About this Summary

Ndax Canada Inc. (“Ndax”, “we” and “our”) believes that our users should understand the crypto assets that they are able to trade and stake 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 in SOL. While we tried to describe the key features of SOL, 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

History of SOL

The Solana (SOL) platform was founded back in 2017 by Anatoly Yakovenko. Anatoly later teamed up with former Qualcomm colleagues Greg Fitzgerald and Stephen Akridge, and three others to found the company that would eventually become Solana Labs. The founding team included former Apple engineers in addition to the Qualcomm veterans.

Solana launched on Mainnet Beta in March 2020, shortly after raising $1.76 million in a public token auction hosted on CoinList. The project's beta network featured basic transaction capabilities and smart contract support. Solana can purportedly handle 50,000 transactions per second.

What is SOL used for

Solana can power several applications that offer a variety of features, including smart contracts, NFTs, decentralized finance, and various digital apps.

The SOL token is the native currency in Solana’s ecosystem and is used to interact with various decentralized apps and to make payments. SOL also has additional use cases, including governance and staking the token to earn additional rewards. Its maximum supply caps at 489 million SOL.

How SOL works

Solana’s major innovation is speed through new technologies including a consensus mechanism called proof of history. Because of this, it can process many more transactions per second and has much lower transaction fees, than rival blockchains like Ethereum.

The concept of Solana’s Proof of History consensus mechanism involves proving that a message occurred before or after a known event, rather than relying on a timestamp. Solana uses Bitcoin’s SHA256 mining algorithm with the addition of a Verifiable Delay Function to create a historical record of events on the blockchain.

Certain Staking Services Terms Applicable to SOL

You can cancel your opt-in to the staking services for any crypto-asset within the first four hours of your initial opt-in.

In addition to the other staking terms that you agree to when you opt-in to our staking services, please consult the table below for additional terms that currently apply to the staking service for SOL at this time. Note that the annual percentage yield (“APY”) is an estimate, and terms are subject to change. All terms in effect are maintained on our website. 

Example: If you have 100 coins staked at 3% APY, the gross reward will be 3 coins for the year. Ndax will earn a fee of 20%, in this case, 0.6 coins and 2.4 coins will be credited to your account based on the payout frequency.

For purposes of the above table:

• “Instant Redemption” may be available for flexible plans on a first-come, first serve basis, subject to availability. If elected, your opt-out is effective immediately, and you are not entitled to any rewards generated within the reward period. This is subject to Ndax liquidity management provisions to fulfill client instructions to sell or transfer crypto assets prior to the Unbonding Period.
• “Standard Redemption” means that your opt-out is delayed for the period of time indicated in the above table, but you collect any rewards generated up to and including those generated within the reward period.
• “Ndax Admin Fee” refers to the percentage fee on the total amount of the reward generated through staking.
• “Bonding Period” refers to the amount of time it takes before you begin to generate staking rewards for that crypto asset from the time you have started staking.
• “Unbounding Period” refers to the amount of time you need to hold your eligible staked crypto assets after opting-in to the staking service before you are able to opt-out.

Risks Specific to Staking SOL  

In addition to the risks described above, prior to staking SOL, you acknowledge that:  

• given the volatility of crypto assets, the value of your staked SOL when you sell or withdraw it, and the value of any reward you earn through staking, may be significantly less than their current value;    
• there is no guarantee that you will receive any reward on staked SOL;    
• past rewards are not indicative of expected future rewards;  
• the rewards you are entitled to may be changed at the discretion of Ndax;  
• you may lose all or a portion of your staked SOL if the validator does not perform as required by the network; and  
• additional risks can be found in the Risk Statement.  

Risks

Before entering into an agreement (a “Crypto Contract”) with Ndax to buy or sell any crypto assets through the Platform, it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

Like other crypto assets, there are some general risks associated with investing in SOL. Each of these risks is described in more detail in the Risk Statement provided to you at the time that you open your account with us and is also available online on the Ndax website and app. You should review the Risk Statement.

In addition to the general risks set out in the Risk Statement, we also point out other specific risks to SOL below.  

Network downtime     

Multiple events in 2022 have caused significant amounts of downtime on the Solana network. On January 21, 2022, a denial-of-service attack caused an outage that lasted approximately 48 hours. On February 2, 2022, the Wormhole bridge, a protocol that allows users to move tokens and NFTs between various blockchains, experienced an exploit leading to losses totaling over USD$320 million. At the time, this was the second-largest DeFi exploit ever and remains the largest attack on the Solana Network to date.  

Future development of the network     

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.

While we have tried to describe the key risks associated with SOL here and in our Risk Statement, we emphasize that this Crypto Asset Statement is not exhaustive of 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 such a crypto asset.

Regulatory Information  

Ndax is offering Crypto Contracts in accordance with the terms of a pre-registration undertaking dated March 23, 2023, that we entered into with the Canadian securities regulators, while our application for registration in certain Canadian jurisdictions is reviewed. Please note that Ndax is not currently registered under securities or derivatives legislation of Canada and there is no guarantee that registration will be granted.

The statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply in respect of a misrepresentation in this Crypto Asset Statement.

Prior to offering a Crypto Contract on SOL, Ndax assesses whether SOL is a security and/or a derivative under the securities and derivatives laws of Canada. Ndax’s assessment includes a review of the history of the SOL (such as how it was created and its governance structure), its characteristics, its market capitalization, and any regulatory concerns regarding SOL. Based on its assessment, Ndax concluded that SOL is not a security or a derivative. However, there is a risk that this conclusion could change in the future. In that case, Ndax may be required to halt or withdraw SOL from trading on the Platform and stop any future trading of Crypto Contracts based on SOL, and users holding SOL may be required to liquidate their positions, potentially at a significant loss. In this event, users holding positions in SOL will be notified via the Platform or other electronic means and advised of the options available to them and any applicable period to sell or withdraw their positions in SOL.

No Canadian securities regulatory authority has expressed an opinion about SOL, including an opinion that SOL is not itself a security and/or derivative.