MiCAR White Paper

DAC Labs Sagl is a Swiss limited liability company based in Lugano, Switzerland, dedicated to software development, information technology, blockchain infrastructure and related digital services. The company's core business activities include the development of DAC, an open-source Layer 1 blockchain infrastructure designed to support decentralised applications, smart contracts, tokenised ecosystems and enterprise-grade digital workflows. DAC Labs Sagl operates internationally, with a focus on the development and deployment of blockchain infrastructure and related ecosystem tools.

DAC Labs Sagl was incorporated on 13 November 2024. As a recently established entity, DAC Labs Sagl does not yet have formal annual financial statements available since registration.

The registered share capital of DAC Labs Sagl is CHF 20,000.

Since incorporation, DAC Labs Sagl has been supported by its registered share capital, shareholder support, internal resources and revenues generated from the sale of software and Web3 products and services.

In addition to the DAC project, the company carries out software development and Web3 infrastructure activities for commercial use cases, including blockchain-based solutions for traceability, tokenised assets, digital workflows and enterprise applications.

These operating activities support the company’s ordinary business development and provide a commercial basis alongside the continued development of the DAC project. Resources are allocated to software development, technical research, blockchain infrastructure, legal and regulatory activities, ecosystem development and preparation for admission to trading of DACT.

At the date of this white paper, the company is in the development phase of the DAC project. No audited annual financial statements are available for DAC Labs Sagl since its incorporation.

DAC is an open-source Layer 1 blockchain infrastructure developed by DAC Labs Sagl. The project is designed to support decentralised applications, smart contracts, tokenised ecosystems and enterprise-grade digital workflows.

DAC is EVM-compatible and uses a multi-layer network architecture intended to support scalability, transaction processing and network coordination. The architecture includes different functional layers and node categories, including Validator Nodes, Supervisor Nodes and Light Nodes.

A distinctive feature of the DAC project is its quantum-ready design approach. DAC integrates a Pure Entropy system, based on physically generated entropy, and Entropy-Padded Transactions intended to reduce transaction exposure during the broadcast phase. The project also includes a Proof of Quantum Work (PoQW) consensus approach, designed to use quantum-oriented computational processes for block production. These technical features remain subject to development, implementation, testing and further protocol specification.

The DAC Token (DACT), which is the crypto-asset subject to this white paper, is intended to provide access to specific functionalities and participation roles within the DAC ecosystem, including node-related functionalities. DAC Coin (DACC), the native operational coin of the DAC blockchain used for transaction fees and protocol operations, is not the crypto-asset subject to this white paper.

Given the technical nature of the DAC project, a glossary has been included in this section of the MiCAR whitepaper to clarify the key terms and concepts used throughout the MiCAR whitepaper.

Technical & Cryptographic Terms

• Entropy-Padded Transactions (EPT): A protocol-level mechanism where transactions are XORed with a block of pure entropy (E*) before being broadcast, ensuring they cannot be read by observers before they are processed.

• EVM-Compatible: Indicates that the DAC blockchain can run smart contracts written for the Ethereum Virtual Machine, allowing developers to use Ethereum tools like Solidity.

• Proof of Quantum Work (PoQW): A consensus mechanism that replaces traditional mining with tasks that require quantum hardware (quantum annealers) to solve efficiently.

• Pure Entropy (E*): Physically random bits generated from quantum-mechanical processes, used in DAC to secure transactions.

• Quantum Annealing: A specialized form of quantum computing used to solve optimization problems (Ising Hamiltonians). DAC uses D-Wave quantum annealers for its PoQW mining.

Network Architecture

• Layer 1 (L1): The base level of a blockchain network (like Bitcoin, Ethereum, or DAC) that settles transactions and maintains security.

• MasterChain: The coordination layer of the DAC network that aggregates shard-level information and maintains system coherence.

• ShardChains: Parallel execution environments in the DAC network that process transactions and smart contracts to increase total throughput.

• SyncroChain: The upper layer of the DAC architecture responsible for epoch management, checkpointing, and global finality.

• Supervisor Nodes: High-level nodes responsible for epoch sealing and network-wide synchronization; they require a significant DACT commitment.

• Validator Nodes: Nodes responsible for transaction validation and block proposal within the protected transaction flow.

