What is Arbitrum?
Arbitrum is a layer-two (L2) scaling solution built on top of the Ethereum blockchain. Its primary objective is to enhance speed, scalability, and cost-effectiveness within the Ethereum ecosystem by utilizing optimistic rollups. By leveraging the security and compatibility of Ethereum, Arbitrum offers numerous advantages, including increased transaction throughput and reduced fees compared to the Ethereum network. This is achieved by offloading a significant portion of the computational and storage burden to off-chain processes.
What is ARB?
The native token of Arbitrum, known as ARB, serves a governance role within the platform. Offchain Labs, the development team behind Arbitrum, recently announced their transition to a decentralized autonomous organization (DAO) structure, known as the Arbitrum DAO. ARB holders possess the ability to vote on proposals that impact features, protocol upgrades, fund allocation, and the election of a Security Council.
On March 16, 2023, Arbitrum made an eagerly anticipated announcement regarding the airdrop of their ARB token. This airdrop was intended for early users and DAOs actively building on the Arbitrum platform, with approximately 12.75% of the total token supply to be claimed. The recipients were rewarded based on a point-based system, reflecting their level of engagement with the Arbitrum network until the cutoff date of March 1, 2023. The total supply of ARB tokens is fixed at 10 billion units, with 1.275 billion units currently in circulation.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about ARB, including an opinion that ARB is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of ARB prior to making it available on Wealthsimple Crypto and has concluded that ARB is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated ARB based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of ARB, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created ARB;
- The supply, demand, maturity, utility and liquidity of ARB;
- Material technical risks associated with ARB, including any code defects, security breaches and other threats concerning ARB and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with ARB, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of ARB.
Like all other crypto assets, there are some general risks to investing in ARB. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure.
ARB presents elevated short-history risk. Although the network was launched for developers and early adopters in August 2021, the ARB token was only initially distributed on March 23, 2023.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading ARB. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc. dated June 23, 2023. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.
Last Updated: August 21, 2023