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 SOL. We created this summary to help you understand the basics of SOL as well as some of the risks involved in trading it. While we tried to describe the key features of SOL here, this summary isn’t meant to tell you everything you’d want to know before investing in SOL. You should also do your own research on SOL to make sure you are comfortable investing in it.
Description of SOL
SOL is the native token of the Solana network (the “Solana Network”). The Solana Network is an open-source, smart-contract platform. The Solana Network is supported by Solana Labs, which is a core contributor to the development of the network, and the Solana Foundation, which is a Swiss non-profit organization dedicated to growing the Solana community and incentivizing development of the network. The Solana Network derives from a whitepaper published in 2017 in which Anatola Yakovenko set out, among other things, the innovative features to be implemented in the Solana Network, including a timestamp system known as proof-of-history (“PoH”).
The Solana Network was designed to offer faster transaction settlement times and to allow developers to write customizable applications in multiple programming languages. In order to achieve these goals, the Solana Network incorporates a number of innovative architectural features. PoH is one of the most distinguishing features of the Solana Network as it is a system that allows it to achieve faster transaction settlement times than other comparable networks. PoH addresses a specific challenge faced by blockchain networks. Namely, in order for nodes (i.e., computers) to validate transactions, they must agree on the time and sequence in which events occurred, which can take a significant amount of time. The PoH system attempts solve this problem by creating a historical record that can be used to verify that an event has occurred in a specific point in time. As a result, nodes can create the next block without having to coordinate with the entire network first because they can trust the timestamp and ordering of the messages that they’ve received.
The PoH system is used by the Solana Network’s delegated proof-of-stake (“DPoS”) consensus protocol. DPoS uses a voting and reputation system to secure the network and validate transactions. Through the DPoS protocol, anyone who owns SOL can help operate the network by locking (or “staking”) their SOL, allowing them to both participate in governance and to increase the chances of being chosen to produce blocks. Participants can also choose to delegate their SOL to other validators, allocating votes to them while earning a portion of the block rewards in the form of newly-minted SOL.
The Solana Network competes directly with the Ethereum network and similar projects for market share. Like the Ethereum Network, the Solana Network significantly lowers the entry barrier for developers to create their own smart contracts and decentralized applications (“dapps”). Developers on the Solana Network are able to program dapps with far fewer restrictions compared to the Bitcoin network. 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.
SOL has three main functions in the Solana Network. Namely, it can be: (i) staked or delegated using the network’s DPoS protocol to facilitate the validation of transactions and the earning of rewards; (ii) used to pay transactions fees associated with transactions on the network; and (iii) used to access the dapps and smart contracts available via the network.
Like other crypto assets, there are some general risks associated with investing in SOL. 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 SOL below. While we tried to describe the key risks associated with SOL here and in our risk statement, these aren’t all of the risks associated with trading in SOL. You should also do your own research on SOL to make sure you are comfortable investing in it.
Downtime on the Solana Network
Events occurred in both 2020 and 2021 where the Solana Network experienced significant amounts of downtime. The most recent event, which occurred on September 14, 2021, lasted approximately 17 hours and was the product of a denial-of-service attack.
Lack of Input on Development
Governance mechanisms are not currently integrated into the Solana Network, meaning that members of the Solana community do not have a say in the future development of or changes to the Solana Network. Rather, decisions about changes to the Solana Network are made by the Solana Foundation and Solana Labs.
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 SOL 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 SOL, including an opinion that SOL is not itself a security and/or derivative.