Economic & Regulatory Terms

• DACC (DAC Coin): The native operational coin used for transaction fees and rewards for node operators.

• DACT (DAC Token): The staking token used to activate Validator and Supervisor nodes.

• Dual-Asset Model: An economic structure that separates governance/participation (DACT) from transactional utility/fees (DACC).

The DAC Token (DACT) is intended to provide access to specific functionalities within the DAC ecosystem.

The main utility of DACT is to enable participation in node-related functionalities of the DAC blockchain, including:

Access to node-related functionalities: DACT is intended to enable access to specific network participation roles within the DAC blockchain ecosystem, including the activation and operation of Validator Nodes and Supervisor Nodes, subject to the applicable technical requirements of the protocol.

Network participation: DACT is intended to support participation in the DAC ecosystem by enabling holders to access defined protocol roles and functionalities connected to the operation and coordination of the network.

Ecosystem access: DACT may be used to access specific functionalities, tools or services made available within the DAC ecosystem, subject to the technical implementation of the protocol and the applicable terms and conditions.

DACT is not intended to be used as the native coin for transaction fees or smart contract execution on the DAC blockchain. These operational functions are associated with DAC Coin (DACC), which is not the crypto-asset subject to this white paper.

The utility of DACT is linked to access to specific network functionalities and participation roles within the DAC ecosystem. DACT does not provide holders with payment rights, profit-sharing rights, redemption rights or any claim for repayment against DAC Labs Sagl.

DAC Labs Sagl has allocated financial, technical and human resources to the development of the DAC project.

The allocated resources include the company’s registered share capital of CHF 20,000, shareholder support, internal management resources, technical development activities, technical research and documentation, legal and regulatory support, infrastructure costs and external marketing support.

The DAC project is supported by a core technical team of approximately five people who have been actively involved in the development of the project over the last 12 months. The estimated value of the technical team contribution allocated to the DAC project over this period is in the range of approximately CHF 350,000 to CHF 500,000. In addition, the quantum-related components of the project are supported by specialist technical contributors with long-standing experience in the relevant field.

From a financial resource perspective, DAC Labs Sagl has allocated and continues to allocate resources to infrastructure, legal, regulatory and marketing activities. Infrastructure costs are currently estimated at approximately CHF 4,500 to CHF 5,000 per month, while external marketing and community-growth activities are currently estimated at approximately CHF 27,000 to CHF 28,000 per month. DAC Labs Sagl has also engaged external legal advisors in connection with Swiss regulatory assessment, FINMA-related matters and MiCA white paper preparation.

The main areas of allocation are the development of the DAC blockchain infrastructure, technical research, preparation and maintenance of technical documentation, development of node-related functionalities, legal and regulatory activities, marketing and ecosystem development, and preparation of the project for admission to trading of the DAC Token (DACT).

The resources allocated to the project are intended to support the continued development, testing and deployment of the DAC ecosystem. Resource allocation may be adjusted over time depending on technical development needs, regulatory requirements and operational priorities.

This white paper is prepared in connection with the admission to trading of the DAC Token (DACT) and is not primarily intended as a fundraising document.

Any financial resources, crypto-assets or other resources made available to DAC Labs Sagl in connection with the DAC project are intended to support the development, testing, deployment and maintenance of the DAC ecosystem.

The planned use of resources includes software development, blockchain infrastructure development, node-related functionalities, technical documentation, security and testing activities, legal and regulatory compliance, operational costs and ecosystem development.

DAC Labs Sagl does not intend to use collected funds or crypto-assets for speculative investment activities, profit distribution to token holders, or redemption of DACT.

The admission to trading of the DAC Token (DACT) is intended to support broader access to DACT for users and participants who wish to access specific functionalities within the DAC ecosystem.

The objective is to facilitate the availability of DACT in a regulated trading environment and to support the development of the DAC ecosystem, including participation in node-related functionalities and other network access roles, subject to the applicable technical requirements of the protocol.

The admission to trading is also intended to support the progressive expansion of the DAC network towards developers, enterprises and organisations interested in using blockchain and Web3 technologies for decentralised applications, smart contracts, tokenised ecosystems, auditable workflows and enterprise-grade digital processes.

