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.
No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform.
Wealthsimple has performed an assessment of whether ARB can be supported by Wealthsimple’s platform, including whether ARB is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
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;
- 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; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether ARB, or generally about whether the type of crypto asset, is a security and/or a derivative.
Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to ARB may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support 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. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.
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.
Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision).
The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
Last Updated: January 1, 2024