About this Statement
Coinsquare Capital Markets Ltd. (“Coinsquare”) is offering crypto contracts to purchase and sell DAI in reliance on a prospectus exemption granted by the Canadian Securities Administrators (CSA) in the amended and restated exemptive relief decision dated October 11, 2024. 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.
About DAI
Danish entrepreneur Rune Christensen is credited with the formation of MakerDAO—a decentralized autonomous organization—in 2014. MakerDAO is the creator of the DAI stablecoin, which officially launched on the Ethereum mainnet on December 18, 2017. While the Maker Foundation was established in 2018 to bootstrap the project, it was formally dissolved in 2021 as the protocol achieved full decentralization. Since then, the protocol has been governed entirely by MKR token holders. In late 2024, the MakerDAO ecosystem underwent a significant evolution known as the "Endgame," rebranding to Sky. This transition introduced new governance and stablecoin assets (SKY and USDS) while maintaining DAI as a core, supported asset within the decentralized ecosystem.
Risks
As with all assets, investing in DAI 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 DAI 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 DAI.
Stability of DAI’s US Dollar Peg and MakerDAO’s influence
As a stablecoin soft-pegged to the US Dollar, DAI’s value is maintained through a decentralized system of collateralized debt and automated market-stabilizing tools. Modern stability is primarily managed through the Peg Stability Module (PSM), which allows for the 1:1 swap of DAI for other stablecoins like USDC to maintain a tight peg during market volatility. Additionally, Maker (now Sky) governance adjusts monetary policy levers such as the Stability Fee—the interest rate charged for borrowing DAI—and the Dai Savings Rate (DSR), which provides an incentive for holders to lock up DAI, thereby managing supply and demand. The "Target Rate Feedback Mechanism" mentioned in earlier technical documents is a legacy feature that is largely dormant in the current Multi-Collateral Dai system. DAI is backed by a highly diversified portfolio of collateral, including crypto assets like ETH and Wrapped Bitcoin (WBTC), as well as a significant allocation to Real-World Assets (RWA) such as US Treasuries and private credit. To ensure solvency, all loans are overcollateralized; if the value of a user's collateral falls below a specific threshold, the protocol automatically liquidates the position through an auction mechanism to protect the system's stability.
Based on the above information, there are some key risks to the stability of DAI’s US Dollar peg. Firstly, the continued function of the Target Rate Feedback Mechanism is essential to DAI’s price. If the TRFM fails to act appropriately, or is compromised in any way, the price of DAI could be de-pegged. Additionally, the Sensitivity Parameter is a significant source of potential risk. Since this parameter controls the maximum price change over a given period of time, and is intended to mitigate losses and facilitate settlement in the event of a hack, its compromise or failure could result in significant changes to the DAI price. Both of the aforementioned risks are controlled by MakerDAO, which inherently makes the distribution of MKR tokens a risk to DAI. Since MakerDAO is governed by MKR holders, large holders of MKR could theoretically risk the stability of DAI through their voting choices. Finally, the stability of DAI’s price is reliant on the security of MakerDAOs oracle sources. MakerDAO has created a unique system for protecting their oracles called the Oracle Security Module.4 Based on the above information, the potential exists for DAI to lose its peg to the US dollar. Investors should consider this risk when evaluating DAI.
DAI’s reliance on the Multiple Networks
DAI is available across a wide array of blockchain networks, functioning primarily as an ERC-20 token on the Ethereum mainnet. It is also highly accessible on leading Layer 2 scaling solutions such as Arbitrum, Optimism, and Base, as well as on alternative Layer 1 networks including BNB Smart Chain, Polygon, Avalanche, and Gnosis Chain (formerly known as the xDAI network). Recent governance expansions have also extended DAI's reach to the Solana network via cross-chain messaging bridges. Consequently, the asset is dependent on the continued operational security and stability of these various infrastructures. Any fundamental technical failure, smart contract exploit, or network-wide outage on these platforms could impact the liquidity or value of DAI tokens held on those respective chains. Investors should consider this dependency when evaluating DAI.5
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 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.
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