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Virtuals Protocol (Virtual) Crypto Asset Statement

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

Description of Virtual

History of VIRTUAL

Virtuals Protocol launched its native token VIRTUAL in April 2024 alongside the debut of the Virtuals AI-agent network, an on-chain infrastructure designed to coordinate autonomous “Virtual Agents.” The founding team—drawn from previous Web3 analytics and artificial-intelligence projects—bootstrapped the network without a public token sale, instead distributing VIRTUAL through a fair-launch airdrop to early testers, community contributors and liquidity-providers. The protocol released a public whitepaper in May 2024 outlining a 100 million fixed token supply, a four-year emission schedule for ecosystem incentives and a roadmap that includes agent-to-agent micro-payments, permissionless agent creation, and cross-chain deployment. Subsequent milestones have included a July 2024 introduction of staking gauges and an October 2024 upgrade that added a real-time reputation oracle for on-chain agents.

What is VIRTUAL used for

VIRTUAL is the utility and governance token that powers all economic activity inside the Virtuals ecosystem. Holders stake VIRTUAL to activate or “spawn” new Virtual Agents, pay micro-fees for compute cycles or data queries executed by those agents, and earn a share of protocol revenues generated from agent subscriptions and marketplace listing fees. In addition, staked VIRTUAL confers voting rights in the Virtuals DAO, which steers parameters such as agent-registry whitelists, fee splits and future treasury grants. Finally, long-term lockers of VIRTUAL receive boosted rewards from liquidity pools that pair VIRTUAL with SOL or USDC on Solana-based automated-market-makers.

How VIRTUAL works

VIRTUAL is an SPL-native token on the Solana blockchain, minted at genesis with a hard-capped supply of 100 million. Fifty per-cent of that supply was released via the initial community airdrop and liquidity-mining campaign; the remainder vests linearly over four years to the ecosystem treasury, core contributors and strategic partners. When a user stakes VIRTUAL to register an agent, the tokens are locked and represented by sVIRTUAL, a non-transferable receipt token that tracks staking weight and governance power. Protocol fees—denominated in VIRTUAL—flow into a staking reservoir and are periodically distributed to sVIRTUAL holders proportionally. If an agent misbehaves (for example, by providing malicious output), a slashing contract can burn part of its associated stake, aligning incentives for honest behaviour. All critical contract code has been open-sourced, and the protocol completed two third-party security reviews in 2024 covering the staking, slashing and fee-distribution modules.

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 VIRTUAL. 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 VIRTUAL below.

Early-stage ecosystem – Virtuals Protocol is less than two years old; network effects, developer adoption and third-party integrations remain unproven and could fail to materialise, affecting token utility and value.
Reliance on core team – Although the DAO can vote on upgrades, key maintenance and roadmap execution are still heavily dependent on the founding developers, whose continued involvement cannot be guaranteed.
Agent slashing uncertainty – The novel staking-and-slashing mechanism has limited real-world testing; flaws in the reputation oracle or disputes over “malicious” outputs could lead to unintended token burns or governance conflicts.
Single-chain concentration – VIRTUAL currently exists only on Solana; any prolonged network outage, congestion event or consensus failure on Solana could disrupt transfers, staking rewards and agent operations.

While we have tried to describe the key risks associated with VIRTUAL 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 VIRTUAL. You should also do your own research on VIRTUAL to make sure you are comfortable investing in such a crypto asset.

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 accordance with the terms of the Decision Document dated December 19, 2024 that we entered into with the Canadian securities regulators. Any fiat currency held in user's accounts are protected by the CIPF's Investment Dealer Fund in accordance with its Coverage Policy. However, CIPF coverage does not extend to any virtual assets held in user's accounts. These assets are not eligible for deposit insurance or any protection from the Canada Deposit Insurance Corporation (CDIC) or CIPF.

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

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

Last Updated: 05/30/2025