This initiative relates to the admission to trading of DACT and is not intended as a public fundraising event. DACT does not provide holders with payment rights, profit-sharing rights, redemption rights or any claim for repayment against DAC Labs Sagl.

The DAC Token (DACT) is intended to be accessible to all types of holders, subject to applicable laws, regulations and the terms and conditions of the relevant trading platforms.

DACT is intended to provide access to specific functionalities of the DAC ecosystem, including node-related functionalities of the DAC blockchain. Access to DACT may be restricted by the individual trading platforms where it is made available.

Such restrictions may include, but are not limited to, geographic restrictions, restrictions applicable to users in sanctioned jurisdictions, anti-money laundering and counter-terrorist financing requirements, know-your-customer requirements, and other restrictions required by applicable laws or platform policies.

Purchases of DAC Token (DACT) on the relevant trading platform may be made using the crypto-assets or fiat currencies supported by that platform, depending on the trading pairs and payment methods made available by the platform from time to time.

The specific payment methods, supported currencies, payment service providers and settlement procedures will be determined by the relevant trading platform and will be subject to its terms and conditions, compliance procedures and applicable laws.

DAC Labs Sagl does not determine all payment methods available on third-party trading platforms and does not provide payment services in connection with secondary market trading of DACT.

If applicable, any valid reimbursements shall be made to the account or wallet originally used to participate in the offer.

DACT purchased on a trading platform will be transferred to holders through the technical and operational systems of the relevant trading platform.

Depending on the platform’s rules and supported functionalities, DACT may be credited to the purchaser’s account on the platform or transferred to an external wallet address compatible with the Ethereum blockchain and the ERC-20 token standard used for DACT.

Transfers are subject to the platform’s terms and conditions, compliance checks, withdrawal procedures, network availability and applicable laws.

Purchasers must have access to an account on a trading platform where DACT is admitted to trading and must comply with the onboarding, know-your-customer, anti-money laundering and other compliance requirements of that platform.

From a technical perspective, holders who wish to withdraw DACT from a trading platform must use a wallet address compatible with the Ethereum blockchain and the ERC-20 token standard used for DACT.

Purchasers are responsible for using compatible wallets and for ensuring that any external wallet address provided for withdrawals is accurate and under their control. Transfers to incompatible or incorrect addresses may result in the loss of the crypto-assets.

DACT is intended to be accessible through the trading platforms for which admission to trading is sought, including OKX, Bitpanda, Bitvavo, Gate, KuCoin EU and Bybit Europe, subject to the completion of the relevant admission, listing and operational procedures.

Investors and holders may access DACT by creating and maintaining an account with the relevant trading platform, completing the platform’s onboarding, know-your-customer and anti-money laundering checks, and complying with the platform’s terms and conditions, geographic restrictions and applicable laws.

Access to the trading platforms may be subject to costs determined by the relevant trading platform. These costs may include, without limitation, trading fees, transaction fees, deposit or withdrawal fees, network fees, currency conversion fees and any other fees applied by the relevant platform or payment service provider.

Such costs are not determined or controlled by DAC Labs Sagl. Users should review the applicable fee schedule, terms and conditions and risk disclosures of the relevant trading platform before accessing or trading DACT.

To the best knowledge of DAC Labs Sagl, no conflicts of interest have been identified in relation to the admission to trading of DACT.

DAC Labs Sagl may have an interest in the successful development of the DAC ecosystem and in the admission to trading of DACT, as this may support broader access to the DAC ecosystem. However, DACT does not provide holders with profit-sharing rights, redemption rights or any claim for repayment against DAC Labs Sagl.

Subject to mandatory applicable law, any dispute arising out of or in connection with this white paper shall be governed by and construed in accordance with the laws of Switzerland.

Subject to mandatory applicable law, any dispute arising out of or in connection with this white paper shall be exclusively subject to the jurisdiction of the courts in Lugano, Switzerland.

DAC Token (DACT) is classified as an "Other Crypto-Asset" under Regulation (EU) 2023/1114, as it is not an Asset-Referenced Token (ART) or E-Money Token (EMT). It is a fungible utility token based on the ERC-20 standard.

