Crypto Asset Statement: RVN (Ravencoin)
Last updated: April 17, 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 Ravencoin (RVN). This summary sets out certain key information about RVN as well as some of the risks involved in trading it. While we tried to describe the key features of RVN here, this summary doesn’t provide all relevant information on RVN. 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 Ravencoin Network
Launched in 2018 as an open-source crypto protocol with the aim of providing fair democratized access, Ravencoin (RVN) is a proof of work blockchain based on a fork of Bitcoin, but designed with the additional capacity to allow for the creation, distribution and transfer of digital assets. The original whitepaper for Ravencoin was published by Bruce Fenton and Tron Black, seasoned developers prior to the launch of the project. Fenton in particular served as a board member and an executive director of the Bitcoin Foundation from 2015 to 2018. In 2020 the Ravencoin Foundation was launched by the Ravencoin community as a non-profit organization that endeavors to assist and protect the Ravencoin open-source project.
Ravencoin differs from Bitcoin in several key ways including the mining mechanism that it uses which is called X16R. This mechanism is designed to promote more decentralized mining than Bitcoin’s algorithm by inhibiting mining via application specific integrated circuit chips (expensive and specialized computer hardware that makes mining more profitable on a larger scale), this change was intended to improve network security by reducing the control that large mining pools have over the network. The other key change in the Ravencoin protocol from Bitcoin was to overcome the innate issues faced by developers attempting to issue and transfer digital assets on the Bitcoin network, including the problem of inadvertent destruction of digital assets on the Bitcoin network through spending associated Bitcoin. Ravencoin was designed with the additional capabilities to allow for the creation, distribution and transfer of digital assets from one party to another similar to the use of ERC-20 tokens on Ethereum. One benefit of Ravencoin over other blockchain projects like Ethereum which can also provide for the securitization of assets is that digital asset names on the Ravencoin network are guaranteed. The first entity to issue a digital asset with a given name becomes the owner of that token project. This is in contrast to projects like Ethereum where project names can be duplicated leading to error and fraud problems.
Ravencoin is the native cryptocurrency of the Ravencoin network. The token is used to pay for transaction fees on the network, for example a token issuer using the Ravencoin network must burn RVN in order to create or transfer tokens. RVN is also used to compensate miners for securing and validating transactions on the Ravencoin blockchain.
This overview provides a summary of certain risks associated with RVN. We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading RVN, 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.
Adoption. Ravencoin was built for one key purpose to facilitate the creation and transfer of assets. The future value of the token will be based on some degree on the adoption of its technology by entities looking to tokenize and distribute assets using a secure blockchain network, as entities using the Ravencoin network to mint and distribute digital assets are required to pay transaction fees in RVN. Failure of the Ravencoin protocol to obtain satisfactory levels of adoption could be detrimental the value of the RVN token.
Malicious Attacks. In July, 2020 Ravencoin was subject to attack due to a defect located in its code and exploited by hackers. As a result of the attack, hackers were able to mint 315 million RVN (roughly equal to 1.5% of the total supply) in a short period of time. Similar to other proof of work networks, the Ravencoin network is also subject to risks of ‘51% attacks’.
Inflation. Similar to Bitcoin, new RVN is created through a mining process. This mining mechanism causes inflation in the Ravencoin network. At this time approximately 60% of the total capped supply of 21 billion RVN is in circulation, meaning that the total supply of RVN will eventually grow by approximately 66% from its current level. Inflation can be expected to cause downward pressure on the price of a crypto asset.
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 RVN. We encourage all Catalyx users to perform their own due diligence to assess the risks associated with RVN 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 RVN or any of the other crypto contracts or crypto assets made available through the Platform, including an opinion that RVN 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.