What is CHR?
Chromia is a blockchain platform for decentralized applications designed to achieve three goals: 1) allow decentralized applications (dApps) to scale to millions of users, 2) improve the user experience of dApps to match those of centralized applications, and 3) create familiar paradigms that allow developers to build secure applications.
Chromia was designed by ChromaWay to be an Ethereum Virtual Machine compatible Layer-2 solution for Ethereum and the Binance Smart Chain. It stores application data and ensures that data additions, updates and transformations are authorized and consistent with the application’s rules. Each dApp built on Chromia is its own blockchain, and throughput can be scaled by increasing the number of nodes in operation.
Chroma (CHR) is an ERC-20 token, and is primarily Chromia's native unit of account and utility with a total supply of 1,000,000,000 CHR. The CHR token has four main uses in the Chromia ecosystem: 1) it is considered the standard currency in Chromia - dApps can use CHR to collect fees or use it as a reserve currency to peg its token, 2) it is used by dApps to pay hosting fees, which rewards Chromia node operators, 3) the token provides an incentive to providers to not collude, as they all have a stake in the ecosystem, and 4) Chromia has several special CHR accounts that are used for system-wide purposes unique to its ecosystem. The Chromia Blockchain is a general-purpose chain, however, with its emphasis on high throughput and scalability, Chromia seeks to become the blockchain of choice for Massive Multiplayer Online Games (MMOGs).
How does CHR compare to Bitcoin?
CHR differs from Bitcoin in a few important ways.
First, Bitcoin is a “coin” and CHR is a “token.” That is because Bitcoin powers the Bitcoin blockchain, and it is mined by a decentralized network of computers that solve complicated maths puzzles to verify transactions. By contrast, CHR 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 CHR transactions. It is what is known as an ERC-20 token, the name applied to the generic token standard for the Ethereum blockchain.
Being an ERC-20 token has perks. Blockchains aren’t great at speaking to each other—you can’t get an Ethereum contract to work with a Bitcoin smart contract without some complicated engineering. However, it’s very easy for ERC-20 tokens to speak to one another, which means that CHR can be used in most other decentralized finance applications.
In addition, unlike Bitcoin, CHR is a utility token. While, like Bitcoin, CHR can be used as a means of payment or a store of value, its market price may be very volatile and so it may not be useful for payments or storing value.
Finally, CHR’s market capitalization is smaller than Bitcoin’s. As of May 2022, CHR’s market capitalization was estimated to be $113 million, as compared to Bitcoin’s market capitalization of $600 billion.
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 CHR, including an opinion that CHR is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of CHR prior to making it available on Wealthsimple Crypto and has concluded that CHR 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 CHR based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of CHR, 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 CHR;
- The supply, demand, maturity, utility and liquidity of CHR;
- Material technical risks associated with CHR, including any code defects, security breaches and other threats concerning CHR 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 CHR, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of CHR.
Like all other crypto assets, there are some general risks to investing in CHR. 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.
Further to these general risks, ChromaWay, the Chromia development team and other affiliated entities are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of CHR have no recourse to ChromaWay or Wealthsimple if CHR declines in value for any reason.
Given that CHR tokens provide holders with discounts for using the Chromia protocol, they have a use or purpose other than investment and speculation based on the efforts of ChromaWay, and their value can be attributed to the potential discounts holders can receive. As a result the market price of CHR is affected by factors other than the efforts and actions of ChromaWay.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading CHR. 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.