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The information contained in this Crypto Asset Statement was last updated on Sep 30, 2025.

No securities regulatory authority in Canada has expressed an opinion about Cardano 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 Cardano 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 March 12, 2025. 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 Cardano 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

Created by Ethereum co-founder Charles Hoskinson, and launched in September 2017, Cardano is an open-sourced, public smart contract blockchain platform.  In addition to being a smart contract platform, which allows the automation of the execution of an agreement upon the trigger of certain requirements so that all participants can be certain of the outcome without any intermediary's involvement or time loss, Cardano is built on the Ouroboros Proof-of-Stake consensus protocol.  Out of the five stages of development (Byron, Shelley, Goguen, Basho, and Voltaire), Cardano is currently in the Basho, or scaling, stage.

Cardano is decentralized and facilitates peer-to-peer transactions with ADA (its native token) which can be used for conducting transactions and staking in the ecosystem.*  ADA tokens are named after Augusta Ada King, Countess of Lovelace, an English mathematician and writer who is largely known for her work on the Analytical Engine, (i.e., Charles Babbage's mechanical computer).

* Currently, Newton does not provide its users with the ability to participate in the staking functions of ADA.

Risks of Cardano

Like an investment in other crypto assets, an investment in Cardano 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 Cardano 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 Cardano.

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 Cardano.  We encourage all Newton users to perform their own due diligence to assess the risks associated with Cardano and to determine whether this level of risk is acceptable to them.  Neither Cardano nor Newton guarantees the value of Cardano, and holders of Cardano will not have any recourse to Cardano or Newton if the value of Cardano declines for any reason whatsoever.

Newton’s Evaluation Process

Newton has reviewed and assessed Cardano prior to making it available on the Newton Platform and has concluded that Cardano 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 Cardano 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 Cardano, including an opinion that Cardano is not itself a security and/or derivative.

Based on publicly available information Newton has reviewed Cardano, including, but not limited to, a review of the following:

• The creation, governance, usage, and design of Cardano, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created Cardano.
• The supply, demand, maturity, utility, and liquidity of Cardano.
• Material technical risks associated with Cardano, including any code defects, security breaches and other threats concerning Cardano 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 Cardano, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of Cardano, 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 Cardano about whether Cardano, or generally about whether the type of crypto asset, is a security and/or derivative.

A link to the Cardano White Paper is available at the following link.

Addendum to Crypto Asset Statement (ADA)

How does ADA staking work? 

Cardano uses a Proof of Stake (PoS) consensus mechanism, where any token holder or group of token holders can stake ADA to become a validator on the network. The responsibilities and role of validators are to check transactions, verify on-chain activity, maintain records, and produce new blocks on the blockchain. Staking rewards are distributed to validators and delegators who stake their ADA.

For a more detailed general explanation of staking and the associated risks of staking, please refer to the Newton Platform Risk Statement. Additional information regarding staking of ADA on the Newton Platform is set out below.

Network Inflation and Saturation

The Cardano network has a variable inflation rate (currently around 4.6%) that determines the size of the total reward pool each epoch. This rate is designed to decrease over time and is influenced by factors such as the target percentage of ADA staked, the actual percentage staked, and network transaction fees.

Each stake pool also has a saturation threshold (currently ~64 million ADA). If a pool’s delegated stake exceeds this threshold, rewards for that pool are proportionally reduced and shared among all delegators in that pool. As a result, your staking rewards may vary over time based on both overall network participation and whether your validator’s pool is above or below the saturation threshold.

Supported Validators 

The infrastructure providers of the validator nodes that Newton arranges to stake ADA with and the total fees for staking ADA are set out in our Staking Asset Supplementary Disclosure: Cardano (ADA).

Approved validators will receive a fee (a Validator Commission) based on a percentage of staking rewards earned from the delegated ADA. The Validator Commission is determined by the respective validators and will be deducted by the Cardano protocol upon the distribution of staking rewards. The estimated annual percent yield (APY) presented in-app is inclusive of this fee.

Epochs

An epoch is the length of time taken to complete a specific amount of blocks on a particular blockchain. For the Cardano protocol, an epoch is currently approximately 5 days.

Staking Rewards

Staking rewards on Cardano are computed once per epoch. Rewards accrued in a given epoch are issued to all participants (validators) in the first block of the following epoch. When rewards are received, Newton will calculate and distribute your share of ADA staking rewards to your respective account on a weekly basis, following an initial warm-up period of two complete Epochs. For each rewards distribution period, your share of ADA staking rewards is proportional to the amount of ADA that you had staked when the reward period began. When you unstake your ADA, you may be ineligible to receive any staking rewards for that period.

Staking Fees 

Newton charges you a fee equal to a percentage of staking rewards to be received by or attributed to your staked ADA through Newton’s Platform. The amount of the fee for staking ADA is set out in our Staking Asset Supplementary Disclosure: Cardano (ADA) next to “Reward Fee”. This fee includes the Validator Commission described above along with Newton’s staking fee, and is deducted prior to any staking rewards being distributed to your account.

Custody of Staked ADA 

ADA staked through Newton’s platform are staked from dedicated wallets with Newton’s custodian (Coinbase Custody Trust Company) with approved validators. Newton’s custodian will continue to hold the private keys or other cryptographic key material required to control staked ADA for so long as these assets are staked. Your staked ADA will not leave Newton’s omnibus accounts with the cold wallet custodian and your ADA will continue to be attributed to your account. 

Staking Asset Supplementary Disclosure: Cardano (ADA) 

Prior to staking any ADA, please review Newton’s Platform Risk Statement and the Crypto Asset Statement for ADA.

ADA can be staked on the Newton Platform. The following is a summary of the key fees, bonding periods, and other relevant factors to staking ADA on Newton’s Platform. This disclosure is in addition to and should be read with the risk information provided in Newton’s Platform Risk Statement and the Crypto Asset Statement for ADA.

Newton arranges to stake ADA with validator nodes operated by the following infrastructure providers:

* Rewards are expressed as a percentage of units of the crypto asset staked and not the Canadian dollar value of crypto assets staked.