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 COMP token (“COMP”). We created this summary to help you understand the basics of COMP as well as some of the risks involved in acquiring it. While we tried to describe the key features of COMP 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 COMP to make sure you are comfortable acquiring it.
Description of COMP
COMP is the governance token of the Compound protocol. The Compound protocol is a platform for decentralized lending that establishes money markets with algorithmically set interest rates. The Compound protocol is based on a whitepaper authored by entrepreneurs Robert Leshner and Geoffrey Hayes. Although the Compound protocol was initially operated by a company named Compound Labs, it has been governed by holders of COMP since 2019.
The Compound protocol works by allowing users to lend to and borrow from lending pools (which are smart contracts running on the Ethereum network). Users are able to lend their crypto assets into lending pools and receive cTokens, which entitle the lending user to an amount of interest based on the supply and demand for the deposited token. Users who have lent crypto assets into a lending pool may also borrow crypto assets up to the amount they have lent. The Compound protocol also rewards lenders in COMP based on the amount of cTokens they hold.
COMP is an Ethereum-based governance token (known as an ERC-20 token) that entitles its holder to vote on (and submit proposals for) changes to the Compound protocol.
Like other crypto assets, there are some general risks associated with acquiring COMP. 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 specific to COMP below. While we tried to describe the key risks associated with COMP here and in our risk statement, these aren’t all of the risks associated with trading in COMP. You should also do your own research on COMP to make sure you are comfortable acquiring it.
Price Dependence on Compound Protocol
As the primary function of COMP is to provide its holders with governance rights in relation to the Compound protocol, COMP’s value is linked to the success of the Compound protocol more generally. In order to be successful, the Compound protocol requires users to both lend to and borrow from its lending pools. Should activity on the Compound protocol decline or should the Compound protocol be subject to bugs, hacking or price manipulation, it is likely that the value of COMP will also decline.
Regulatory Risk of Decentralized Finance Lending Protocols
The regulation of platforms for lending crypto assets continues to evolve in North America and within foreign jurisdictions. Governmental authorities may implement new regulatory schemes or enforce existing regulatory requirements in a manner which could restrict the use of the Compound protocol and otherwise impact the demand for and value of COMP.
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 COMP 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 COMP, including an opinion that COMP is not itself a security and/or derivative.