David McNeal

 TABLE OF CONTENTS 1 DISCLAIMER3 2 THE TERNION MISSION4 3 CRYPTOCURRENCY MARKET OVERVIEW5 3.1. Major Cryptocurrency Growth Trends5 3.2. Market Maturation8 3.3. Market Behavior9 3.4. Market Forecast10 4 BLOCKCHAIN TECHNOLOGY OVERVIEW12 4.1. Consensus Protocols12 4.2. Smart Contracts15 5 CRYPTOFINANCE CHALLENGES: VOLATILITY & USER EXPERIENCE16 5.1. Cryptocurrency Versus Monetary Functions16 5.2. Identifying Cryptofinance Problems19 6 THE TERNION TOKEN22 6.1. Financial Model: Asset Appreciation via Token Burn23 6.2. Utility Features: Liquidity Support23 6.3. Blockchain Choice: Ethereum Network24 7 THE TERNION ECOSYSTEM27 7.1. Ternion Ltd27 7.2. Ternion Reserve29 7.3. Ternion Exchange30 7.4. Ternion Payments31 8 TERNION INITIAL COIN OFFERING33 8.1. Public Pre-sale33 8.2. Public Sale34 8.3 Token Distribution34 9 ROADMAP35 10 SUMMARY36 TERNION ICO Table of Contents 1 DISCLAMER Please read the following document carefully. In case of any doubt, please seek legal, financial or fiscal advice in your jurisdiction. The information below is not exhaustive nor does it fully cover all aspects of the Ternion Initial Coin Offering. This document is not legally binding for Ternion Ltd and/or any third party and imposes no contractual obligations between such parties. The contents of this document shall not be considered as legal opinion or advice on any subjects covered herein. Before entering any legally binding contractual relation or performing any kind of related transactions, we recommend that future Ternion token holders seek an independent opinion and professional consultation, as all the contents of the present Whitepaper are provided for information purposes only. The Ternion token should not be considered as a share, bond or any kind of financial security regardless of jurisdiction. This document does not constitute a public offer of any kind, including, but not limited to, a financial security offer, regardless of jurisdiction. Ternion Ltd does not consult, advise or provide any opinions concerning the acquisition, sale or any other transaction performed with Ternion tokens. The present document cannot be a basis for any kind of binding agreement or investment decisions related to Ternion. There is no obligation of any kind regarding the purchase or sale of Ternion tokens arising from the present documents. The Ternion whitepaper, website and other informational materials may be available in multiple languages. In all such cases, the English version of any given document is the original and binding one, and it prevails over any other version in the event of any discrepancies. Ternion Ltd shall not be held responsible for any erroneous, inadequate or misleading translations. ATTENTION: Residents of the Peoples Republic of China, Republic of Singapore and Non- Accredited Investors with the Residency of the United States of America are prohibited from purchasing, selling or performing any other kind of transactions with Ternion tokens. Upon taking part in any such transaction, residents of the above countries will bear full responsibility for any consequences, and they indemnify Ternion Ltd from any damage, claim and responsibility. Disclaimer 2 THE TERNION MISSION BRIDGING THE GAP TO A DECENTRALIZED FUTURE From the Ancient Roman denarius to the Italian florin and to the US dollar, the history of international currencies stretches back thousands of years, showing humanity’s intrinsic desire for the dependability and freedom offered by currency that isn’t restrained by borders. Today, the rising tide of decentralized finances, coupled with the crumbling of fiat currencies, points ever more towards cryptocurrency becoming the go-to monetary system in an increasingly digital, globalized world. Yet in the rush for innovation, cryptocurrency creators are trying and failing to jump over an insurmountable chasm straight into a fully decentralized future, ignoring lessons from the past, which illustrate how all innovation, whether technological, financial, or otherwise, has its time and place, being achieved through the gradual evolution of the old into the new. With Ternion, our goal is to build a reliable bridge to connect modern financial realities with the blockchain-based finance systems of the future, creating a tangible path for innovation in cryptofinance. Instead of chasing the same technological innovation as the majority of blockchain startups, our aim is to utilize the most reliable existing technology to solve pressing cryptofinance problems. And instead of simply superimposing traditional financial structures onto the blockchain, we intend to connect existing financial institutions with the decentralization of currencies and assets going on in the blockchain realm. To this end, we’ve developed a financial model that endows Ternion with the kind of reliability in everyday transactions that we’ve all come to expect from the funds in our wallets and bank accounts, creating a digital currency that incentivizes actual monetary use rather than the dreaded “hodling” that has plagued the cryptocurrency market for years. Ultimately, we seek to advance mass adoption of cryptocurrencies by showing the world that their unpredictability can be managed, their niche use cases can be expanded, and their price can be maintained, all through natural market forces. TERNION ICO The Ternion Mission 3 CRYPTOCURRENCY MARKET OVERVIEW Starting at just below $18 billion and ending the year at around the $600 billion mark, the total cryptocurrency market capitalization hike for 2017 was record-shattering when compared to preceding years of relaxed, gradual growth. While Bitcoin was certainly responsible for a large portion of that growth, rising from just above $15 billion to over $235 billion over the course of the year, other cryptocurrencies skyrocketed just the same, starting 2017 at just over $2 billion and ending it by passing the $375 billion mark. As a result, Bitcoin no longer reigns unopposed over the cryptofinance market, with hundreds of new tokens released in 2017, and by all accounts, hundreds more to come in 2018. 