Crypto Asset Statement: HBAR (Hedera Hashgraph)
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 Hedera Hashgraph (HBAR). This summary sets out certain key information about HBAR as well as some of the risks involved in trading it. While we tried to describe the key features of HBAR here, this summary doesn’t provide all relevant information on HBAR. 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 HBAR
About Hedera Hashgraph
Hedera Hashgraph is a project that aspires to provide an infrastructure for the decentralization of the Internet as well as traditional cryptocurrencies. Unlike most other crypto projects, Hedera Hashgraph operates on Distributed Ledger Technology (DLT) architecture instead of blockchain. The project is governed by a counsel which includes a rotating set of members, many of which are large international organizations. Hedera Hashgraph uses a structure known as Directed Acyclic Graph (DAG) to verify and execute transactions on the network. The DAG structure has certain advantages over blockchain technology which results in the reduction of the data size of transactions which in turn lowers costs, increases speed and improves the scalability of the network. The Hedera Hashgraph network can be used to build decentralized applications and protocols that scale with smart contracts.
HBAR is the native cryptocurrency of the Hedera Hashgraph network and its main functions are to be used as “network fuel” to pay for transactions on the network as well as for and network protection through a method similar to a proof of stake mechanism. Developers can use HBARs to pay for network services, such as transferring HBARs, managing fungible and non-fungible tokens, and logging data. For each transaction submitted to the network, HBARs are used to compensate network nodes for bandwidth, computation, and storage. Hedera’s public network uses HBARs, which are staked or proxy staked to a network node, to weigh votes on transactions when reaching consensus.
This overview provides a summary of certain risks associated with HBAR. We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading HBAR, 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.
Alternative Solution to Blockchain Technology. The DLT technology used to operate the Hedera network is an alternative to blockchain technology which is typically based on principals of decentralization. The Hedera network does not operate on the same decentralized principals as the network is controlled by a centralized group of entities, the Hedera Council. Additionally, unlike most blockchain networks, the Hashgraph protocol on which the Hedera network operates is not open source, but is patented by the developer, Swirlds. These ideological differences with the crypto community more broadly may present challenges to the widespread adoption of the Hedera network which could affect the value of HBAR.
Security Limitations of Hashgraph Technology. Some critics have suggested that the Hashgraph protocol may allow bad actors to influence notes and transmit false data in ways that are not possible on other blockchain networks, due to the lack of cryptographic block confirmation protocols. If this turns out to the case, this factor could also affect adoption of the network which could negatively affect the price of HBAR.
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 HBAR. We encourage all Catalyx users to perform their own due diligence to assess the risks associated with HBAR 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 HBAR or any of the other crypto contracts or crypto assets made available through the Platform, including an opinion that HBAR 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.