Crypto Asset Statement - Avalanche

About this Statement

Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Avalanche in reliance on a prospectus exemption granted by the Canadian Securities Administrators (CSA) in the exemptive relief decision dated July 5, 2022. The statutory rights of action for damages and the right of rescission in section 130.1 of the Securities Act (Ontario) and similar legislation in the other CSA jurisdictions do not apply in respect of a misrepresentation in this statement to the extent that a crypto contract is distributed under the above-noted prospectus relief.

No securities regulatory authority in Canada or any other jurisdiction has expressed an opinion about any of the crypto assets (or crypto contracts) that are available through Coinsquare’s platform, including an opinion that the crypto assets are not themselves securities and/or derivatives.

Coinsquare has compiled the information contained in this Crypto Asset Statement to the best of its ability based on publicly available information.  Coinsquare is providing this Crypto Asset Statement on an “as is” basis and makes no representation or warranty as to accuracy or completeness of the contents.   

About Avalanche

Launched in 2020 by Ava Labs (which was founded by Emin Gün Sirer), Avalanche is an Ethereum competitor that facilitates the creation of custom blockchains (including private blockchains) and decentralized applications (dApps). Deploying smart contracts on Avalanche cost just a tenth of what they cost on Ethereum as it eliminates the dependency on high gas fees, front-running, and other adverse effects of slow smart contract blockchains.

Risks

As with all assets, investing in Avalanche is not without some general risks. Many of these risks are identified and explained in our Risk Statement. In addition to the general risks, we outline some risks that are specific to Avalanche below. While we make an effort to identify every source of risk, we encourage you to do your own research and ensure you are comfortable investing in Avalanche.

Avalanche token supply

AVAX has a fixed token supply, which is reduced through burning of the fee amount of every transaction.1 As of April 6, 2022, approximately 1.8 million AVAX tokens have been burned, or removed from supply.2 This reduction of available supply may have an impact on the price of the asset or the future adoption of the network and should be considered by any potential investor.

Avalanche’s unique consensus mechanism

The Avalanche platform utilizes a unique mechanism for consensus. The Snow protocol aims to merge the best features of classic consensus protocols with the best properties of the Nakamoto consensus. Since this consensus mechanism is unique to the Avalanche platform, it is important that investors are confident in its ability to remain secure against any attacks. Details on the Snow protocol is described in the whitepaper linked in the References section below.3

Coinsquare’s Due Diligence for Digital Assets

To be made available for trading on Coinsquare’s platform, a digital asset must pass the following due diligence reviews:

  1. Coinsquare Securities Law Assessment
  2. Coinsquare Digital Asset Security Audit
  3. New Digital Asset Business Case

Coinsquare undertakes these three levels of due diligence in order to determine whether the digital asset is compliant with our legal and regulatory obligations, is secure, and has historical data supporting a beneficial business case. Coinsquare’s New Product Committee must provide final approval for a new digital asset to be made available on the platform.

References:

  1. David Hamilton. “Investing In Avalanche (AVAX) – Everything You Need to Know.” April 12, 2022. https://www.securities.io/investing-in-avalanche-avax-everything-you-need-to-know/
  2. Burned AVAX. https://burnedavax.com/
  3. Team Rocket, Maofan Yin, Kevin Sekniqi, Robbert van Renesse, Emin Gün Sirer. “Scalable and Probabilistic Leaderless BFT Consensus through Metastability” 24 Aug. 2020.Cornell University. https://assets.website-files.com/5d80307810123f5ffbb34d6e/6009805681b416f34dcae012_Avalanche%20Consensus%20Whitepaper.pdf

Published Date: July 5, 2022