Token Description & Project Background

Chain describes itself as a “Web3 blockchain infrastructure for developers to build powerful applications.”

Per the project’s whitepaper, Chain is focused on bringing scalability, security and accessibility to the Web3 space. Its two core service offerings, Chain Cloud and Sequence, offer streamlined tools designed to help developers launch nodes across independent blockchain ecosystems or manage their own permissioned ledger.

Chain has a native token, XCN, used to provide payment and confer voting rights. Token holders can also utilize XCN to receive discounts and premium access to the protocol.

Chain was created in 2014 by H Adam Ludwin. In 2018, the project was acquired by Lightyear Corp, the commercial arm of Stellar – developers of the Lumen (XLM) token – in a reported $500 million dollar deal.

In 2020, Chain was re-acquired by private backers and is led by CEO Deepak Thapliyal. Since the launch of the protocol, the privately held company has managed to raise roughly $40 million in funds from a series of Fortune 500 backers including Visa, Capital One, Citigroup and Nasdaq.

Chain’s former native token, CHT, was rebranded to XCN in March of 2022.

Sequence is a ledger as a service offering that works as a system or record for managing balances. It’s a cloud-based, security-focused solution leveraged by Citigroup, Visa and Nasdaq, one that’s tailored towards the development of permissioned ledgers. According to documentation, Sequence’s infrastructure can be utilized by cryptocurrency exchanges, ride sharing apps, lending platforms and mobile wallet providers. Sequence also offers an end-to-end solution for the design, development and sale of non-fungible tokens (NFTs). 

Chain Cloud is a “decentralized infrastructure protocol designed for developers to access blockchain networks on-demand.” The platform features various API endpoints allowing application builders to launch automated nodes, and license them to run dApps across an array of EVM-compatible chains/layer-2s, including Ethereum, BNB Chain, Arbitrum and Polkadot.

By streamlining the process of deploying nodes, and by building bespoke ledgers, Chain seeks to foster an environment in which developers are focused on building the best product possible rather than maintaining complex infrastructure components, the protocol’s whitepaper explained.

Governance on the protocol is controlled by the Chain DAO. Token holders stake XCN to vote on various on-chain proposals, such as ones relating to levels of transaction fees and rewards.

Risks of XCN

Like an investment in other crypto assets, there are some general risks to investing in XCN. 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 the Risks Specific to Holding Digital Assets statement.

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with XCN. 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 XCN community and core team members are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of XCN have no recourse to Chain’s core team, private backers, or Uphold if XCN 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 XCN on the Uphold Platform, Uphold performed due diligence on XCNand determined that XCN 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 XCN, 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 XCN.
• Marketing materials put forward by the XCN social team including, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with XCN, including any code defects, security breaches and other threats concerning XCN 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 XCN including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of XCN. 

General

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 the Risks Specific To Holding Digital Assets statement 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 link. Please also review the Uphold Canada – Crypto Risk Statement 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 Risks Specific To Holding Digital Assets statement. 

Last updated on June 2, 2023.