XDC Network (XDC) Crypto Asset Statement

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

Description of XDC

History of XDC

XDC is the native token of the XDC Network, an enterprise-focused, EVM-compatible blockchain that originated from the XinFin (eXchange inFinite) project in 2017. Founders Atul Khekade and Ritesh Kakkad sought to build a hybrid public-private ledger that could integrate with existing financial messaging standards (e.g., ISO 20022) and digitize traditional trade-finance instruments. The public mainnet launched in June 2019 with a pre-minted supply of 37.9 billion XDC tokens and a governance model centered on 108 masternodes. Key milestones include the TradeFinex launch (a decentralized invoice-factoring marketplace), the 2021 rebrand to “XDC Network”, and the 2022 onboarding of the Trade Finance Distribution (TFD) Initiative, which connected regulated institutions to tokenized trade-finance assets on XDC.

What is XDC used for

XDC serves multiple roles within the XDC Network ecosystem. It is the unit in which gas fees are denominated and paid for executing smart-contract transactions. Masternode operators must lock a minimum stake of XDC to participate in block production and earn rewards, while delegators can stake XDC to those nodes in return for a share of inflationary rewards and network fees. Because the network targets corporate and trade-finance use cases, XDC is also posted as collateral for tokenised invoice pools, cross-border settlement rails and other applications built on the network’s ISO-20022-compatible smart-contract layer. In addition, holding XDC grants voting power in on-chain governance proposals relating to protocol upgrades or parameter changes.

How XDC works

The XDC Network employs a delegated proof-of-stake consensus called XDPoS 2.0. A maximum of 108 validator masternodes, each bonded with at least 10 million XDC, participate in a rotating committee that signs blocks approximately every two seconds. Validators are selected through on-chain elections that weight both self-bonded and delegated stake, and rewards are distributed proportionally to stakers after each epoch. The protocol is EVM-compatible, allowing deployment of Solidity smart contracts, and supports the XRC-20 token standard for fungible assets. Its hybrid architecture lets enterprises run permissioned sub-ledgers that can anchor hashes to the public chain for transparency while maintaining data privacy. Bridges connect XDC to networks such as Ethereum and BNB Chain, enabling cross-chain asset transfers. The fixed supply of 37.9 billion XDC is non-inflationary; validator rewards are funded from protocol reserves and transaction fees instead of new token issuance.

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 XDC. 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 XDC below.

Concentration of validation power – The network relies on a fixed set of 108 masternodes; if a small number of entities control a large portion of staked XDC, governance and block production could become centralised.
Enterprise-adoption uncertainty – XDC’s value proposition is tied to institutional adoption in trade finance; limited uptake or integration delays could reduce demand for the token.
Regulatory and interoperability risk – Because the project targets tokenisation of real-world financial instruments, unfavourable regulations or changes to standards such as ISO 20022 may affect network usage.
Bridge and smart-contract vulnerabilities – Although the base chain has not suffered a major exploit, assets bridged between XDC and other networks are exposed to contract risk on both chains.

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

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

Last Updated: 7/8/2025