What is Enjin?
Originally founded in 2009, Enjin began as an online gaming community without any blockchain component. An ICO (Initial Coin Offering) in 2017 launched Enjin’s blockchain ecosystem, still supporting the gaming community. The Enjin blockchain platform allows users to monetize, market, manage, and trade digital assets on chain. The Enjin Platform allows users to create and add utility to their assets, such as NFTs; the Marketplace allows users to trade and explore other assets; and the Wallets allows users to manage and hold assets. One common use case is gamers tokenizing in-game assets they created in order to trade or sell them to other gamers. Enjin also allows existing gaming platforms to leverage blockchain utility by leveraging the Enjin blockchain ecosystem and providing this technology to their players.
Founded by Maxim Blagov and Witek Radomski and now supported by a global team, Enjin has supported the creation of over $1 billion in digital assets. In March 2021, the Enjin team completed a private sale of one of its network tokens, Efinity (EFI). EFI contributes liquidity and governance to the Enjin network, and interacts with Enjin’s other asset, ENJ, in multiple ways, including encouraging node stability.
What is ENJ?
Enjin Coin, or ENJ, is an ERC-20 token that the Enjin network uses to back the value of digital assets created on its platform, thus creating a reserve value for these assets. ENJ holders can also participate in staking and node, or collator, nomination, and earn EFI rewards in return. ENJ holders who have earned EFI can also participate in protocol governance. There is a max supply of 1 billion ENJ tokens and since ENJ is a deflationary asset it helps to regulate asset value and create scarcity.
How does ENJ compare to Bitcoin?
First, Bitcoin is a “coin” and ENJ is a “token.” Bitcoin powers the Bitcoin blockchain and it is mined by a decentralized network of computers that solve complicated puzzles to verify transactions. By contrast, ENJ is a token that runs on the Ethereum blockchain. On Ethereum, ETH is the only coin that can be mined. And miners mine ETH to process ENJ transactions. It is what is known as an ERC-20 token, the name applied to the generic token standard for the Ethereum blockchain.
Second, Bitcoin is far larger than the Enjin network, and older, too. While Bitcoin, the largest cryptocurrency by market capitalization, has a market cap of roughly $880 billion, ENJ has a market cap of around $1.7 billion (as of January 2022.) And while ENJ was created in 2017, Bitcoin has been around for over a decade.
However, it should be noted that although ENJ is different from Bitcoin, it is far from independent from it. Bitcoin, the coin with a larger market (by a long shot), can influence the price of all other cryptocurrencies. If Bitcoin crashes, there’s a good chance that ENJ will feel the burn too (not directly as they operate entirely distinctly, but through overall market sentiment.) It is not clear, but unlikely, that a significant drop in ENJ’s value would have a material impact on Bitcoin.
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 Enjin, including an opinion that ENJ is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of ENJ prior to making it available on Wealthsimple Crypto and has concluded that ENJ 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 ENJ based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of ENJ, 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 Enjin;
- The supply, demand, maturity, utility and liquidity of ENJ;
- Material technical risks associated with ENJ, including any code defects, security breaches and other threats concerning ENJ 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 ENJ, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of ENJ.
Like all other crypto assets, there are some general risks to investing in ENJ. 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. ENJ still relies on contributions from the core Enjin platform team, and has an interactive reliance on another Enjin asset, EFI. ENJ also presents higher short history risk.
The Enjin team and community are not under any legal or regulatory obligation to disclose material information to the public regarding their activities. Holders of ENJ have no recourse to The Enjin team or Wealthsimple if ENJ declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading ENJ. 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 18, 2021. 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: January 25, 2022
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