3.1. Major Cryptocurrency Growth Trends The tokens leading the charge serve both as powerful driving forces for the market’s current upward trend and as indicators of the varied directions available to cryptocurrencies as money, assets, service-powering resources, and more. Bitcoin Starting 2017 at just over $950, Bitcoin reached the $20,000 threshold at the end of the year. Within the same time frame, its market cap went from $15 billion to $200 billion and then past $300 billion mark, creating a level of market optimism that, until now, has never been seen in the cryptofinance space. Bitcoin Price 2017 This surge resulted from a wide range of positive events over the year. Particularly, three critical milestones stood out above all others, as notable highlights. Q2 2017 saw Japan pass their Virtual Currency Act, which legalized cryptocurrencies as legitimate payment methods, which fell a few steps short of accepting them as legal tender but still proved to be a big boost to market confidence. The following Bitcoin price hike occurred in Q3 with the appearance of Bitcoin Cash, showcasing the market’s immense desire for the defeat of Bitcoin’s scaling issues. Finally, as the year drew near its end, the market exploded with the release of Bitcoin futures by the CME and CBOE exchanges, leading to record-breaking capitalization. The very end of the year did see a considerable drop in capitalization for the leading cryptocurrency, yet doomsayers in the media failed to dampen the overall market mood, and Bitcoin price leveled out as it always does, showing just how resilient the cryptocurrency market is to panic-filled news. On the technological side, 2017 saw growing hype for the Lightning Network, which is shaping up to be the coin’s salvation from its scalability problem – likely a major contributing factor to the overall market confidence hike. Ethereum From just $8 to beyond $800, Ethereum’s 2017 growth may not be a match for Bitcoin numerically, but it doesn’t have to be, as Ether is a utility token rather than a pure value store due to its use as a transactional resource for decentralized digital solutions of all shapes and sizes. As such, the token’s upward mobility, regardless of actual price, shows that the blockchain realm is expanding not only financially but technologically, as well. Further adding to market confidence as a whole due is its symbiosis inherent to cryptocurrencies. At the same time, Ethereum developers’ ongoing efforts to move the digital token from the Proof of Work system (resource-intensive, competitive mining) to the Proof of Stake system (costefficient, deterministic mining), thus solving the scaling issues that trouble all cryptocurrencies, remains a powerful argument in favor of Ethereum’s utility token model over Bitcoin and its reliance on outside solutions. Ripple Opening 2017 with a market cap of $237 million and greeting 2018 at over $100 billion, Ripple has shown itself to be a strong contender with over 47,000% growth over the most optimistic year for cryptocurrencies yet. A point of interest regarding Ripple’s growth in 2017 was its adoption by banks as settlement infrastructure technology. With loud names such as the IMF and American Express, as well as a variety of both public and private financial institutions working closely with Ripple out of concern for price and security, 2017 showed that blockchain technology is, in fact, being actively adopted for practical purposes, which will only serve to prop up the cryptofinance market even more. LITECOIN Litecoin’s growth in price from just $4 to past the $350 mark in 2017 inspired hope for altcoins, which tend to receive the lion’s share of criticism among those doubtful of cryptocurrencies. Serving to fill the gap of a day-to-day transaction coin left open by Bitcoin’s skyrocketing transaction fees and uncomfortable processing times, Litecoin benefits from technical upsides that keep its momentum strong despite market volatility. 3.2.Market Maturation While capitalization is the talk of the town, the cryptocurrency market is expanding and changing in more ways than one. Individual traders still make up most of market players, with trading volumes expanding alongside the market’s overall capitalization growth. The numbers don’t lie, though they aren’t exact either. According to the most reliable sources, the 24-hour volume of global cryptocurrency markets broke the $50 billion mark in 2017, which is in the same ballpark as the NYSE’s average. This draws a stark comparison to real world financial markets – something many believed to be mere fantasy not that long ago. However, 2017 also marked a noticeable entrance into the space from public and private financial institutions, which is in no uncertain terms a major milestone for the market. This interest from major institutions was predicated to a considerable degree upon the anticipated introduction of futures contracts, which resulted in a powerful growth spurt for the market near the end of 2017. And while the charts leveled out somewhat after the initial rush, the capitalization hike is real and points towards the kind of resilience institutional investors are interested in seeing. At the same time, 2017 saw the number of cryptocurrency hedge funds reach 100 for the first time, with more than 75% of them being launched that very year, and their