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 MKR (“MKR”). We created this summary to help you understand the basics of MKR as well as some of the risks involved in acquiring it. While we tried to describe the key features of MKR 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 MKR to make sure you are comfortable acquiring it.
Description of MKR
MKR is the governance token for the Maker protocol (the “Maker Protocol”). The Maker Protocol allows users to generate Dai – a cryptocurrency-backed stablecoin soft-pegged to the U.S. Dollar – by contributing certain crypto assets to smart contracts. The Maker Protocol was initially created by a group of developers led by Rune Christensen. The Maker Protocol is now overseen by the MakerDAO, a decentralized autonomous organization, which works alongside the Maker Foundation, a Cayman Islands company that assists in developing the Maker Protocol, and the Dai Foundation, a Denmark-based organization formed to house the Maker community's key intangible assets, such as trademarks and code copyrights.
Dai is generated, backed, and kept stable through collateral assets that are deposited into Ethereum-based smart contracts (known as “Maker Vaults”) on the Maker Protocol. To generate Dai, the Maker Protocol accepts as collateral any Ethereum-based asset that has been approved by MKR holders. When a user wants to withdraw the collateral from a Maker Vault, they must repay the Dai generated and pay a fee (known as a “Stability Fee”). To ensure there is always enough collateral in the Maker Protocol to cover the value of all outstanding debt (i.e., the amount of Dai outstanding valued at its target price of USD$1), any Maker Vault deemed too risky (according to parameters established by MKR holders) is liquidated through automated auctions. Additionally, the Maker Protocol allows Dai holders to earn further Dai when they deposit Dai into a smart contract. MKR holders vote on the rate at which the Dai is earned, known as the Dai Savings Rate (“DSR”). The DSR is intended to be set so as to enhance the price stability of Dai.
The MKR token allows holders to vote on various parameters governing the Maker Protocol’s smart contracts, including the DSR and the risk parameters that trigger the liquidation of Maker Vaults. MKR is also used to purchase excess Dai and to make stability fee payments in auctions.
Like other crypto assets, there are some general risks associated with acquiring MKR. 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 MKR below. While we tried to describe the key risks associated with MKR here and in our risk statement, these aren’t all of the risks associated with trading in MKR. You should also do your own research on MKR to make sure you are comfortable acquiring it.
Loss of Value on Failure of Dai to Perform
A failure of the Maker Protocol to perform according to expectations (i.e., by generating Dai and maintaining its price and by allowing collateral assets to be redeemed in exchange for Dai) would harm its users. The mere prospect of Dai not performing as expected could result in MKR’s price to significantly decline.
MKR’s Dependence on the Ethereum Blockchain
The strength of MKR is heavily dependent on the strength of the Ethereum network. If the Ethereum network were to experience a serious issue, MKR’s price could significantly decline.
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 MKR 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 MKR, including an opinion that MKR is not itself a security and/or derivative.