About this Summary
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 MATIC. We created this summary to help you understand the basics of MATIC as well as some of the risks involved in trading it. While we tried to describe the key features of MATIC here, this summary isn’t meant to tell you everything you’d want to know before investing in MATIC. You should also do your own research on MATIC to make sure you are comfortable investing in it.
Description of MATIC
MATIC, an ERC-20 token running on the Ethereum blockchain, is the native token of Polygon, which is a solution that provides tools to increase the speed and reduce the cost and complexities of transactions on blockchain networks. Polygon was created in India in 2017 by Ethereum developers Jaynti Kanani, Sandeep Nailwal and Anurag Arjun, as well as Mihailo Bjelic.
Polygon is a protocol and framework for building and connecting Ethereum-compatible blockchain networks. These Ethereum-compatible blockchains, commonly known as “sidechains,” are unique blockchains that are bound to the main Ethereum blockchain and are used to support many decentralized finance protocols. Polygon helps enable the building and connecting of these sidechains through its framework, which allows for a “one-click deployment of preset Ethereum-compatible blockchains” and is comprised of a set of modules for developers who want to build their own custom blockchains. This framework is implemented alongside the Polygon Network’s protocol, which allows communication between any two participating Polygon sidechains, as well as between any Polygon sidechain and Ethereum. Taken as a whole, Polygon is intended to facilitate the creation of two types of sidechains: “secured chains” and “stand-alone chains.” Secured chains leverage the validation mechanisms of the Ethereum network or a pool of professional validators. In contrast, stand-alone chains require their own pool of validators.
MATIC can be used for staking and for paying transaction fees on Polygon blockchains. Users are rewarded in MATIC tokens for providing resources and services to Polygon networks, including by validating transactions using the proof-of-stake consensus mechanisms implemented by Polygon blockchains or for executing smart contracts. Additionally, users who own and stake MATIC are able to vote on upgrades to Polygon, with each MATIC token representing one vote.
Like other crypto assets, there are some general risks associated with investing in MATIC. 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 MATIC below. While we tried to describe the key risks associated with MATIC here and in our risk statement, these aren’t all of the risks associated with trading in MATIC. You should also do your own research on MATIC to make sure you are comfortable investing in it.
Dependence on Polygon Developers
While many contributors to Polygon are employed by companies in the industry, most of them are not directly compensated for helping to maintain the network. As a result, there are no contracts or guarantees that they will continue to contribute to Polygon.
Concentration of MATIC Holdings
More than half of the MATIC currently in circulation is controlled by the founders and other persons associated with the development of Polygon. As a result, these persons controls a significant vote related to planning and decision making of Polygon. A concentrated level of ownership by these persons may adversely affect the price of MATIC itself.
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 MATIC 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 MATIC, including an opinion that MATIC is not itself a security and/or derivative.
Staking Rewards and Fees
Staking rewards are computed and distributed after each successful checkpoint submission. If a reward is accrued after a checkpoint submission, it will be issued in the first block of the following checkpoint. 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 epoch, your share of MATIC rewards is proportionate to the amount of MATIC that you had staked when the checkpoint 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 MATIC: (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.