total combined assets growing to $2.2 billion. While many of the funds in question are still young and relatively small, their appearance nonetheless contributes directly to the general expansion of the cryptocurrency market. Technological innovation isn’t far behind either. With algorithmic trading becoming more popular among foreign exchange traders due to demand for boosted trading efficiency, it’s no wonder that the same trend has made its way into the cryptocurrency market too, especially given the native technological component of blockchain-based finances in general. And finally, yet very importantly, a notable trend on the outskirts of the cryptocurrency boom continued over the course of 2017: miners buying up graphics cards by the truckload. Much to the annoyance of PC gamers around the world, cryptocurrency miners continue to leave store shelves empty of the most advanced GPUs on the market due to the immense processing power they offer being particularly valuable for mining operations. This shows a level of market expansion that extends beyond mere capitalization growth, and while gamers find themselves paying extra for certain models of graphical processors, such enormous investments into the cryptocurrency market from indirect players are worthy of notice. 3.3. Market Behavior The reality of cryptofinance innovation is that cryptocurrency creators are currently attempting to construct a piece of a fully decentralized future today, based on a vision of how technology will supposedly work decades from now. Many don't make it due to sheer ignorance of the core element required for innovation in all things: building upon what came before. Setting aside utility tokens to focus on the financial side of the cryptocurrency market leaves two distinct categories of cryptocurrencies with a focus on value and payments. The first category is comprised of all the cryptocurrencies that promise astronomical returns on investment by manipulating their financial models in convoluted ways and confusing investors along the way – let's call them speculative coins. Even when speculative schemes work as intended, they benefit a small fraction of token holders, with the wealthiest holding (or “hodling”) their tokens and treating them as nothing more than niche investment vehicles, functional currency market that benefits everyone. Then there's the second category of stablecoins. They take the polar opposite approach and force artificial stability onto their tokens through complex algorithms and other machinations with their platforms. This approach hasn’t exactly proven to be reliable. Even the stablecoins that manage to maintain a consistent price simply suck all the appeal out of cryptocurrency from the perspective of investors and traders who are vital to the health of the market. The creators of both of these types of cryptocurrencies fail because they refuse to respect market forces, swinging wildly to one extreme or another. They, like many before them in the fiat currencies market, allow their egos to blind them to what are actually fairly simple realities of financial innovation -- and innovation in general -- specifically, that anything new and long-lasting is always built upon something that came before it. Meanwhile, traditional financial institutions are growing ever more wary of the "Crypto Uprising" and often seem more interested in supporting choking regulation for blockchain-based finances than embracing them (though we have seen the seeds of a long-awaited shift away from this attitude over the past year). The takeaway being that between the lack of understanding and all the unchecked volatility, the institutions feel threatened. 3.4. Market Forecast While skeptics still had a firm foothold in 2016, 2017 has shown beyond a doubt that cryptocurrency expansion and integration into everyday life is inevitable. Two decades since the turn of the century, and physical money is making way for electronic payments at alarming rates as banknotes and coins go the way of the dodo. However, today’s most popular electronic money transfer options require a third party, such as a bank, to keep track of the funds being exchanged. Blockchain technology is set to demolish this approach by removing the need for intermediaries and making digital payments simpler. The current state of cryptofinances illustrates the kind of paradigm shift that doesn’t come along often. The market is only just forming, its rules are only just being formulated, and national governments are feverishly attempting to regulate this new financial playing field. As a result of such considerable uncertainty, it isn’t really possible to forecast the market’s behavior with any level of confidence. Many have tried and continue in their attempts, but few parties, if any, rely on statistical forecasts when it comes to cryptocurrencies, at least for now. Yet when all is said and done, the cryptocurrency market has proven itself incredibly resilient, and 2017 was the first year in blockchain-based finance history to show real promise across all major vectors. The future is brighter than ever, and while Bitcoin has served a valuable purpose in driving the market forward, the battle to dethrone it continues full bore. 4 BLOCKCHAIN TECHNOLOGY OVERVIEW The blockchain is a digital, decentralized ledger that uses a peer-to-peer model and makes all participating parties (nodes) hierarchically equal, utilizing a consensus protocol and encryption to remove the need for trust between participants. Blockchains are a complicated subject, but for the purposes of cryptofinance, there are several key benefits. Decentralization in the blockchain is achieved by every node containing a copy of the entire ledger