What is Algorand?

Algorand is a layer-1 decentralized blockchain platform founded in 2017 by MIT professor and Turing Award winner Silvio Micali. Designed for scalability, security, and decentralization, Algorand employs a unique Pure Proof-of-Stake (PPoS) consensus mechanism that allows for quick, energy-efficient transactions without compromising on security. The platform supports a range of applications, including decentralized finance (DeFi), non-fungible tokens (NFTs), and enterprise use cases.

As of January 1, 2025, Algorand transitioned from an automatic rewards system, where simply holding ALGO tokens generated rewards, to a staking-based rewards model. In this new system, only users actively staking their ALGO to validate transactions or participating in governance earn rewards. This shift aligns rewards with active contributions to the network's operation and decentralization.

What is ALGO?

The ALGO token is integral to the Algorand network. It serves as the native currency for transaction fees, staking, and governance participation. Additionally, ALGO is used in decentralized applications (dApps) built on the network. With a capped total supply of 10 billion tokens, ALGO's scarcity is fixed, ensuring predictable issuance and distribution over time.

Risk Statement

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 ALGO can be supported by Wealthsimple's platform, including whether ALGO is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.

We evaluated ALGO based on publicly available information, including (but not limited to):

• The creation, governance, usage and design of ALGO, 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 ALGO;
• The supply, demand, maturity, utility and liquidity of ALGO;
• Material technical risks associated with ALGO, including any code defects, security breaches and other threats concerning ALGO 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 ALGO, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of ALGO; and
• Statements made by regulators or securities regulatory authorities in Canada and other jurisdiction regarding whether ALGO, 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 ALGO may result in changes to this Crypto Asset Statement and/or Wealthsimple's ability to support ALGO.

Like all other crypto assets, there are some general risks to investing in ALGO. 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.

Additional Risks / Information

ALGO has elevated regulatory risk. The United States Securities and Exchange Commission (SEC) has alleged that ALGO is a security under U.S. federal securities laws in one or more enforcement proceedings pending before U.S. courts against crypto trading platforms. None of the Algorand Foundation or Algorand Technologies are parties to this proceeding, and the U.S. courts have not determined that ALGO is a security. In the event that a U.S. court determines that ALGO is a security or there are other material developments affecting the treatment of ALGO under securities laws, Wealthsimple may cease to support ALGO and/or the market for ALGO may be adversely affected.

We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading ALGO. 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: February X, 2025