Before trading any crypto assets it is important to understand the risks. This overview summarizes certain risks associated with AVAX.
No securities regulatory authority has expressed an opinion about AVAX, including an opinion that AVAX itself is not a security and/or derivative.
Token Description & Project Background
Avalanche is a smart-contract platform which bills itself as ‘blazingly fast, low-cost and eco-friendly’.
Avalanche was created by Ava Labs, a private Brooklyn based company, founded by Cornell professor Emin Gun Sirer, and two Cornell PhDs, Kevin Seqniki and Maofan Yin. Emin Gun Sirer is well known in cryptocurrencies for creating karam, a cryptocurrency that predated Bitcon by a few years. He also is known for being the founder of bloxRoute, a popular Ethereum scaling solution.
In early November 2021, the project created a $200 million fund to incentivize developers to build on the network.
Avalanche is also divided into three "interoperable" blockchains: The Exchange Chain (X-Chain); The Contract Chain (C-Chain); and The Platform Chain (P-Chain).
The X-Chain functions as a source of creation and distribution of the native AVAX token; it's similar to the Ethereum ERC-20 standard.
The C-Chain is tasked with hosting smart contracts and dApps using its own Avalanche Virtual Machine, (similar to the Ethereum Virtual Machine).
Finally, the P-Chain acts as a sole coordinator of network validators. It also tracks and enables active subnets.
AVAX is the network's native asset. It pays fees and secures, via staking, the platform while serving as a basic unit of account among the Avalanche ecosystem's sub-realms.
Risks of AVAX
Like an investment in other crypto assets, there are some general risks to investing in AVAX. These include: (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to thestatement.
In addition to these general risks, an investment in AVAX is subject to the following specific risks:
- The Layer-1 space faces intense competition. Any success associated with AVAX is dependent on Avalanche’s rate of adoption by developers and projects.
We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with AVAX. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.
The AVAX community and Ava Labs are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of AVAX have no recourse to the AVAX community, Ava Labs, or Uphold if AVAX declines in value for any reason.
Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.
Uphold’s Evaluation Process
Prior to listing AVAX on the Uphold Platform, Uphold performed due diligence on AVAX and determined that AVAX is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following:
- The creation, governance, usage, and design of AVAX, including ensuring the source code being open-source, audited and peer reviewed, security, and roadmap for growth in the developer community.
- The supply, demand, maturity, utility, and liquidity of AVAX.
- Marketing materials put forward by the AVAX social team including, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
- Material technical risks associated with AVAX, including any code defects, security breaches and other threats concerning AVAX 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 AVAX, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of AVAX.
Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold 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. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
Uphold users should read thestatement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.
Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following. Please also review the for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website and statement.
Last updated on June 12, 2023.
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