Crypto Asset Statement: ATOM (Cosmos)
Last updated: April 10, 2023
About this Statement
CatalX CTS (“Catalyx” or “we”) strives to provide our users with information to assist in understanding crypto assets that are offered for trading on the Catalyx platform (the “Platform”). One of the crypto assets we offer on the Platform is ATOM (Cosmos). This summary sets out certain key information about Cosmos and ATOM as well as some of the risks involved in trading ATOM. While we tried to describe the key features of ATOM here, this summary doesn’t provide all relevant information on ATOM. We encourage users to perform their own research in order to understand any crypto asset that they intend to trade on the Platform.
About Cosmos
Cosmos is a decentralized network of independent parallel blockchains designed to let people build custom, secure, scalable and interoperable blockchain applications quickly. Each chain is secured by the Tendermint consensus, a Byzantine Fault Tolerance (BFT) consensus algorithm. The protocol’s goal is to create an ‘Internet of Blockchains’, which is a network of blockchains where each participant is able to communicate with each other in a decentralized way.
This goal is achieved through three core open-source elements: Tendermint, the Cosmos SDK and the Inter-Blockchain Communication protocol. Each new independent blockchain created within Cosmos is called a “zone” and is tethered to the Cosmos Hub. The Hub is the first of many interconnected blockchains built on the network and acts as an intermediary. Validators and delegators in the Hub can vote on proposals that are then able to change the parameters of the system, coordinate the upgrades, and vote on the different governance policies of the Cosmos Hub.
What is ATOM?
ATOM is the native token of the Cosmos Hub and performs various functions. ATOM owners can stake their tokens to a trusted validator to ensure network security. Cosmos utilizes a gas system similar to Ethereum and ATOMs are also used to pay transaction fees. Finally, ATOMs are required to participate in on-chain governance.
Risks
This overview provides a summary of certain risks associated with ATOM. We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading ATOM, and in addition, does not take into account an individual’s particular situation or risk tolerance. Purchasers are encouraged to conduct their own research prior to trading any crypto asset on the Platform. Catalyx users should read the Risk Disclosure Statement for additional discussion of general risks associated with crypto assets made available through the Catalyx platform.
Underlying Value Risk. Cosmos aims to offer an ecosystem of connected blockchains. It also tries to reduce the complexity of the blockchain technology and ease for developers with help of a modular framework that demystifies decentralized apps. If the means of valuing Cosmos prove to be fundamentally flawed, then the market may undergo a repricing of Cosmos, which could have an adverse impact on the price of ATOM.
Dependence on Cosmos Developers. The future success of the Cosmos project is likely somewhat dependent on the ongoing participation in network development by the founders and the Interchain Foundation, a foundation formed to support the development of the Cosmos ecosystem. If these entities cease their support for the network such actions may be detrimental to the project and may negatively affect the price of ATOM.
Please note that these risks and the associated summaries or overviews provided for each in the Risk Disclosure Statement 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 ATOM. We encourage all Catalyx users to perform their own due diligence to assess the risks associated with ATOM and to determine whether this level of risk is acceptable to them.
How Catalyx determines which Crypto Assets to List
Catalyx has established robust policies and procedures to review each crypto asset offered for trading on the Platform. Among other information, we review available public information relating to the crypto asset on the following topics prior to making a determination on whether a crypto asset will be listed:
The history and characteristics of the crypto asset including whether the crypto asset was launched by ICO;
Analysis of the founders or inventors of the crypto asset/related network and a review of their ongoing involvement with crypto asset/network;
How the crypto asset functions including a review of its utility or purpose;
The market liquidity for the crypto asset;
The current and proposed governance of the ecosystem on which crypto asset operates with a focus on the level of decentralization of such ecosystem; and
The position taken by any regulator with respect to the crypto asset including any enforcement action taken against the crypto asset, the related network, or the founders.
In addition to the above we also conduct an analysis of factors weighing in favor or against the crypto asset being deemed to be a security based on Canadian securities laws.
Regulatory Information
No securities regulatory authority in Canada has expressed an opinion about ATOM or any of the other crypto contracts or crypto assets made available through the Platform, including an opinion that ATOM itself is not a security and/or derivative. Changes to applicable law may adversely affect the use, transfer, exchange, or value of any crypto contracts or crypto assets you hold on the Platform.
Certain statutory rights under securities legislation in Canada do not apply in respect of this Crypto Asset Statement.