About this Statement
Bitbuy Technologies Inc. (“Bitbuy” or “we”) believes that our users should understand the crypto assets that they are able to trade using our crypto trading platform (the “Platform”). One of the crypto assets we offer on the Platform is Injective (“INJ”). We created this summary to help you understand the basics of INJ as well as some of the risks involved in trading it. While we tried to describe the key features of INJ here, this summary isn’t meant to tell you everything you’d want to know before investing in INJ. You should also do your own research on INJ to make sure you are comfortable investing in it.
INJ is the governance token of the Injective blockchain, a layer-1 network which markets itself as the blockchain built for finance. Injective boasts unique features such as an on-chain order book that supports spot, futures, and derivatives trading, that aim to attract those who would build financial dApps.1 Injective was built using the Cosmos SDK, and consequently uses the Tendermint proof-of-stake consensus mechanism.2 Injective values interoperability, enabling communication with other chains that employ the Inter-Blockchain Communication (IBC) protocol through Wormhole (a protocol developed through the Cosmos SDK).3 Injective is available as the native asset of the Injective blockchain, or as an ERC20 token. They are interconvertable via the Injective Hub, but the ERC20 token must be converted to native for staking. The current offering of INJ at Bitbuy is the ERC20 token only.
Like other crypto assets, there are some general risks associated with investing in INJ. We describe many of these general risks in the risk statement we publish on our website, including risks relating to: (i) volatility; (ii) access, loss or theft, (iii) control of processing power; (iv) settlement of transactions on crypto asset networks; (v) momentum pricing; (vi) private keys; (vii) internet disruptions; (viii) faulty code; (ix) network development and support; (x) regulatory risk; (xi) network forks; (xii) air drops; (xiii) voting rights; (xiv) cybersecurity incidents and other systems and technology problems; and (xv) unforeseeable risks. We also point out some risks that are specific to INJ below. While we tried to describe the key risks associated with INJ here and in our risk statement, these aren’t all of the risks associated with trading in INJ. You should also do your own research on INJ to make sure you are comfortable investing in it.
INJ relation to the Cosmos Network
Although Injective is a Layer-1 network, it is heavily intertwined with the Cosmos Network. Injective was developed using the Cosmos SDK, and it utilizes CosmWasm for its smart contract and dApp development on the network. CosmWasm was originally developed for the Cosmos ecosystem, but has evolved to be used with other IBC-compatible networks. While INJ tokens and the Injective blockchain are not reliant on the Cosmos network as an ERC-20 token is reliant on the Ethereum network, there are still clear links between Injective and Cosmos as explained above. This relation between the two networks could have the potential to impact market price of either asset based on news or movements in the other asset. Potential investors should be aware of the link between Injective and Cosmos and consider this when evaluating INJ for investment.
INJ relation to the Ethereum Network
The INJ ERC20 token that is offered by Bitbuy is dependent on the stability and security of the Ethereum Mainnet. Any fundamental issues with this network could impact the value of ERC20 INJ, or the operation of the Injective Hub bridge which allows interconversion of the ERC20 token with the native INJ blockchain asset.
Injective employs a mechanism whereby 60% of all fees from dApps are entered into a buy-back-and-burn event. In these events, the basket of fees, which is typically comprised of various assets, is auctioned of to the highest bidder in exchange for INJ token. The proceeds of the auction (the INJ tokens) are then burned, which reduces the total supply of INJ. On June 6, 2023, the official Injective twitter account posted, saying that Injective had the highest burn rate in crypto and that nearly 5.7 million INJ tokens had been burned to date. Potential investors should be aware of the deflationary impact of burning, and also be aware that there has been increasing regulatory scrutiny from the United States SEC on tokens that employ a burning mechanism.
Staking Rewards and Fees
Staking rewards are computed and distributed after each successful block. If a reward is accrued after during a block, it will be issued immediately upon the completion of the block. When rewards are received by Bitbuy, Bitbuy will provide statements to users indicating the amount of the rewards that the user is entitled to as well as the total rewards that were earned and any fees payable. For each block, your share of INJ rewards is proportionate to the amount of INJ that you had staked when the block began.
