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 October 12, 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.
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.
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.
The relevant sections in the Risk Statement are as follows:
Platform Risk, Short History Risk, Price Volatility, Potential Decrease in Global Demand for Digital Assets, Potential for Illiquid Markets, Transfers of Digital Assets are Irreversible, Concentration Risks, Uncertainty in Regulation, Financial Institutions May Refuse to Support Transactions Involving Digital Assets, Digital Assets’ Blockchain May Temporarily or Permanently Fork and/or Split, Cyber-Security Risk, Airdrops, Issues with Cryptography Underlying Digital Asset Networks, Internet Risk, Open Loop System, Risk if Entity Gains a 51% Share of Digital Asset Network, Possible Increase in Transaction Fees, Possible Increase in Service Fees, Limited Canadian Investor Protection Fund Account, No Voting Rights, Custody of Digital Assets, Custody Risk Insurance, Threats to Coinsquare’s Physical Assets, Covid-19 Outbreak, Use of Leverage, Halting, Suspending, and Discontinuing Digital Assets.
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:
- Coinsquare Securities Law Assessment
- Coinsquare Digital Asset Security Audit
- 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.
- 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/
- Burned AVAX. https://burnedavax.com/
- 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 22, 2022