Note: Right now this currency is only being offered to select Private Wealth clients. Click here to learn more about our Private Wealth (OTC) team and what they can do for you.
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 through the Platform is AVAX. We created this summary to help you understand the basics of AVAX as well as some of the risks involved in acquiring it. While we tried to describe the key features of AVAX here, this summary isn’t meant to tell you everything you’d want to know before acquiring it. You should also do your own research on AVAX to make sure you are comfortable acquiring it.
Description of AVAX
AVAX is the native token of the Avalanche platform. AVAX is used to secure the Avalanche Platform through staking, paying for fees and providing a basic unit of account between the multiple subnetworks created on the Avalanche platform.
The Avalanche platform was developed by Ava Labs, an organization founded by Cornell University researchers Emin Gun Sirer, Maofan “Ted” Yin and Kevin Sekniqi. The Avalanche Foundation, a not-for-profit organization, also supports the development of the Avalanche platform through a development fund.
The Avalanche platform targets three broad use cases: (i) building application-specific blockchains; (ii) building decentralized applications; and (iii) building digital assets with custom rules, covenants, and riders. At a high level, Avalanche describes itself as an open, programmable smart contracts platform for decentralized applications. In this sense, Avalanche competes directly with Ethereum and similar projects for market share. The primary features of Avalanche which distinguish it from such projects are its consensus protocol and multi-chain structure.
Avalanche utilizes a family of proof-of-stake (“PoS”) consensus protocols collectively called “Snow”. In simple terms, transactions are verified using Snow by having nodes communicate with each other at random until a sufficiently large portion of them reach an agreement. A validator's chance of being sampled is proportional to the amount of AVAX it has staked. Unlike some other networks, the minimum computer requirements for staking do not require special computer hardware. According to Ava Labs, the Avalanche platform’s consensus protocols can process over 4,500 transactions per second, while Ethereum can only support 14 transactions per second.
The Avalanche platform features multiple blockchains performing core and application-specific functions. All validators on the Avalanche platform (i.e., the users who stake AVAX and validate blocks) must stake AVAX and act as validators on the Avalanche platform’s primary network. Transactions on non-core blockchains, meanwhile, are validated by subsets of validators known as subnets. Participation in subnets is optional. The Avalanche platform’s primary network is comprised of three blockchains: the Platform Chain (the “P-Chain”); the Contract Chain (the “C-Chain”); and the Exchange Chain (the “X-Chain”). The X-Chain enables the creation of new digital assets and the exchange of tokens between blockchains. The C-Chain is an instance of Ethereum’s virtual machine, which allows for the creation and execution of Solidity-based applications. The P-Chain manages network validators and enables developers to create new subnets.
Like Ether, the native token of the Ethereum network, AVAX 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. AVAX is also valuable because of its ability to be staked in exchange for rewards.
Like other crypto assets, there are some general risks associated with acquiring AVAX. 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 AVAX below. While we tried to describe the key risks associated with AVAX here and in our risk statement, these aren’t all of the risks associated with trading in AVAX. You should also do your own research on AVAX to make sure you are comfortable acquiring it.
Dependence on Avalanche Developers
While many contributors to the Avalanche platform are employed by companies in the industry, most of them are not directly compensated for helping to maintain the platform. As a result, there are no guarantees that they will continue to contribute to Avalanche.
The success of the Avalanche platform is predicated on developers choosing to build and use Avalanche-native applications. There is significant competition between crypto asset networks seeking to offer smart contract platforms for decentralized applications. The price of AVAX is likely to decline in the long run if constructive and meaningful applications are not created, supported and used on the Avalanche platform.
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 AVAX in reliance on a prospectus exemption contained in the exemptive relief decision Re Bitbuy Technologies Inc. dated November 30, 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 AVAX, including an opinion that AVAX is not itself a security and/or derivative.