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 EOS. We created this summary to help you understand the basics of EOS as well as some of the risks involved in trading it. While we tried to describe the key features of EOS here, this summary isn’t meant to tell you everything you’d want to know before investing in EOS. You should also do your own research on EOS to make sure you are comfortable investing in it.
Description of EOS
EOS was created in 2017 to be the native digital currency for the EOS.IO computer network (the “EOS.IO Network”) by Block.one, the Cayman Islands based company that founded EOS. All transactions that take place on the EOS.IO Network are recorded on a decentralized, transparent, immutable, and multi-layered public ledger known as the “blockchain.”
The EOS protocol attempts to emulate many of the real-world features that computer hardware offers. The features include things like computer processing units and graphics processing units, hard disk storage and random-access memory. Users on the network offer up all of these computing resources to the network in order to keep it going, which is why the project uses the trademark principle of decentralization to its advantage. EOS also uses the power of smart contracts to facilitate transactions. The point of these features is to scale the development and the use of industrial-scale applications through what’s known as decentralized autonomous organizations (or DAOs).
EOS uses a blockchain protocol known as Delegated Proof of Stake (“DPoS”), which was designed to be an improvement on the more commonly known proof of stake protocol. DPoS protocols are desirable because they significantly lower the amount of computing power, effort and processing time necessary to validate blocks. Instead of requiring millions of individuals to reach consensus to validate a block every few seconds, DPoS allows EOS holders to vote for a small number of delegates who must reach consensus to mine new blocks (“delegated block producers”). With EOS, only 21 individuals are selected as delegated block producers, but they need to be voted in for each block. EOS claims to be able to process thousands of transactions per second, which is significantly higher than the Bitcoin or Ethereum Networks.
EOS competes directly with Ethereum. and similar projects for market share. Like Ethereum, the EOS blockchain has an additional application layer that significantly lowers the entry barrier for developers to create their own smart contracts and decentralized applications (“dapps”). Developers on the EOS.IO Network can program dapps with far fewer restrictions compared to the Bitcoin Network. Dapps are like normal apps, but once deployed on the EOS.IO Network, they are unchangeable because they are recorded on the EOS blockchain. Dapps are not governed by any central body and are instead controlled by the logic written into the smart contract, which self-executes once its predefined terms are met.
Like Ether, the native digital currency for the Ethereum Network, EOS can function as a means of exchange and/or a store of value, with its value also being influenced by the additional use cases associated with its network.
Risks
Like other crypto assets, there are some general risks to investing in EOS. We identify many of these general risks in the risk statement we publish on our website. We also point out some risks specific to EOS below. While we tried to describe the key risks associated with EOS here and in our risk statement, these aren’t all of the risks associated with trading in EOS. You should also do your own research on EOS to make sure you are comfortable investing in it.
Risks Related to Potential Centralization
There is a heightened risk of centralization with the EOS.IO Network’s DPoS protocol because the twenty-one delegated block producers exert significant control over the EOS.IO Network. Delegated block producers are selected through a highly competitive voting process which is held every two minutes, and individuals are constantly voted into and out of the delegate roles. Anyone on the EOS.IO Network can theoretically be voted in, but block validation requires a powerful computer and an advanced understanding of network RAM usage, so the average person is effectively excluded from participating in EOS governance. Some individuals or entities are repeatedly voted as delegated block producers, thereby increasing the centralization of the EOS blockchain protocol. DPoS may make the EOS.IO Network more vulnerable to security threats if the delegate composition or their validation decisions are influenced by vote buying, collusion or state intervention.
Concentration of EOS Holdings
The largest EOS addresses hold a very large portion of the EOS currently outstanding. Market volatility may result when large holders of EOS decide to sell significant amounts of their bitcoin positions.
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.
Regulatory Information
Bitbuy is offering crypto contracts to purchase and sell EOS in reliance on a prospectus exemption contained in the exemptive relief decision Re Bitbuy Technologies Inc. dated November 30th, 2021. 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 EOS, including an opinion that EOS is not itself a security and/or derivative.