About this Statement

Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell LDO 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 LDO

LDO is the governance token of Lido DAO. Lido DAO is a liquid staking protocol which works on the Ethereum blockchain. It enables users to stake their ETH in Ethereum’s beacon chain, which locks the assets. Lido DAO then allows these assets to be liquified by issuing stETH.The purpose of the Lido protocol and stETH is to allow those who’ve staked their ETH to retain some liquidity as their ETH is locked until further upgrades to the Ethereum mainnet are completed.

Risks

As with all assets, investing in LDO 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 LDO 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 LDO.

Concentration of LDO held by early investors and developers

When the initial supply of LDO tokens was issued, 22.18% of the entire supply was distributed to early investors and an additional 20% of the supply was distributed to founding developers.1 Investors should consider this distribution and the potential impact that this concentration of tokens could have when evaluating LDO.

Lido DAO’s Reliance on Ethereum Network

As LDO is an ERC-20 token on the Ethereum network, it is highly dependent on the continued stability of that network. Additionally, the Lido protocol’s main function is providing liquidity for ETH that is staked in the Ethereum Beacon Chain.2 Any fundamental issues in the Ethereum network may impact LDO’s smart contract or token value, and any fundamental issues in the Ethereum Beacon Chain may affect the Lido protocol. Investors should consider this dependency when evaluating Lido DAO.

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. Messari. “Lido DAO Launch & Initial Token Distribution.” February 2023.  https://messari.io/asset/lido-dao/profile/launch-and-initial-token-distribution
  2. Vasiliy Shapovalov. “How Lido Works.” Lido. November 6, 2020.  https://blog.lido.fi/how-lido-works/

Last updated on Jun 17, 2024