Before trading any crypto assets it is important to understand the risks. This overview summarizes certain risks associated with ETH.
No securities regulatory authority has expressed an opinion about ETH, including an opinion that ETH itself is not a security and/or derivative.
Token Description & Project Background
Ethereum is a Layer-1, proof-of-stake blockchain built for facilitating smart contracts underpinning decentralized applications (dApps).
The network's native token, ether (ETH), primarily serves as a means of payment for network transaction fees.
ETH is also used as collateral for borrowing specific ERC-20 tokens within the decentralized finance (DeFi) sector, aspoints out.
At Ethereum’s core is its support for smart contracts, or programmable contracts i.e. coders write “if this, then that” type instructions and, if conditions are met, the contract auto-executes.
Developers use Ethereum-run smart contracts to write code to securely program an array of digital technology services, value propositions and asset varietals, without the need for any third-party intermediary.
Ethereum transitioned to a Proof-of-Stake model at the end of 2022, a process commonly referred to as ‘The Merge’.
Post-Merge, new ETH tokens are minted by nodes running the network and staking ETH tokens into a pool to secure the network and validate transactions.
Ethereum was founded by Vitalik Buterin.
The Ethereum mainnet launched in July of 2015. One year earlier, Buterin received a Thiel Fellowship grant and set up a non-profit, The Ethereum Foundation.
Risks of ETH
Like an investment in other crypto assets, there are some general risks to investing in ETH. 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 ETH is subject to the following specific risks:
- The Layer-1 space faces intense competition. Any potential success associated with ETH depends on Ethereum’s continued rate of adoption.
We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with ETH. 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 ETH community and Ethereum Foundation are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of ETH have no recourse to ETH, the Ethereum Foundation, or Uphold if ETH 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 ETH on the Uphold Platform, Uphold performed due diligence on ETH and determined that ETH 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 ETH, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community.
- The supply, demand, maturity, utility, and liquidity of ETH.
- Any marketing materials put forward by the ETH social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
- Material technical risks associated with ETH, including any code defects, security breaches and other threats concerning ETH 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 ETH, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of ETH.
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 23, 2023.
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