The DACT token’s primary functionalities within the DAC ecosystem include:

• Access to node-related functionalities: DACT is intended to enable access to specific network participation roles within the DAC blockchain ecosystem, including the activation and operation of Validator Nodes and Supervisor Nodes, subject to the applicable technical requirements of the protocol.

• Network participation: DACT is intended to support participation in the DAC ecosystem by enabling holders to access defined protocol roles and functionalities connected to the operation and coordination of the network.

• Ecosystem access: DACT may be used to access specific functionalities, tools or services made available within the DAC ecosystem, subject to the technical implementation of the protocol and the applicable terms and conditions.

The functionalities described in F.2 are partially live. Additional node-related functionalities, including Validator Node and Supervisor Node activation, are expected to be progressively launched during the second half of 2026, subject to technical implementation, testing and protocol deployment.

DACT is a fungible and transferable crypto-asset classified as an “Other Crypto-Asset” under Regulation (EU) 2023/1114. It is issued as an ERC-20 token on the Ethereum blockchain.

DACT is intended to provide access to specific functionalities within the DAC ecosystem, including node-related participation roles such as Validator Nodes and Supervisor Nodes, subject to the applicable technical requirements of the protocol.

The DAC project is based on an open-source Layer 1 blockchain infrastructure developed by DAC Labs Sagl. Its technical documentation describes a multi-layer architecture and quantum-ready components, including Pure Entropy, Entropy-Padded Transactions and Proof of Quantum Work (PoQW).

DAC Labs Sagl operates in the field of software development, information technology, blockchain infrastructure and related digital services.

As part of its everyday business activity, DAC Labs Sagl provides services related to the development and maintenance of blockchain infrastructure, software components, technical documentation, ecosystem tools and blockchain-based applications.

Purchasers or holders of DACT do not acquire any contractual rights, equity interests, profit-sharing rights, dividends, redemption rights, repayment rights or other financial claims against DAC Labs Sagl or any affiliated entity by virtue of holding the token.

The DACT token is designed for functional use within the DAC ecosystem. Any rights linked to DACT are limited to the token’s protocol-level utility, such as:

• Access to node-related functionalities: DACT may enable access to specific network participation roles within the DAC blockchain ecosystem, including the activation and operation of Validator Nodes and Supervisor Nodes, subject to the applicable technical requirements of the protocol.

• Ecosystem access: DACT may allow holders to access specific functionalities, tools or services made available within the DAC ecosystem, subject to technical implementation and applicable terms and conditions.

Purchasers and holders are responsible for complying with applicable laws, the terms and conditions of the relevant trading platform, wallet security requirements and any technical requirements necessary to use DACT within the DAC ecosystem.

Holding DACT does not represent ownership in DAC Labs Sagl or any other legal entity and does not confer any right to financial returns.

There are no formal contractual financial rights to exercise against DAC Labs Sagl. Any functionality associated with DACT is exercised technically by interacting with the DAC ecosystem, the relevant smart contracts, node software or other protocol interfaces made available for the DAC project.

For example:

• Access to node-related functionalities: holders may be required to hold the required amount of DACT, use compatible wallet infrastructure, comply with the applicable technical requirements of the protocol and follow the procedures made available for the activation or operation of Validator Nodes or Supervisor Nodes.

• Ecosystem utility: holders may access specific functionalities, tools or services made available within the DAC ecosystem, subject to technical implementation, availability and applicable terms and conditions.

Any transfer, withdrawal or use of DACT through a trading platform is subject to the relevant platform’s terms and conditions, onboarding, know-your-customer and anti-money laundering procedures, withdrawal rules, technical requirements and applicable laws.

These actions are technical and protocol-level functionalities and do not create any right to financial returns, repayment, redemption or profit-sharing against DAC Labs Sagl.

The rights and obligations linked to DACT may be modified where required by applicable laws, regulatory requirements, technical development, security considerations, protocol upgrades or changes to the DAC ecosystem.

Any material change affecting the functionality of DACT will be assessed and implemented by DAC Labs Sagl and, where appropriate, communicated to holders through the official DAC communication channels or reflected in updated documentation.

DACT does not provide holders with corporate voting rights, control rights over DAC Labs Sagl, profit-sharing rights, redemption rights or repayment rights. The rights linked to DACT remain limited to its protocol-level utility and access to specific DAC ecosystem functionalities, including node-related functionalities.

