What is Cartesi?
Cartesi (CTSI) was founded in 2018 and has been designed to be a Layer-2 platform that facilitates the development of smart contracts and decentralized applications (dApps) across multiple blockchains. Cartesi uses two main pieces of infrastructure to solve the problem of scalability and high transaction costs on blockchains: Descartes Rollups, which is a variant of an optimistic rollup, and Noether, a side-chain that provides data availability to applications. Notably, Cartesi is unique in that it intends to enhance programming by allowing developers to write smart contracts using coding languages with which they are already familiar, such as Python and run them on Linux OS.
The Cartesi token (CTSI) is an ERC-20 utility token that powers the Cartesi proof of stake network. It primarily allows users to pay for transactions and smart contract processing on Noether and incentivizes Cartesi node operators to engage with the system honestly. Stakers receive CTSI rewards by staking their tokens and participating in the network, node runners are selected randomly according to a proof of stake network and gain the right to create the next block, and users of the network pay CTSI fees to insert data on to the Noether side-chain.
How does CTSI compare to Bitcoin?
CTSI differs from Bitcoin in a few important ways.
First, Bitcoin is a “coin” and CTSI 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, CTSI 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 CTSI 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 CTSI can be used in most other decentralized finance applications.
In addition, unlike Bitcoin, CTSI is a utility token. While, like Bitcoin, CTSI 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, CTSI’s market capitalization is smaller than Bitcoin’s. As of June 2022, CTSI’s market capitalization was estimated to be $89 million, as compared to Bitcoin’s market capitalization of $576 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 CTSI, including an opinion that CTSI is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of CTSI prior to making it available on Wealthsimple Crypto and has concluded that CTSI 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 CTSI based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of CTSI, 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 CTSI;
- The supply, demand, maturity, utility and liquidity of CTSI;
- Material technical risks associated with CTSI, including any code defects, security breaches and other threats concerning CTSI 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 CTSI, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of CTSI.
Like all other crypto assets, there are some general risks to investing in CTSI. 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, the Cartesi Foundation, the CTSI 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 CTSI have no recourse to the Cartesi Foundation, the CTSI development team or Wealthsimple if CTSI 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.