What is EOS Network?
The EOS network is a blockchain-based platform designed for the development and deployment of decentralized applications (dApps). EOS was created by Block.one, a company registered in the Cayman Islands. The project was publicized in 2017, and its development was led by two well-known figures in the cryptocurrency space, Brendan Blumer and Daniel Larimer. After the launch of the network by the EOS community in June 2018, Block.one began to gradually shift its focus towards other business ventures and projects. Recognizing the gap left by Block.one, prominent members of the EOS community formed the EOS Foundation, a non-profit entity with the goal of supporting the EOS ecosystem. The EOS Foundation currently oversees the EOS network’s ongoing development.
Leveraging a Delegated Proof-of-Stake (DPoS) consensus mechanism, EOS prioritizes scalability and usability, offering fast transaction speeds and minimal fees. Managed by a rotating group of 21 elected block producers, the network emphasizes a governance structure that allows for community-driven upgrades and decisions. Through its unique resource allocation system, EOS aims to provide a more user-friendly and efficient environment for developers and users alike.
What is the EOS token?
The EOS token is the native cryptocurrency of the EOS blockchain. It grants holders network resources (like CPU and bandwidth), voting rights for electing block producers, and the ability to participate in governance decisions. Primarily used for staking and resource allocation, the EOS token is essential for developers and users to interact with and utilize the EOS platform's features and services.
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 EOS can be supported by Wealthsimple’s platform, including whether EOS is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
We evaluated EOS based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of EOS, 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 EOS;
- The supply, demand, maturity, utility and liquidity of EOS;
- Material technical risks associated with EOS, including any code defects, security breaches and other threats concerning EOS 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 EOS, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of EOS; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether EOS, 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 EOS may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support EOS.
Like all other crypto assets, there are some general risks to investing in EOS. 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.
There may be heightened legal and regulatory risks applicable to EOS. The development of the software underlying the EOS network was funded through an Initial Coin Offering (ICO) conducted by Block.one in 2017 and 2018. In October 2019, Block.one agreed to settle with the U.S. Securities and Exchange Commission (SEC) for $24 million over allegations that it conducted an unregistered securities sale with its ICO. There has also been class action litigation in the U.S. courts in connection with the Block.one ICO.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading EOS. 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