Any modification will remain subject to applicable laws, the technical implementation of the DAC protocol and the terms and conditions of the relevant trading platforms.

DAC Labs Sagl does not currently intend to conduct a new public offer of DACT in connection with this white paper. This white paper is prepared in relation to the admission to trading of DACT.

Any future public offer of DACT, if carried out, would be subject to applicable laws, regulatory requirements and any required updates to the relevant documentation.

DACT functions as a utility token within the DAC ecosystem, providing access to specific network functionalities and participation roles. These include:

• Access to node-related functionalities: DACT is intended to enable access to specific network participation roles within the DAC blockchain ecosystem, including the activation and operation of Validator Nodes and Supervisor Nodes, subject to the applicable technical requirements of the protocol.

• Network participation: DACT is intended to support participation in the DAC ecosystem by enabling holders to access defined protocol roles and functionalities connected to the operation and coordination of the network.

• Ecosystem access: DACT may be used to access specific functionalities, tools or services made available within the DAC ecosystem, subject to the technical implementation of the protocol and the applicable terms and conditions.

DACT is not redeemed against DAC Labs Sagl for cash, repayment or financial consideration.

DACT may be used technically within the DAC ecosystem to access the functionalities described in G.7. Depending on the relevant functionality, DACT may either be locked, allocated or otherwise used through the applicable DAC ecosystem tools, smart contracts, node software or protocol interfaces.

For node-related functionalities, including Validator Nodes and Supervisor Nodes, holders may be required to hold and lock the required amount of DACT in accordance with the applicable technical requirements of the DAC protocol.

For other ecosystem functionalities, DACT may be used to access specific tools, interfaces or services made available within the DAC ecosystem.

The availability and method of use of DACT may evolve over time depending on the technical implementation, protocol upgrades and applicable terms and conditions.

There are no restrictions on the transferability of DACT at the token standard level, subject to the technical features of the ERC-20 token standard and the Ethereum blockchain.

However, certain uses or allocations of DACT may be subject to lock-up, vesting or other transfer restrictions. In particular, DACT used for node-related functionalities, including Validator Nodes and Supervisor Nodes, may be locked in accordance with the applicable technical requirements of the DAC protocol.

The issuer reserve, corresponding to 22% of the total DACT supply, is subject to a 12-month cliff and a 48-month vesting period.

In addition, trading platforms may impose transfer, deposit, withdrawal or trading restrictions in accordance with their terms and conditions, compliance procedures, geographic restrictions, sanctions screening, anti-money laundering requirements and applicable laws.

Subject to mandatory applicable law, including Regulation (EU) 2023/1114 where applicable, the rights and obligations linked to DACT and any dispute arising out of or in connection with this white paper shall be governed by and construed in accordance with the laws of Switzerland.

The competent courts shall be the competent courts of Lugano, Switzerland, subject to any mandatory jurisdiction, consumer protection rules or other mandatory provisions that may apply under applicable law.

Use of trading platforms, custody arrangements, deposits, withdrawals and trading activities may also be subject to the terms and conditions and applicable law provisions of the relevant trading platform or service provider.

Subject to mandatory applicable law, any dispute arising out of or in connection with this white paper or the admission to trading of DACT shall be subject to the jurisdiction of the competent courts of Lugano, Switzerland.

This provision does not create any redemption right, repayment right, profit-sharing right, guarantee of value or other financial claim against DAC Labs Sagl. It is without prejudice to any mandatory jurisdiction, consumer protection rules or other mandatory provisions that may apply under applicable law.

DACT is issued as an ERC-20 token on the Ethereum blockchain. The ERC-20 standard supports compatibility with wallets, trading platforms and other infrastructure that support Ethereum-based tokens.

The DAC blockchain is designed as an EVM-compatible Layer 1 blockchain infrastructure. Its technical architecture includes a multi-layer network structure composed of ShardChains, MasterChain and SyncroChain, as described in the DAC technical documentation.

The technical documentation also describes quantum-ready components, including Pure Entropy, Entropy-Padded Transactions and Proof of Quantum Work (PoQW). These components are intended to support protected transaction handling, network coordination and the long-term technical development of the DAC protocol.

