Tagion Utility Tokens

The term ‘utility’ comes from the Latin word ‘utilitas’, meaning ‘usefulness’.

Whenever we speak of utility in the context of DLT, we often speak of the usefulness of a token. The Market in Crypto Assets (MiCA) regulation defines a utility token as “a type of crypto asset which is intended to provide digital access to a good or service,vavailable on DLT”. A utility token is accordingly a digital asset on a distributedvledger, granting holders access to certain products or services. Here, we further extend the notion of a utility token to encompass a token used for staking in the consensus layer and for compensating node operators for validating and recording transactions.

While the classification of a utility token is binary - either it is or isn't a utility token - the notion of token utility conversely operates on a spectrum, indicating that a token can vary in its usefulness. As such, when speaking of token utility, we refer to the usefulness of the token, defined as its ability to access or unlock goods and services; the more needed it is for accessing and utilizing services, the greater its utility.

Building on the economist Randal Wray's renowned saying "taxes drive money", we may say that "utility drives demand." As a token's utility increases, its demand naturally follows, enticing individuals to purchase and use it. Yet, in the world of distributed ledger networks, the demand aspect of a token economy frequently receives insufficient attention. This oversight can translate into a sub-optimal token economy, potentially rendering token utility non-existent. This section delves into the intricate token economy underpinning the Tagion Network, emphasizing the mechanisms that stimulate demand of its native token, TGN. Below, the demand-side dynamics have been illustrated.

TGN serves as a means of payment used by stakeholders when transacting on the Tagion Network. However, TGN serves not only as the primary medium for network transactions, but also as a pivotal staking instrument within the network's sybil-resistant mechanism and as a governance tool in its innovative Treasury design. As the backbone of the Tagion Network, TGN will accordingly serve as the focal point around which value will revolve, evolve, and unfold.