder for DeFi to go mainstream. Recognizing this, Sonic (S) Fantom created an independent and decentralized DAG-based network for decentralized apps (dApps).

An asynchronous, non-deterministic algorithm called Lachesis powers the Fantom mainnet and facilitates the creation and use of smart contracts through the Ethereum Virtual Machine (EVM). The advantage of a DAG chain is that it makes the network fully independent. This means that the network congestion in one part does not affect the working of the rest of the chain. dApps built on Fantom can benefit from this feature, being able to create their own blockchain networks with governance rules and tokenomics of their choice.

S is also responsible for securing the network through a proof-of-stake system. Apart from this, the token is used to pay the fees for all types of transactions on Fantom. Users can also stake S tokens to vote on platform governance decisions.

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 S. 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 S below.  

Adoption Risk

The success of Fantom is predicated on developers choosing to build and use Fantom-native applications. There is significant competition between crypto asset networks seeking to offer smart contract platforms for decentralized applications. The price of S is likely to decline in the long run if constructive and meaningful applications are not created, supported and used on Fantom.

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

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