What is COTI?

COTI (“Currency of the Internet”) is a financial technology platform built on its own directed acyclic graph (DAG) based blockchain infrastructure with a Proof of Trust consensus algorithm. The stated aim of the Coti project is to become the base layer protocol upon which future decentralized solutions are built, similar to other base layer protocols like Ethereum, Solana, or Polkadot. COTI coin is the native cryptocurrency of the COTI protocol.

The Coti project began in 2017, and initially the project planned to build a decentralized payment application on top of the Ethereum network. However, the Coti project decided to expand on its original vision and develop its own blockchain protocol to be optimized for decentralized payments and designed for use by merchants, governments, payment decentralized applications, and stablecoin issuers. Its focus on enterprise use cases and white label payments infrastructure distinguishes it from other more general-purpose base layer protocols.

The Coti project launched its blockchain protocol on mainnet in June 2019 and has continued building its ecosystem. The project aims for its ecosystem to meet the challenges associated with traditional finance, including latency, fees, and global inclusion. The Coti protocol aims to scale to process over 100,000 transactions per second (TPS), currently at 10,000 TPS (as of October 2021).

The COTI token may be used as a common means of payment, including all fees and staking inside the COTI ecosystem. COTI has a fixed supply of 2,000,000,000 units.

Note that Wealthsimple transfers only supports the ERC-20 COTI token on the Ethereum network, and not the native COTI mainnet coin.

How does COTI compare to Bitcoin?

COTI differs from Bitcoin in a few important ways.

First, Bitcoin is a “coin” and COTI 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, COTI 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 COTI 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 COTI can be used in most other decentralized finance applications.

In addition, unlike Bitcoin, COTI is a utility token. While, like Bitcoin, COTI 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, COTI’s market capitalization is smaller than Bitcoin’s. As of June 2022, COTI’s market capitalization was estimated to be $139 million, as compared to Bitcoin’s market capitalization of $576 billion.

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. First and foremost:

No Canadian securities regulatory authority has expressed an opinion about COTI, including an opinion that COTI is not itself a security and/or derivative.

Wealthsimple has performed a legal assessment of COTI prior to making it available on Wealthsimple Crypto and has concluded that COTI 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 COTI based on publicly available information, including (but not limited to):

• The creation, governance, usage and design of COTI, 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 COTI;
• The supply, demand, maturity, utility and liquidity of COTI;
• Material technical risks associated with COTI, including any code defects, security breaches and other threats concerning COTI 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 COTI, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of COTI.

Like all other crypto assets, there are some general risks to investing in COTI. 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, Coti Limited and other affiliated entities are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of COTI have no recourse to Coti Limited, its affiliates or Wealthsimple if COTI declines in value for any reason.

Wealthsimple Digital Assets Inc. (WDA) has prepared this Crypto Asset Statement based on publicly available information. Although WDA has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. WDA emphasizes that this Crypto Asset Statement is not exhaustive of all risks associated with trading or staking SOL. 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.