Crypto Asset Statement: LINK (Chainlink)
Last updated: March 27, 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 Chainlink (LINK). This summary sets out certain key information about LINK as well as some of the risks involved in trading it. While we tried to describe the key features of LINK here, this summary doesn’t provide all relevant information on LINK. We encourage users to perform their own research in order to understand any crypto asset that they intend to trade on the Platform.
History & Characteristics of LINK
What is Chainlink?
Chainlink is a decentralized oracle network that allows blockchains to communicate and receive information from non-blockchain sources. The network accomplishes this by allowing smart contracts to interact with real-world data and services that exist outside of blockchain networks through the use of decentralized oracles. Smart contracts are pre-specified agreements on a blockchain that automatically execute when certain conditions are met and an oracle is a software that acts as an intermediary, translating data between the blockchain and the real world. Some smart contracts require data from off-blockchain sources, this is where the Chainlink network operates to provide off-chain data to smart contracts on the blockchain in a format that they will understand. Each Chainlink request requires multiple oracles operating on the network to respond with the data requested. By using a decentralized oracle system, the problem of faulty or compromised data being delivered as a response to requests is greatly diminished.
LINK is an ERC-20 token and is used to facilitate transactions on the Chainlink network. When a user needs information for a smart contract, they put out a “Requesting Contract” and fund this contract with LINK. Due to the token's use in facilitating the network's essential operations, LINK is a crucial component of the Chainlink Network. Payments made in LINK are specifically meant to reward node operators that help close the information gap between smart contracts and outside data sources by retrieving data for smart contracts. To demonstrate their dedication to the network and encourage good service, Chainlink node operators are also obliged to stake LINK in the Chainlink network.
This overview provides a summary of certain risks associated with LINK. We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading LINK, 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.
Concentration Risk. As of the date of publication a large percentage of the total supply of LINK appears to be held by a relatively small number of holders. As a result, the actions of these major LINK holders could potentially significantly affect the value of LINK.
Dependence on Chainlink Developers. The future success of the Chain network is likely dependent on the ongoing participation in network development by the founders and Chainlink Labs. If these entities cease their support for the network such actions may be detrimental to the project going forward.
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 LINK. We encourage all Catalyx users to perform their own due diligence to assess the risks associated with LINK 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.
No securities regulatory authority in Canada has expressed an opinion about LINK or any of the other crypto contracts or crypto assets made available through the Platform, including an opinion that LINK 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.