and sharing information about new transactions with other nodes. This system makes the blockchain eminently secure, eradicates the possibility of a total system shutdown, and removes third parties from the equation, which leads into the next key advantage. Peer-to-peer interaction between blockchain nodes stands in stark contrast to most traditional financial systems, with information regarding transactions passed strictly from one node to another but eventually shared across the entire network, which means no single authority is ever in charge of the data. Ledger mechanics mean that the blockchain can only have new information added, never removed, which guarantees a high level of security and reliability. With an immutable ledger being stored across hundreds of nodes worldwide, the potential for any kind of malicious disruption within the network is lower than with any other accounting solution. Consensus lies at the very core of blockchain technology. It ensures that only correct blocks are recorded in the ledger through a network-wide distribution of authentication responsibilities. These methods of authentication vary, and at present, part of cryptocurrencies’ gradual climb to maturity is comprised of blockchain developers seeking the best consensus protocol. 4.1. Market Forecast Consensus helps make sure that there is only one version of the truth in the blockchain, which ensures accuracy of financial information and prevents malicious actors from meddling with the content. While consensus protocol development is an ongoing effort, several major approaches rise above the rest. Proof of Work Bitcoin’s protocol of choice, Proof of Work functions by having miners compete to add a block containing new transactions to the blockchain through solving an extremely complicated cryptographic puzzle. The first miner to solve the puzzle is rewarded with some newly mined Bitcoin and a small transaction fee. To ensure proper integrity, each blockchain node votes for which version of a transaction it encountered first, with the transaction that gains the most vote being added to the blockchain. This makes certain that all nodes remain on the same page, as the longest chain will always be the correct one. One hypothetical vulnerability of this approach to mining is the 51% Attack, which can theoretically be possible if a group of miners were to control at least 51% of the network’s computing power, allowing them to interfere with the validation of transactions within the blockchain and thus spend the same Bitcoin twice. Because Proof of Work computations are complex and taxing, they require a large amount of computational power. And because Proof of Work rewards miners with Bitcoin, the number of interested parties is far from small. As supply and demand clash within this framework, the result is heavy power consumption as miners seek to increase the profitability of their mining operations through sheer hardware scaling. Proof of Stake Initially implemented for the PeerCoin cryptocurrency, Proof of Stake states that the transaction validation vote for a blockchain can be performed by temporarily contributing tokens to a voting pool. Token holders don’t actually lose their tokens while voting (simply freezing them for the duration), but the limited amount of tokens held by participating parties restricts the system. With Proof of Stake, no new tokens are generated, as they all exist from the onset, so miners act more as authenticators and are rewarded strictly from transaction fees. The chances of a miner being picked to validation a transaction depend on how many tokens the miner owns or is willing to contribute for staking This approach avoids enormous power expenditures like those resulting from Proof of Work efforts, as transaction sorting occurs within a limited space and doesn’t depend on the computing power of participating miners. Everything comes down to how many tokens any given participant owns and the overall network load. Proof of Stake is beneficial in a number of ways, including reduced power consumption (and fewer angry gamers who can’t get their hands on the latest graphics cards), increased malicious attack costs (allowing the market to react to a potential 51% Attack faster), and a hash rate limited by the total amount of tokens held by users. Proof of Activity This protocol follows a structured order of actions and is essentially a mixture of Proof of Work and Proof of Stake. The mining begins with PoW effort Once a hash is solved, however, it isn’t added to the blockchain, instead acting as a template with header and the miner’s reward address attached The protocol then switches to Proof of Stake, choosing an arbitrary group of validators to sign the block template, with validators who own more tokens being more likely to be chosen Once all validators sign, the template becomes an authentic block Should any signatures be missing, miners continue working, creating new templates, and the process continues until the correct number of signatures is received A key benefit to this combined arms approach is that stakeholders only participate in validating blocks after Proof of Work miners have performed their work, thus preventing potential malicious parties, even with 51% or more resource share, from being able to unilaterally create authentic new blocks. Proof of Burn This protocol is based upon the destruction of tokens. The “burn” is accomplished by sending tokens to an address from which they cannot be retrieved. By burning their tokens, users gain lifetime mining privileges. The more tokens you burn, the higher your chances at making money through mining. This approach is roughly comparable to using tokens to purchase computational