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

Description of SUI

History of SUI 

SUI is a Layer-1 blockchain built by Mysten Labs, founded in September 2021 by a team of former Meta (Facebook) engineers. Its design focuses on scalability and low-latency blockchain technology, optimized for developers building decentralized applications. It launched its mainnet in 2023 after a series of testnets.

What is SUI used for

SUI serves as the native token within the SUI Network, facilitating transactions within its ecosystem. SUI
serves several crucial functions within the network:

• Transaction Fees: Users pay gas fees in SUI to execute and store transactions on the SUI network
• Staking and Network Security: SUI can be staked to participate in the Delegated Proof-of-Stake
  (DPoS) mechanism, which secures the network. Validators are selected based on the amount of SUI
  they or their delegators stake.
• Governance: In the future, SUI holders have the abillity to vote on protocol upgrades and important
  governance decisions

How SUI works

SUI operates on a Delegated Proof-of-Stake (DPoS) mechanism, using validators to process transactions and maintain the blockchain. Users can stake SUI tokens to become validators or delegate their tokens to validators to earn rewards. The network uses an object-based accounting system that allows for efficient transaction management, using Narwhal and Bullshark consensus mechanisms for finalizing complex transactions.

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 SUI. 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 SUI
below:

• Complexity of New Architecture:   SUI uses a highly innovative consensus mechanism called Narwhal and Tusk, which optimizes for parallel transaction processing. While this architecture provides potential speed advantages, it is relatively new and could face unforeseen challenges in scaling, security vulnerabilities, or technical failures that have not yet been encountered.
• Storage Costs for Users: One unique feature of SUI is its object-based data model, where storage costs are paid upfront by users as part of their transaction fees. As network usage grows, the cost for storing data could become prohibitive for certain use cases, leading to reduced user adoption or dissatisfaction with long-term usage costs.
• Regulatory Risks: As with all blockchain-based projects, regulatory changes can impact the operation and value of the SUI Network and its token.

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

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

Last Updated: 10/7/2024