Each crypto asset for which Bitbuy provides staking services is subject to specific fees because of the unique nature of each blockchain network. These fees are calculated on a percentage basis in relation to the amount of rewards earned. Bitbuy’s service fee may be up to 30% of net rewards earned by a user (as more fully described in our fee schedule.
With respect to any rewards earned on your staked INJ: (i) Bitbuy’s custodian, BitGo, will be entitled to a fee and may pay a portion of that fee to any third-party service provider it selects to act as validator; (ii) any remaining portion of the rewards (the “Net Rewards”) will be delivered to one of Bitbuy’s custodial wallets with BitGo; (iii) Bitbuy will be entitled to a fee of 30% in respect of the Net Rewards (the “Bitbuy Services Fees”); and (iv) after the Bitbuy Service Fee has been paid, your account will be credited with any remaining portion of the rewards, and, subject to any unbonding, lock-up or cooling-down period, you will be able to hold, sell or withdraw your rewards.
Currently, the third-party service provider we use is our custodian, BitGo. BitGo is regulated as a trust company under the Division of Banking in South Dakota. Pursuant to Bitbuy’s relationship with BitGo, BitGo may act as the validator in respect of staked crypto assets or may select a third-party service provider to act as the validator. BitGo currently has a contractual relationship with Figment, whereby Figment acts as validator for the crypto assets stored in Bitbuy’s custodial wallets with BitGo. Headquartered in Toronto, Figment is one of the world’s largest blockchain infrastructure and services providers.
Validators miss out on INJ rewards if they fail to participate when called upon, and their existing stake can be destroyed if they behave dishonestly.
Bitbuy may, at its sole discretion, transfer reimbursements for slashing penalties it receives from BitGo to its users less any administrative costs or expenses Bitbuy incurs in reimbursing users. In the event a supported Cosmos validator is slashed, Bitbuy has no obligation to replace any lost INJ or otherwise provide any compensation for any losses. Negative impacts of slashing will be allocated to all clients using the staking service in proportion to the amount of INJ they had staked.
How Bitbuy Decides to List Crypto Assets
Bitbuy reviews crypto assets before making them available for trading on the Platform. In making our decision to list a new crypto asset, we consider publicly-available information about the crypto asset, including (among other things) its creation, design, governance, usage, supply, demand, maturity, utility, liquidity, material technical risks and legal and regulatory risks.
To date, we have only made crypto assets available for trading on the Platform which have significant supply, demand and liquidity. In our experience, crypto assets with these qualities tend to also satisfy the other criteria we evaluate as part of our review. That being said, our review process is fulsome and flexible, and we don’t prioritize any one factor over another. You should review the risk statement published on our website for more information about our procedures for determining whether to make a crypto asset available for trading on the Platform.
Bitbuy is offering crypto contracts to purchase and sell in reliance on a prospectus exemption contained in the exemptive relief decision Re Bitbuy Technologies Inc. dated November 30th, 2023. 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 provinces and territories of Canada would not apply in respect of a misrepresentation in this Statement.
No Canadian securities regulatory authority has expressed an opinion about INJ, including an
- “Injective - About.” Injective. 2023. https://injective.com/about
- Jemima Conlon. “What Is Injective (INJ)?” Ledger Academy. December 6, 2023. https://www.ledger.com/academy/what-is-injective
- Wormhole. “Wormhole Gateway: A New Onramp to the Interchain.” Medium. August 7, 2023. https://blog.cosmos.network/wormhole-gateway-a-new-onramp-to-the-interchain-91fb2d3950fa
- CoinMarketCap. “Injective (INJ) - About Injective.” 2023. https://coinmarketcap.com/currencies/injective/
- Cosmos SDK. “CosmWasm Smart Contracts.” 2023. https://docs.cosmos.network/v0.46/CosmWasm/
- Curious Cosmonaut Research. “Injective Whitepaper.” Medium. November 6, 2022. https://medium.com/@cosmonautcurious/injective-whitepaper-cdb95fa74c46
Other Useful Links:
Injective Twitter: https://twitter.com/Injective_
Last updated: January 4, 2024