resources for Proof of Work (sans the depreciation). Proof of Burn doesn’t work particularly well for early stages of cryptocurrency lifecycles but performs efficiently when the majority of a cryptocurrency has already been mined and for tokens that are released in their entirety on day one. Proof of Capacity This protocol follows a direct model of resource contribution. Miners simply offer an amount of storage space to participate, which is both efficient in terms of power expenses and helps avoid harmful botnet operations, since storage space can be kept track of in an efficient and vigilant manner. The more space you offer, the higher your chances of finding the next block. Aside from the nothing-at-stake problem, which means that participants with nothing to lose have little reason to avoid malicious activity, this protocol is also limited by storage drive access speeds, and chasing maximum hardware efficiency can effectively turn this approach right back into Proof of Work. 4.2. Smart Contracts Unlike regular contracts, which describe the terms of cooperation between parties, smart contracts are programs that not only declare conditions for operations but also enforce them, serving as a means of actually performing transactions in the blockchain. While Bitcoin’s smart contracts are simple and limited to currency operations, Ethereum was created specifically to facilitate the development of custom smart contracts, thus expanding its use cases beyond cryptocurrency operations, with a focus on the development of decentralized applications powered by Ether. Ethereum further improved upon Bitcoin by introducing a Turing-complete programming language called Solidity for its blockchain, which means that its smart contracts can solve just about any computational problem, making Ethereum’s tokens distinct from Bitcoin and placing Ether firmly in the category of utility tokens that can be used not only as financial instruments. 5 CRYPTOFINANCE CHALLENGES: VOLATILITY & USER EXPERIENCE While the technical challenges faced by cryptocurrency developers are many and varied, digital coins also face a number of financial problems, which are often viewed through a lens of comparison to fiat money. 5.1. Cryptocurrency Versus Monetary Functions Broadly speaking, money must serve three functions. It makes sense then to compare cryptocurrencies to these functions in order to identify its viability in the long term. Store of Value The very concept of value store in the context of digital currencies is a bit of a catch-22. For cryptocurrency to act as a reliable store of value, people need to believe that it offers value, but for people to believe that it offers value, cryptocurrency needs to be a good store of value (among other things). Fortunately, the technological component of cryptocurrencies offers a solution by endowing cryptocurrencies with inherent traits that are valuable to its users. Cryptocurrency cannot be forged It takes up no physical space and can be backed up as needed Users are not subject to expenses related to storing digital coins Nor do users have to pay any third parties to transfer funds across borders Funds stored in cryptocurrencies can be hidden more effectively than any other medium Decentralized funds are also practically impossible to steal, except via user error And neither banks nor governments can freeze decentralized assets Of course, disadvantages are still present as well, stemming mostly from the present early stage of cryptocurrency adoption. On one hand, since cryptocurrencies are favored as an alternative means of payment, the limited options currently available for using them to pay for goods and services also limit their ability to serve as a store of value On the other hand, cryptocurrency capitalization can sometimes limit its usability for certain transactions, meaning that said capitalization needs to grow to support all transaction volumes. In short, as cryptocurrencies become more successful, they become a better store of value. Means of Payment First and foremost, the ability of a cryptocurrency to act as a means of exchange between parties depends to a considerable degree on its ability to function as a store of value. In other words, you can only really buy something with digital coins if the selling party has a strong desire for your coins in the same way people generally have a strong desire for fiat money and various other valuable assets. Additionally, these coins, when stored for any given amount of time after a transaction, must provide the seller with the certainty that their acquisition resulted in an increase to their overall amount of wealth. Then comes an array of functional benefits to using cryptocurrencies as a means of payment. Transaction Cost & Speed: a double-edged sword dependent on technical advancement, with the beneficial aspect being the ability to transfer funds anywhere in the world in what should be a matter of minutes and with what are meant to be relatively low fees Lack of Centralized Control: cryptocurrencies remain majorly free from the interference of both private organizations and governments Flawless Uptime: transactions can be performed 24 hours a day, seven days a week, all year long, without regard for national holidays or even technical malfunctions (one or two blockchain nodes failing means nothing in the grand scheme of things) Low Barrier to Entry: payments in cryptocurrencies can be accepted practically right away, without the need to open bank accounts, purchase payment processing equipment, or dig through complicated user agreements Difficult to Track: while the transparency of the blockchain prevents cryptocurrency transactions from being completely hidden, they are nonetheless