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 NEAR Protocol 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 NEAR Protocol 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 NEAR Protocol 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
NEAR Protocol is a layer-one blockchain that was designed as a community-run cloud computing platform and that seeks to solve some of the limitations that have been bogging competing blockchains such as low transaction speeds, low throughput, and poor interoperability. The aim is to provide the ideal environment for DApps and to create a developer and user-friendly platform. NEAR introduces unique solutions to scaling problems and has its own consensus mechanism called “Doomslug.” NEAR uses a “sharded” Proof of Stake consensus mechanism, with each shard currently capable of processing about 1000 transactions per second. Currently, there are 4 shards in total on the NEAR protocol, which brings the total speed of up to 4000 TPS.
NEAR Protocol’s development is coordinated by NEAR Foundation, a non-profit organization based in Switzerland. NEAR originally went live in October 2020. According to DefiLama, as of July 2022, NEAR protocol has about US$314M of total value locked (TVL) onchain.
* Currently, Newton does not provide its users with the ability to participate in the staking functions of MKR.
Risks of NEAR
Like an investment in other crypto assets, an investment in NEAR 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 NEAR 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 NEAR.
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 NEAR. We encourage all Newton users to perform their own due diligence to assess the risks associated with NEAR and to determine whether this level of risk is acceptable to them. Neither NEAR nor Newton guarantees the value of NEAR, and holders of NEAR will not have any recourse to NEAR or Newton if the value of NEAR declines for any reason whatsoever.
Newton’s Evaluation Process
Newton has reviewed and assessed NEAR Protocol prior to making it available on the Newton Platform and has concluded that NEAR Protocol 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 NEAR Protocol 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 NEAR Protocol, including an opinion that NEAR Protocol is not itself a security and/or derivative.
Based on publicly available information Newton has reviewed NEAR Protocol, including, but not limited to, a review of the following:
- The creation, governance, usage, and design of NEAR Protocol, including the source code, security, and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that created NEAR Protocol.
- The supply, demand, maturity, utility, and liquidity of NEAR Protocol.
- Material technical risks associated with NEAR Protocol, including any code defects, security breaches and other threats concerning NEAR Protocol 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 NEAR Protocol, including (i) any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of NEAR Protocol, 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 NEAR Protocol about whether NEAR Protocol, or generally about whether the type of crypto asset, is a security and/or derivative.
A link to the NEAR Protocol White Paper is available at the following link.