Token Description & Project Background

The Flare Network is a Layer-1, Proof-of-Stake (PoS) blockchain. Hugo Philion, Sean Rowan, and Dr. Naïri Usher are the project’s three co-founders.

The Flare Network enables different blockchains to communicate with each other (blockchain interoperability). It also provides smart contract capabilities to Layer-1 blockchains, hence the project’s tagline #ConnectEverything.

There are three components on the Flare Network to be aware of:

1. State Connector: this protocol allows external blockchain data to be used on the Flare Network
2. Flare Time Series Oracle (FTSO): this protocol provides a reliable source of off-chain data to be used on the Flare Network
3. Ethereum Virtual Machine (EVM): Flare uses EVM for its smart contract development. This makes it particularly easy for Ethereum developers to build on the network.

FLR is the network’s native token. It’s used to pay transaction fees, participate in governance, and secure the network through staking.

Flare: A (very) brief history

• On January 9th, 2023, the Flare network distributed one of the largest token airdrops in history. 15% of the total airdrop was distributed - the remaining 85% of tokens will be distributed over the next 36 months.
• The first Flare whitepaper was published in August 2020. The whitepaper outlined the Flare team’s intent to create a blockchain that would purely focus on bringing smart-contract capabilities to networks which didn’t have them enabled. At that time, the Flare network’s native token was named ‘Spark’. Ripple’s XRP Ledger was used as the primary example of a blockchain which could benefit from Flare’s innovations.
• A second version of the Flare whitepaper was published in December 2022.  The ‘Spark’ token was renamed FLR, and the project’s widened scope was presented. See here for full details. 

Risks of FLR

Like an investment in other crypto assets, there are some general risks to investing in FLR. 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 FLR  is subject to the following specific risks:

• The Layer-1 space is intensely competitive. Any of the Flare network’s potential success is dependent on the extent of its adoption by enterprises and developers.
• The network is decentralized in its operations with the Flare Network managing less than 33% of validator nodes. Any potential success will rely on the efforts of a global community of miners and developers contributing to the network.

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

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.