much harder to track and associate with a name or a face than traditional financial transactions Immune to Government Prohibition: from WikiLeaks donations to gambling operations, governments and various other special interests have been successful in prohibiting various transactions through traditional financial channels – something they simply aren’t able to do in relation to decentralized finances So why do various parties still refuse to pay with or accept payments in cryptocurrency? Generally speaking, the currently present issues with cryptocurrency adoption can be divided into three categories: technical, financial, and social. Cryptocurrency technology is still at a foundational stage in its development. This has resulted in a curious case popularity surging past technical limitations, for the time being at least, as seen with Bitcoin growing so popular that it’s now faced with slow processing times and high transaction fees. These issues will require ongoing development to resolve. Within the context of the cryptofinance market, since cryptocurrencies aren’t issued by a central authority, they possess an inherent level of uncertainty, with their value depending majorly on supply and demand. And that’s not mentioning the doomsday scenario of any currently existing cryptocurrency collapsing entirely and losing all value overnight. On top of all this, social awareness of cryptocurrencies is still growing, and given their initial emergence as niche investment vehicles, many people still find it challenging to purchase and use cryptocurrency as, well, currency, due to the lack of previous focus on user experience within the blockchain community. Overall, cryptocurrency is definitively a good means of payment, as its advantages are permanent and create a value proposition distinct from fiat currencies, while present disadvantages are temporary and already gradually being eliminated. Unit of Account A widespread but flawed assumption is that a unit of account must be exceptionally stable. However, this assumption is based upon traditional finances and upon fiat money in particular. Within the context of cryptocurrencies, total stability is an unachievable and an undesirable goal. Yet that doesn’t mean that digital coins can’t serve as units of account. On the contrary, as cryptocurrencies are liquid, they allow users to comfortably plan their usage without the complexities that would be associated with them were they a form of nonliquid asset. At the same time, cryptocurrency serves as a unit of account on the basis of the simplest definition for the term, in that gaining it results in profit while parting with it results in loss. At the same time, cryptocurrency serves as a unit of account on the basis of the simplest definition for the term, in that gaining it results in profit while parting with it results in loss. When viewed from a first principles perspective, cryptocurrency serves as a less-thanstable unit of account in a decidedly unstable world, and as fiat currencies continue their gradual decline amid failed attempts at preserving stability while surrounded by chaos, it stands to reason that a new, technologically powered and economically malleable financial instrument is essentially inevitable. 5.2.Identifying Cryptofinance Problems Interestingly, the three most prominent problems users experience with cryptocurrency in small scale transactions today line up perfectly with the three baseline functions of money. End User Cryptocurrency Problem Functions of Money Intense volatility makes it difficult to buy or sell goods at mutually agreed upon prices Store of Value Hefty transaction fees can outweigh the various benefits offered by decentralized payments Means of Payment Lackluster user experience design across the crypto-ecosystem hinders mass adoption Unit of Account Meanwhile, investors too suffer from a trifecta of issues that can be aligned with monetary functions but play a bigger role in investment operations than they do when used to purchase goods and services. Investor Cryptocurrency Problems Functions of Money Constant price manipulation, i.e. “whales” swinging the market via buy walls Store of Value Transaction delays cause costly issues, i.e. traders missing out on favorable positions Means of Payment Exchanges, payment systems, etc. chase hype without investing in usability Unit of Account With the second problem in both of these comparisons – transaction fees and delays making cryptocurrencies less desirable as a medium of exchange – being worked on relentlessly on the technological level, we can drop it and focus on the two remaining issues that can and should be addressed financially to avoid stifling the market’s health through overengineering. Volatility & Store of Value Volatility remains a tangible problem for all cryptocurrency adopters, with traders having front row seats every day, while end users attempting to purchase goods or services encounter it less often but greet it with even greater frustration. Bitcoin Volatility 2017 This ongoing problem is caused by a variety of market conditions and traits inherent to digital currencies. Cryptocurrencies are artificial, not secured by anything and with no responsible party Ongoing formation of the market means news of ICO/token bans spurs volatility Unpredictable regulatory actions further affect a young market’s stability Vast expectations followed by underdelivering, i.e. ICO fraud & cybercrime This state of things is what leads some in the direction of stablecoins, following dubious promises of complete, forced stability. But it’s important to keep in mind that a certain level of volatility is not only healthy but unavoidable. Within this context it’s best