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. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about EOS, including an opinion that EOS is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of EOS prior to making it available on Wealthsimple Crypto and has concluded that EOS 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 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; and
- 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.
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. Each of these risks are described in more detail in our in-app Product Disclosure.
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.
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: November 7, 2023