Crypto Asset Statement: SYS (Syscoin)
Last updated: April 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 Syscoin (SYS). This summary sets out certain key information about Syscoin as well as some of the risks involved in trading it. While we tried to describe the key features of Syscoin here, this summary doesn’t provide all relevant information on Syscoin. 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 Syscoin
The Syscoin network was launched in 2014 by Sebastian Schepis as a blockchain network that attempts to combine best of the leading blockchain networks, Bitcoin and Ethereum. Built on a fork of Litecoin, the Syscoin network combines Bitcoin’s proof of work consensus mechanism with Ethereum’s smart contract capabilities. The network has recently also added ZK-Rollups capabilities (a layer-2 scaling solution that moves computation off-chain while storing transaction data on-chain) which significantly increases its speed of the network.
Similar to Bitcoin, Syscoin is a Proof of Work (PoW) blockchain that performs merged mining with Bitcoin. This means that miners can mine both BTC and Syscoin simultaneously at no extra cost. At the same time, the Syscoin blockchain benefits from the security provided by the Bitcoin miners via PoW.
Since its launch in 2014 the governance of the Syscoin network has evolved. A somewhat recent development to the network was the creation of master nodes network to provide increased security to the network. In order to operate a master node network participants must ‘lock in’ 100,000 SYS Tokens and provide certain minimum hardware support to the Syscoin network. 75% of each regular block reward is distributed to master node operators as incentive to continue to support the network. The payout to master node operators provides accelerated payouts based on seniority in order to promote long term support for the network with rewards increasing after 1 year and again after 2.5 years.
What is the Syscoin Token?
The Syscoin Token (SYS) is the native token of the Syscoin platform. SYS is used for paying transaction fees within the Syscoin network, including the minting and transferring of other tokens created on the Syscoin network including non-fungible tokens. SYS holders with 100,000 SYS can also host master nodes to secure, participate in the governance of and provide other services to the blockchain network. Master node operators earn SYS rewards in return for their services.
This overview provides a summary of certain risks associated with Syscoin. We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading Syscoin, 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.
Competition and Adoption. There are other blockchain networks that provide similar technology to that of the Syscoin network, including Ethereum (which is widely adopted and used in the blockchain industry). The future value of the SYS token will be based to some degree on the adoption of its technology by users of blockchain technology generally. Failure of the Syscoin protocol to obtain widespread adoption could harm the value of the SYS token.
Inflation. Similar to Bitcoin, new SYS Tokens are created through a mining process. This mining mechanism causes inflation in the Syscoin network. Inflation on the Syscoin network is not capped. Inflation can be expected to cause downward pressure on the price of a crypto asset.
Dependence on Bitcoin. Because SYS tokens are co-mined with Bitcoin any changes to the Bitcoin network that affect miners or mining generally can be expected to have a corresponding impact on the Syscoin network.
Dependence on the Syscoin Foundation. The future success of the Syscoin network is likely somewhat dependent on the ongoing participation in network development by the founders and the Syscoin Foundation. 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 Syscoin. We encourage all Catalyx users to perform their own due diligence to assess the risks associated with Syscoin 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 Syscoin or any of the other crypto contracts or crypto assets made available through the Platform, including an opinion that Syscoin 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.