As an ERC-20 token, DACT is deployed through a smart contract on the Ethereum blockchain.

Holders may hold, store and transfer DACT using wallet software or hardware wallets compatible with the Ethereum blockchain and the ERC-20 token standard. Holders may also hold DACT through accounts provided by trading platforms, custodians or other third-party service providers that support DACT.

The use of any wallet, trading platform, custodian or other third-party service provider is subject to the technical requirements, terms and conditions, fees, security measures and applicable laws relevant to that service provider.

DACT is issued as an ERC-20 token on the Ethereum blockchain. Transfers of DACT on Ethereum are processed according to the consensus mechanism and validation rules of the Ethereum network.

The DAC blockchain, developed by DAC Labs Sagl, uses a Proof of Quantum Work (PoQW) consensus approach. PoQW is intended to support block production and network coordination within the DAC Layer 1 infrastructure.

The implementation and operation of the DAC consensus architecture remain subject to technical development, testing and protocol deployment.

The DAC ecosystem includes protocol-level incentive mechanisms linked to network operation.

Blocks and network activity may generate rewards in DAC Coin (DACC), the native operational coin of the DAC blockchain. These rewards may be distributed to network participants, such as Validator Nodes and Supervisor Nodes, that actively participate in the consensus and operation of the DAC protocol, subject to the applicable technical requirements.

Rewards are generated by the protocol and are not paid or guaranteed by DAC Labs Sagl.

The admission of DACT to trading on third-party trading platforms involves specific risks for holders.

• Third-party platform risk: Holders are subject to the terms and conditions, technical systems and operational procedures of the relevant trading platforms. Operational disruptions, outages, cyberattacks, maintenance, suspension of services or a decision to delist or restrict DACT may affect access, trading, deposits, withdrawals, liquidity and availability.

• Admission and liquidity risk: Admission to trading may be delayed, suspended, refused or limited by one or more trading platforms. Even if DACT is admitted to trading, there is no guarantee that an active or liquid market will develop or continue to exist.

• Platform insolvency and custody risk: If a holder keeps DACT on a trading platform, custodian or other third-party service provider, the holder may be exposed to insolvency, operational failure, cyber-security incidents or loss of access affecting that service provider.

• Regulatory risk: Trading platforms and crypto-asset service providers are subject to evolving laws and regulatory requirements. New rules, supervisory measures or platform policies may restrict access, trading, deposits, withdrawals or availability of DACT in certain jurisdictions.

N/A

Holding DACT involves risks inherent to crypto-assets and utility tokens.

• Market volatility risk: The market price of DACT may be volatile and subject to significant fluctuations. The value of DACT may be affected by market conditions, supply and demand, liquidity, regulatory developments, market sentiment and other factors. There is no guaranteed price, buyback mechanism, redemption right or value protection scheme.

• Liquidity risk: There is no guarantee that an active or liquid market for DACT will develop or continue to exist. Holders may not be able to sell DACT at a desired time, price or volume, or at all.

• Custody and private key risk: Holders are responsible for securing the private keys or access credentials to their wallets. Loss, theft, compromise or misuse of private keys, wallet credentials or platform accounts may result in the irreversible loss of DACT.

• Regulatory risk: The legal and regulatory treatment of crypto-assets may change over time. Future laws, regulations, supervisory measures or platform policies may restrict the holding, transfer, trading or use of DACT in certain jurisdictions.

• Utility and adoption risk: The utility of DACT depends on the development, deployment, technical availability and adoption of the DAC ecosystem. Certain functionalities may be delayed, limited, changed or may not become available as expected.

The future success of the DAC ecosystem is subject to implementation risks.

• Adoption and competition risk: The DAC ecosystem may fail to attract a sufficient number of users, developers, enterprises, node operators or ecosystem participants. The project may also face competition from other blockchain infrastructures and Web3 projects that may have greater financial, technical, operational or market resources.

• Roadmap and development risk: The DAC project may experience delays, changes to its roadmap or unforeseen technical complexities. Planned features, including node-related functionalities and quantum-ready components, may be delayed, modified or not implemented as expected.