to look past the surface and consider a far deeper situated root cause: the potential for total collapse. Due to cryptocurrencies’ tenuous position of relying entirely on market sentiment, the doomsday scenario for any digital coin is the loss of all value completely. In comparison, volatility doesn’t seem like such a bleeding wound. Yet attempts to prevent complete loss of value are far and few between, with the majority of the cryptocurrency community focusing on the ongoing volatility they witness day in and day out. User Experience & Unit of Account While lackluster user experience across cryptocurrency exchanges, wallets, payment systems, and other decentralized services certainly contributes to dampening digital coins’ potential as a medium of exchange, a deeper underlying connection can be drawn between poor UX and cryptocurrencies’ capacity as units of account. Both the liquid nature of cryptocurrency and its ability to facilitate profit or loss are limited by slow mass adoption, which in turn bogs down the entire market from reaching its full potential. As blockchain developers concoct convoluted technical solutions at the token level and stablecoin creators chase the illusion of stability through market-choking financial models, it’s worth examining the benefits of improving user experience across the board. As evidenced by the past decade of progress within the tech product ecosystem, focusing on the human factor within a market can and does yield substantial benefits. To this end, given the consistent failures stemming from attempts at curbing volatility directly, the problem left to solve is one of improving user interaction. Of course, this needs to become a market-wide trend to have global effect, but as with the tech product ecosystem and many industries before it, a single drop can create waves of change. 6 THE TERNION TOKEN Almost two decades into the XXI century, we stand at a financial crossroads of immense magnitude, capable of truly reshaping the way the world works, where one path represents the established fiat currencies of the world, while the other is a new challenger in the form of cryptocurrency and decentralized finances as a whole. Within this context, the difference between fiat currencies and cryptocurrencies is of vital importance. The core contrast comes down to fiat serving as legal tender backed by central governments, while cryptocurrency is not yet considered legal tender, nor backed by any central authority, be it a government or a bank, due to its decentralized nature. This is where Ternion takes the road less traveled, as we see a clear need for compromise to achieve true progress. While we’re all too familiar with the dwindling power of fiat in the world, and while we firmly believe that decentralized finances are the future, the Ternion token is meant to serve as a symbol of unification between traditional finances and cryptofinance. The Ternion is a hybrid digital asset that combines the multipurpose nature of a utility token with the reliable liquidity of a reserve currency. We accomplish this by uniting traditional financial institutions with the cryptocurrency market so as to build a bridge that we can all use together, leading to tangible benefits for everyone. Modern day innovation in tech has brought about a popular concept called disruptive innovation. A little-talked-about consequence of this phenomenon is that for a new market to take root, an existing market must often be dislodged and often outright destroyed. The “Cryptocurrency Revolution,” the way it tends to be described, certainly fits the bill, threatening traditional financial institutions in a real way. But does it have to be this way? At Ternion, our analysis of the violent spasms of a young cryptocurrency market has revealed that there may be – nay, there must be – a better way. The Ternion represents a hybrid approach that builds upon an existing market to offer the reliability cryptocurrency still lacks for everyday transaction purposes. 6.1. Financial Model: Asset Appreciation via Token Burn In order to facilitate reliable liquidity, we’ve created a financial model that operates based on market forces. This model and the ecosystem created to enact it will issue and support Ternion tokens across their lifecycle while simultaneously helping both the Ternion and other cryptocurrencies behave more reliably when used for everyday commercial transactions. The Ternion Financial Model functions by supporting the Ternion Reserve’s portfolios. Essentially, this means that the Ternion tokens held by the fund are backed by two distinct business entities while remaining decentralized for all functional intents and purposes. Step 1: Profit Generation The Ternion Exchange operates based on a progressive commission (from 0.25% down to 0.1% based on monthly traded asset volume). Ternion Payments charges a 1% - 1.5% commission per transaction, depending on volume. Step 2: Token Buyback The entity at the head of the Ternion Ecosystem (see 7.1. Ternion Ltd) performs a buyback of Ternion tokens worth 50% of the funds accumulated in Step 1. Step 3: Token Burn We then perform a token burn, reducing total Ternion supply and thus causing asset appreciation for all token holders, with the process then beginning anew. Model Lifecycle A simplified example of this perpetual process can be summarized as follows. Let’s say the total cryptocurrency turnover is at 10,000,000 tokens with a price of $1 each, and assuming that supply is equal to demand. With commission income from the Ternion Exchange and Ternion Payments equal to $2,000,000, we buy out $1,000,000 worth of tokens (in this case, 1,000,000 tokens). The token supply is now at 9,000,000, with each token’s