What is NEAR?

NEAR is a decentralized layer-one blockchain that was created as a community-run cloud platform that looks to mitigate some issues facing other blockchains like congestion caused by low transaction speeds, low throughput, and poor interoperability. NEAR uses its block generation scheme (consensus mechanism system) Doomslug, in tandem with its proposed shading design Nightshade in an effort to solve these congestion issues and scale the network. NEAR also seeks to be developer and user-friendly with features designed to accelerate the application development and user-onboarding processes. For instance, the protocol is designed to utilize human-readable account names, unlike the cryptographic wallet addresses common to Ethereum.

The NEAR Blockchain was created by the NEAR Foundation and is presently being built upon by the developers in the community (NEAR Collective). Its mainnet went live in April 2020, and network validators voted to unlock token transfers in October 2020. NEAR's bridge to Ethereum (called the Rainbow Bridge) launched in March 2021.

What is NEAR token?

NEAR is NEAR’s native token serving two primary functions within the network: the token is used to pay for transaction fees and to execute smart contracts. Users can also stake NEAR as part of the proof-of-stake consensus mechanism to receive rewards for validating transactions. By design, there is a maximum supply of 1,000,000,000 NEAR units.

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

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

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

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

NEAR has elevated regulatory risk. The United States Securities and Exchange Commission (SEC) has alleged that NEAR 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 NEAR Foundation or NEAR Collective are parties to this proceeding, and the U.S. courts have not determined that NEAR is a security. In the event that a U.S. court determines that NEAR is a security or there are other material developments affecting the treatment of NEAR under securities laws, Wealthsimple may cease to support NEAR and/or the market for NEAR may be adversely affected.

We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading NEAR. 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: January 1, 2024