• Funding and resource allocation risk: Continued development depends on the effective allocation of financial, technical and human resources. A shortfall in available resources, operational difficulties or changes in strategic priorities could slow, limit or adversely affect the development and deployment of the DAC ecosystem.

• Governance and upgrade risk: Technical, security, regulatory or operational needs may require changes to the DAC protocol, technical parameters or ecosystem functionalities. Such changes may affect the timing, scope or manner in which DACT can be used within the DAC ecosystem.

DACT and the DAC ecosystem rely on complex and emerging technologies, which involve specific risks.

• Smart contract risk: DACT is issued as an ERC-20 token on the Ethereum blockchain. The smart contracts used for DACT or related DAC ecosystem functionalities may contain bugs, vulnerabilities, design errors or implementation flaws. Such issues could be exploited by malicious actors and may result in loss of tokens, loss of access or disruption of functionalities.

• Underlying DLT risk: DACT relies on the Ethereum blockchain for issuance and transfers. Holders are exposed to risks affecting Ethereum, including network congestion, high transaction fees, technical failures, consensus failures, forks, cyberattacks or other disruptions. The DAC blockchain infrastructure also remains subject to technical development, testing and deployment risks.

• Cybersecurity risk: The DAC ecosystem, including smart contracts, node software, wallets, interfaces, infrastructure and third-party services, may be targeted by cyberattacks, phishing, malware, denial-of-service attacks, private key compromise or other malicious activity.

• Quantum-ready technology risk: The DAC technical documentation describes quantum-ready components, including Pure Entropy, Entropy-Padded Transactions and Proof of Quantum Work (PoQW). These technologies are complex and remain subject to development, testing, validation and implementation risks. There is no guarantee that they will operate as intended or provide the expected level of protection in all circumstances.

• Scalability and performance risk: The underlying technology may not scale effectively to support the expected number of users, transactions, applications, node operators or ecosystem participants. Performance limitations, congestion or technical bottlenecks could affect the availability, cost or usability of DACT and related DAC ecosystem functionalities.

• Third-party technology risk: Holders may rely on wallets, trading platforms, custodians, infrastructure providers or other third-party tools to hold, store, transfer or trade DACT. Failures, vulnerabilities or restrictions affecting such third parties may result in loss of access, delays, failed transactions or loss of crypto-assets.

DAC Labs Sagl applies and intends to apply several measures to mitigate technology-related risks.

• Development and testing: DAC Labs Sagl carries out technical development, internal testing and review activities in relation to the DAC blockchain infrastructure, DACT-related functionalities and ecosystem tools.

• Use of established standards: DACT is issued as an ERC-20 token on the Ethereum blockchain, using a widely adopted token standard supported by wallets, trading platforms and infrastructure providers.

• Technical documentation: DAC Labs Sagl has prepared technical documentation, including the DAC White Paper and DAC Yellow Paper, describing the architecture, protocol design and quantum-ready components of the DAC ecosystem.

• Security and monitoring: DAC Labs Sagl intends to monitor technical risks, vulnerabilities, network performance and ecosystem developments, and to implement updates or corrective measures where appropriate.

• External review and audits: DAC Labs Sagl may engage external technical, legal or security advisors, including independent auditors, where appropriate, to review relevant components of the DAC ecosystem.

• User responsibility and third-party controls: Holders are encouraged to use compatible wallets, secure private keys and follow the security procedures of the relevant trading platforms, custodians or wallet providers.

N/A

DACT is issued as an ERC-20 token on the Ethereum blockchain. Transfers of DACT on Ethereum are processed according to the consensus mechanism and validation rules of the Ethereum network.

The DAC blockchain, developed by DAC Labs Sagl, is described in the technical documentation as using a Proof of Quantum Work (PoQW) consensus approach. PoQW is intended to support block production and network coordination within the DAC Layer 1 infrastructure.

The implementation and operation of the DAC consensus architecture remain subject to technical development, testing and protocol deployment.

Data provided by CCRI; all indicators are based on a set of assumptions and thus represent estimates; methodology description and overview of input data, external datasets and underlying assumptions available at: carbon-ratings.com/dl/whitepaper-mica-methods-2024 and docs.mica.api.carbon-ratings.com. We do not account for any offsetting of energy consumption or other market-based mechanism as of today.