The information contained in this Crypto Asset Statement was last updated on August 15, 2022.
No securities regulatory authority in Canada has expressed an opinion about Aave or any of the other Crypto Contracts or Crypto Assets made available through Newton Crypto Ltd. (Newton) on the Newton Platform, including an opinion that Aave itself is not a security and/or derivative. Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.
Newton is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Newton Crypto Ltd. dated August 15, 2022. 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 Crypto Asset Statement or the Newton Platform Risk Statement.
This overview provides a summary of certain risks associated with Aave and is not an exhaustive description or summary of these risks and, in addition, does not take into account an individual’s particular situation or risk tolerance. Investors are encouraged to conduct their own research prior to trading any crypto asset.
Newton users should read the Newton Platform Risk Statement for additional discussion of general risks associated with crypto assets made available through the Newton platform. A copy of the Newton Platform Risk Statement acknowledged by you is available in your account in the “Statements & Reports” section.
Token Description & Project Background
Founded in 2017 by Stani Kulechov, Aave is an open-source, decentralized lending platform built on the Ethereum network with an ICO held in 2017. Currently, Aave supports 17 different cryptocurrencies and uses a peer-to-peer (P2P) lending system, or “pool-based” process, which allows users to participate as both depositors and borrowers. Aave provides its users with the ability to switch between stable and fixed interest rates which is accomplished by Aave’s utilization of Chainlink, thereby providing up-to-date valuations of locked-in crypto assets.
AAVE was originally launched in 2017 as ETHLend (as the LEND token) but was later swapped 100:1 to become the AAVE coin, which is the current native token of the Aave protocol. AAVE runs on a non-custodial platform which gives users the ability to borrow, lend, and earn interest on stable- and altcoins cryptocurrency assets without having to own them directly. The program is built on Ethereum and utilizes the blockchain’s decentralization and security to serve as a high-yield savings account for cryptocurrencies and stablecoins.*
* Currently, Newton does not provide its users with the ability to participate in the interest-earning functions of AAVE.
Risks of Aave
Like an investment in other crypto assets, an investment in Aave includes the following general risks: (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk.
For additional information of general risks associated with crypto assets, you may refer to the Newton Platform Risk Statement. In terms of specific risks, as Aave is one of the longest-standing crypto assets and its community base is widely decentralized, there is no central working group or authority to disclose material information to the public regarding Aave.
Please note that these risks and the associated summaries or overviews provided for each herein are not intended to be an exhaustive discussion pertaining to all such risks and, in addition, there may be other risks that come with exposure to Aave. We encourage all Newton users to perform their own due diligence to assess the risks associated with Aave and to determine whether this level of risk is acceptable to them. Neither Aave nor Newton guarantees the value of Aave, and holders of Aave will not have any recourse to Aave or Newton if the value of Aave declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed Aave prior to making it available on the Newton Platform and has concluded that Aave is not a security or derivative under Canadian securities legislation; however, there is a risk that this conclusion could change in the future and that, in such event, Newton will be required to halt, suspend, and then remove Aave from its platform as described in the Newton Platform Risk Statement.
Further, as indicated above, no Canadian securities regulatory authority has expressed an opinion about Aave, including an opinion that Aave is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed Aave, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of Aave, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Aave.
- The supply, demand, maturity, utility, and liquidity of Aave.
- Material technical risks associated with Aave, including any code defects, security breaches and other threats concerning Aave and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
- Legal and regulatory risks associated with Aave, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Aave, and (ii) statements made by any securities regulatory authorities in Canada, other regulators in IOSCO-member jurisdictions, or the regulator with the most significant connection to Aave about whether Aave, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the Aave White Paper is available at the following link.