About this Statement

Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell The Graph in reliance on a prospectus exemption granted by the Canadian Securities Administrators (CSA) in the exemptive relief decision dated October 12, 2022. The statutory rights of action for damages and the right of rescission in section 130.1 of the Securities Act (Ontario) and similar legislation in the other CSA jurisdictions do not apply in respect of a misrepresentation in this statement to the extent that a crypto contract is distributed under the above-noted prospectus relief.

No securities regulatory authority in Canada or any other jurisdiction has expressed an opinion about any of the crypto assets (or crypto contracts) that are available through Coinsquare’s platform, including an opinion that the crypto assets are not themselves securities and/or derivatives.

Coinsquare has compiled the information contained in this Crypto Asset Statement to the best of its ability based on publicly available information.

About The Graph

The Graph is an indexing protocol for querying networks like Ethereum and IPFS. Anyone can build and publish open APIs, called subgraphs, making data easily accessible. By doing this, The Graph provides decentralized finance (or DeFi) applications like DEXs the data they need to operate effectively. GRT is the network token of The Graph.

Risks

As with all assets, investing in The Graph is not without some general risks. Many of these risks are identified and explained in our Risk Statement.

The relevant sections in the Risk Statement are as follows:  

Platform Risk, Short History Risk, Price Volatility, Potential Decrease in Global Demand for Digital Assets, Potential for Illiquid Markets, Transfers of Digital Assets are Irreversible, Concentration Risks, Uncertainty in Regulation, Financial Institutions May Refuse to Support Transactions Involving Digital Assets,  Digital Assets’ Blockchain May Temporarily or Permanently Fork and/or Split, Cyber-Security Risk, Airdrops, Issues with Cryptography Underlying Digital Asset Networks, Internet Risk, Open Loop System, Risk if Entity Gains a 51% Share of Digital Asset Network, Possible Increase in Transaction Fees, Possible Increase in Service Fees, Limited Canadian Investor Protection Fund Account, No Voting Rights, Custody of Digital Assets, Custody Risk Insurance, Threats to Coinsquare’s Physical Assets, Covid-19 Outbreak, Use of Leverage, Halting, Suspending, and Discontinuing Digital Assets.

In addition to the general risks, we outline some risks that are specific to The Graph below. While we make an effort to identify every source of risk, we encourage you to do your own research and ensure you are comfortable investing in The Graph.

GRT token reliance on Ethereum networks

GRT is issued only as an ERC20 token on Ethereum Mainnet, meaning that the integrity of the GRT token is dependent on the stability and security of the Ethereum blockchain system. Any fundamental issues in this network could impact GRT’s market sentiment, market cap, and token price.

Reliance on Indexer Nodes

The Graph ecosystem relies on a set of individual nodes, known as ‘Indexers’, to process queries, which are requests for data from a blockchain. Indexers stake GRT to join the network, and are rewarded with GRT for their computing power spent on processing a query.

The Graph ecosystem, as one of many proof-of-stake blockchain projects, competes for the participation of indexer nodes with other projects that also use proof-of-stake models. There is a risk that a lack of indexer participants could hinder or prevent The Graph from properly providing its services, which may negatively affect GRT’s market sentiment, market cap and token price.

Concentration of GRT Supply

The GRT token supply is highly concentrated. The top 10 wallet addresses hold 59.7% of the supply, and the top 100 wallet addresses hold 86.9% of the supply1. 70% of the maximum GRT supply is currently in circulation, and the protocol uses a 3% per year token supply inflation rate. Such high concentration among few wallets creates a risk that the decisions of large GRT holders can seriously affect GRTs market cap and token price.

Coinsquare’s Due Diligence for Digital Assets

To be made available for trading on Coinsquare’s platform, a digital asset must pass the following due diligence reviews:

  1. Coinsquare Securities Law Assessment
  2. Coinsquare Digital Asset Security Audit
  3. New Digital Asset Business Case

Coinsquare undertakes these three levels of due diligence in order to determine whether the digital asset is compliant with our legal and regulatory obligations, is secure, and has historical data supporting a beneficial business case. Coinsquare’s New Product Committee must provide final approval for a new digital asset to be made available on the platform.

References:

  1. “Holders Statistics”, CoinMarketCap. July 21, 2022. https://coinmarketcap.com/currencies/the-graph/holders/

Last updated on Jun 17, 2024