# What is Tagion

April 2022
The Tagion Team

Tagion is a realistic dream of a **unique monetary system** combining **ground-breaking technology** and sustainable **democratic governance**. It is a Distributed Ledger Technology (DLT) solution and tagions are the native currency built on that very same platform.

Tagion was founded in 2017 by three Danes, Theis Simonsen, Carsten Bleser Rasmussen and Kristian Vestergaard based on an ambition to create a better financial future for all. The vision was to develop a real alternative to the incumbent financial system.

Tagion is a Commons Project funded by the commercial entity DECARD AG and hundreds of private investors. Tagion was self-funded by the founders for the first three years and since supported by a private SAFT sale. The team working within the Tagion ecosystem consists of more than 30 full time employees working on several use-cases (as of April 2022.

Tagion is social innovation in **web 3.0** based on ground-breaking technological inventions.

## Tagion is an alternative:

Technological development has made it possible to create new money systems different to the ones we know today, in one vital area: How they are governed. Today, monetary systems are centralised and governed by central banks, governments, and commercial banks. To some, this creates a sense of security when in reality this system is controlled by third parties with commercial and political interests. An analysis of the current money system will reveal that it is not neutral and therefore not fair.

## Who are the users of Tagion?

The users of the Tagion network can be divided into different categories:

1. Users. They will use the system to pay for e.g. products and services for tagions or change to other currencies
2. Node operators. These actors will be awarded for operating the network infrastructure
3. Ambassadors. These people will evangelise the concept to drive the organic growth of the network and build applications on top of the system
4. Core members. These people will play a role in developing and shaping the system.


## A unique monetary system

Tagion is being built as an open and democratic monetary system and banking platform. It solves the problem of creating a scalable and secure DLT-system with a decentralised **governance model** including community governance, low energy consumption and an intrinsic stable monetary policy.

Scalability, security, and decentralisation in one solution is considered as the Holy Grail within the fintech community. A DLT-solution that solves this issue is the basis for creating a sustainable monetary system – which is a declared goal for many crypto projects of today. So far, no other fintech organisation has accomplished to create a solution living up to all three parameters at once. Tagion succeeds (with this) by combining social innovation and new technology.

In other words, the Tagion system includes unique elements, which will change this scenario and deliver on all three issues creating a unique monetary system for the future. Let us explain:

**Tagion is scalable** because it has used a divide and conquer model where governance, storage, and consensus is divided into different layers. Tagion invented the HiBON data-format and the Tagion DART database. This ensures performance with more than 10.000 transactions per second (TPS).

**Tagion is secure** because of our governance model and the hashgraph gossip model. Proof-of-community governance will ensure stability in the monetary system over time, meaning the social aspect of how a monetary system functions. The hashgraph gossip model is based on mathematical proof that ensures a 100 percent guarantee for the credibility of the transaction.

**Tagion has a sustainable decentralised governance\*\*** structure\*\* due to several different factors:

- Tagion is a common resource driven by all actors in the network. Users of the coin – the money – nodes, and contributors, all are a part of developing, operating, and driving Tagion. It is based on a social score system, and is not controlled by one place. Thus, the consensus model is based on proof-of-community and not proof-of-stake or proof-of-work. This model ensures that no single stakeholder can gain unproportionally advantages.
- Tagion main network is operated by nodes. Here is an example, also illustrated in the model: When users of the network exchanges goods for money, the node (here it is John's node) may be involved in creating a consensus to execute such transactions. This is how the Tagion network functions – in the big picture. This is the business model of the network. Users pay for the usage and community members, for example node operators, core members and ambassadors are paid for their work. However, there is much more to it. Read on to learn more.


### Ground-breaking technology

With Tagion, a fully decentralised system is made possible through the invention of several novel technologies and solutions. **Tagion DART, Tagion Wavefront, Tagion Hashgraph, and Tagion Node Governance** are all examples you can study in more detail in the public Tagion Tech Paper (link)

The most problematic technical component in the DLT domain is the trade-off between security, decentralisation, and performance. The Tagion network obtains all three components simultaneously, which is the key technical differentiator. On top of this, **the gossip protocol enables fair ordering** that allows for a real Decentralised Exchange, DEX, a solution with fair and efficient price discovery.

The Tagion Hashgraph solution is inspired by the hashgraph consensus mechanism initially invented/introduced by Leemon Baird (ref til paper). This solution is efficient enough to process more than 10.000 transactions per second, **which is many times faster** than other DLT-providers.

