Token Description & Project Background

Cosmos is a network of many independent chains, all of which utilize the byzantine fault-tolerant (BFT) consensus algorithms. Cosmos allows developers to build both permissionless and permissioned blockchains. 

The network launched with the release of its first blockchain, the Cosmos Hub, in 2019.

Back in 2017, the Interchain Foundation, a Swiss non-profit organization that funds open-source blockchain projects, contracted for-profit Tendermint, Inc. (which also utilizes the name All Bits, Inc.) to develop and launch the Cosmos software. Tendermint was launched in 2014 by Jae Kwon, who developed his own byzantine fault-tolerant (BFT) consensus mechanism and started the company to develop business-related opportunities for the algorithm. 

Kwon co-wrote the Cosmos whitepaper and Tendermint raised $9 million to continue the project through a Series A funding round in March 2019.

The Cosmos Hub, a proof-of-stake blockchain, is powered by its native ATOM cryptocurrency. 

Risks of ATOM

Like an investment in other crypto assets, there are some general risks to investing in ATOM. 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.

In addition to these general risks, an investment in ATOM is subject to the following specific risks:

• There is currently no limit on the supply of new ATOM tokens that can be created. Cosmos adjusts the amount of tokens created based on the number of ATOM being staked. This can result in significant annual inflation rates.

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

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.