Tagion is a system divided into three different technical layers, which optimises the efficiency of the original hashgraph:

- The network layer is optimisedd to exchange data most efficiently between nodes
- The consensus layer is optimised to reach consensus as efficient as possible with ordering
- Storing the data in the Tagion DART optimises the speed of transactions

There is no need to store consensus data forever like in a normal blockchain to prove the data integrity. When data is not necessary to keep anymore, we can delete it. This is possible because the output from each consensus round is executed in a system called Tagion VM which produces a Recorder (Database instruction file like SQL statement), which is then executed against the **Tagion DART Database**. In conclusion, each layer can be optimised for its main function creating a superior performance in the network.

## Tagion is different

This table illustrates the essential elements, which separate Tagion from the two dominant DLT-technologies of today. It also shows how Tagion is the only solution of the three that can solve the **Holy Grail problem** – and thereby being the only solution that offers the possibility of creating a sustainable decentralised monetary system.

| **DLT providers** | **Bitcoin** | **Ethererum** | **Tagion** |
| ------------------------- | -------------- | -------------- | ------------------ |
| TPS | ~ 5 | ~ 15 | ~ 10.000 |
| --- | --- | --- | --- |
| Speed of validation | ~ 600 seconds | ~ 12 seconds | < 1 second |
| Speed of finality | ~ 3600 second | ~ 60 seconds | < 20 -30 seconds |
| Cost of transactions | ~ $1-20\* | ~ $2-50\* | < $0.2 |
| Infrastructure governance | Permissionless | Permissionless | Permissionless |
| Consensus ordering | No | No | Yes |
| Consensus mechanism | Proof of Work | Proof of Work | Tagion Hashgraph |
| Governance | Proof of Work | Proof of Work | Proof of Community |

\*These numbers are based on network congestion

## Independent and useable money

How is Tagion going to be different from the **existing monetary system**? To understand this, we need to understand what money is. The first fundamental thing to comprehend is that money is as much a **social and psychological phenomenon** as it is a financial one. Money is a medium of exchange and can only be so if the users trust the value of the currency. Therefore, a monetary system is also a social contract.

Tagion is born out of frustration and opposition to the mechanisms of the existing fiat system. It rests upon the notion, that the way the system operates is ultimately hindering the possibility of **sound money** and that it compromises the **social contract** mentioned above. Ultimately, it is based on the understanding that at the end of the day the incumbent system fosters inefficiency, instability, favours the few, and excludes billions of people, which the founding forces of Tagion do not think is right.

Tagion becomes an alternative to the existing monetary by

- Giving access to banking services to everybody
- Giving access to financial services without the need for a commercial bank
- Creating a system of sound money (unit of account, medium of exchange, store of value)
- Ensuring low to non-inflation and thereby money that lives up to the demands for being a stable unit of account
- Offering the possibility of open participation in the financial system for all.

## Democratic Governance: Proof-of-community

As already mentioned, one of the technologically unique aspects of Tagion, in comparison to other systems, is its governance model and the way it is implemented. In most cases, the governance model is **implemented in the technical layer** of the DLT-solution, for example in Ethereum and Bitcoin. Tagion&#39;s governance model is separated from the underlying system and is developed and implemented as a commons. The Tagion system&#39;s governance model is called proof-of-community.

What is important to understand is that the governance model has a technological as well as a social aspect. This way of constructing a DLT-solution where **social governance mechanisms** are incorporated from the beginning, has not been seen before. The reason for constructing the DLT-solution as such points back to the fact that monetary systems are social constructs.

Understanding Tagion requires that one also understands what it means that something exists as a common resource. \_A common resource (or the &quot;commons&quot;) is any scarce resource, such as water or pasture, that provides users with tangible benefits but which nobody, in particular, owns or has an exclusive claim to. A major concern with common resources is overuse, especially when there are poor social-management systems in place to protect the core [resource](https://www.investopedia.com/terms/c/common-resource.asp) (REF: Will Kenton).

Tagion governance model stems primarily from the work of Elinor Oström, Nobel Prize winner from 2009. Oström has been one of the driving forces behind theories about **governance of common resources**, models that strive to solve the concern of overuse or sustainable maintenance of a commons. Oström developed eight principles for governing a commons. In combination with social network theory and chaos theory, these principles are the foundation of the governance model ─ **proof-of-community** ─ which Tagion embodies.

## To sum up

**Tagion is the alternative; it is decentralised, governed by all who want to participate and is secure. It brings together unique elements such as a scalable secure DLT-system, social innovation, low energy consumption, and an intrinsic sustainable stable monetary system.**