price rising by approximately 10%, given reliable overall liquidity (see 7.2. Ternion Reserve). This results in consistent asset appreciation for Ternion holders due to quarterly token burns, effectively counteracting market volatility and inflation. Token Burn Token burn based financial models have shown themselves to be the most effective at combating the cryptocurrency market’s volatility, offering a number of key benefits. What does token burn do? Increases percent of supply owned per token holder, yielding a net benefit for all token holders Makes the token less likely to be considered a security due to its destructive nature Allows for consistent price growth despite reduction in supply due to cryptocurrency’s inherent nigh-infinite divisibility 6.2. Utility Features: Liquidity Support The Ternion is a utility token positioned to grant users access to a variety of benefits within the Ternion Ecosystem. Specifically, Ternion can be used to pay for: Listing cryptocurrencies on the Ternion Exchange Ternion Exchange commissions Liquidity purchases on the Ternion Exchange Access to additional plugins on the Ternion Exchange Ternion Payments fees Advertising throughout the Ternion Ecosystem Within the Ternion Ecosystem, all roads lead to Rome, and the utility features of the Ternion token are no different, being focused on upholding Ternion liquidity. Just as the Ternion Financial Model relies on natural market forces to support Ternion liquidity, so too does the utility functionality of the Ternion token, with active use of the Ternion Exchange and Ternion Payments resulting in higher demand for TRN, which is then channeled back into the ecosystem, creating a contained cycle of supply and demand. 6.3. Blockchain Choice: Ethereum Network The Ternion is an ERC20-compliant, Ethereum-based token with smart contract support. Unlike Bitcoin, which is majorly limited to serving as a currency system in the form of an account balance ledger, Ethereum places a wealth of functionality at the disposal of cryptocurrency and decentralized app creators. Furthermore, Bitcoin’s block time – the amount of time it takes for the network’s hashing power to solve a block hash – is simply too long for the purposes of a token sale, which would cause untenable delays. As such, we’ve selected Ethereum as our blockchain of choice, with the Ethereum network and the Ethereum token standard being the optimal solution to the challenges posed by the creation of the Ternion Ecosystem and the Ternion token. Infrastructure The Ethereum platform offers a number of benefits at the cutting edge of cryptocurrency infrastructure. Reliability: The Ethereum blockchain consists of tens of thousands of nodes across the world, providing a level of uptime and access reliability unparalleled by centralized solutions. Self-Maintenance: The decentralized nature and ledger mechanics of the Ethereum network prevent any unwarranted manipulations of transactions stored within the blockchain, with the network of nodes capable of self-repair through its consensus and propagation mechanisms. Transparency: A user can track a transaction and verify its status from anywhere and without the need for a central authority to grant access to the information. Security: As per Vitalik Buterin, inventor of Ethereum, “Everything at Ethereum, including the website, the tools, the whitepapers and of course all of the software and compilers are 100%, wall to wall open source and under GPL.” Security: As per Vitalik Buterin, inventor of Ethereum, “Everything at Ethereum, including the website, the tools, the whitepapers and of course all of the software and compilers are 100%, wall to wall open source and under GPL.” Fraud Prevention: A smart contract within the Ethereum blockchain is immutable, meaning that it cannot be changed once deployed, but Ethereum does offer the ability to extend or update smart contracts, which effectively occurs with the addition of a new contract, thus preventing any fraud committed through altering a deployed contract but still allowing for bug fixes and improvements by the creator. Specification Ethereum’s focus on supporting decentralized applications is facilitated by several technical traits that benefit both tokens used as digital currencies and those with utility functions. ERC20: The single most pertinent benefit to the financial viability of Ethereum, the ERC20 protocol has seen steady adoption since 2015 and was finally formalized in 2017, resulting in all Ethereum-based tokens now needing to conform to the integration guidelines put forth in the protocol and thus being inherently interchangeable with other tokens using the Ethereum blockchain – a development that directly supports the Ternion Ecosystem’s value proposition for all Ethereum-based cryptocurrencies, not only Ternion itself (see 7.4. Ternion Payments). Proof of Stake: Similar to Ternion’s balanced approach to cryptofinance, Ethereum’s creators are taking a hybrid path with implementing the Proof of Stake consensus protocol meant to solve the scaling issues plaguing any vast Proof of Work blockchain, with the initial integration being a combined PoW/ PoS algorithm where Proof of Work is still responsible for network health but not security. Gas Fees: The nature of smart contracts means that they are executed across all full nodes within the Ethereum network, which creates immense data integrity at the cost of considerable time and power, necessitating payments in a resource called Gas for every transaction so as to incentivize users to use their computational resources for the good of the blockchain. State Storage: Rather than just a ledger of transactions, the Ethereum blockchain contains application state, allowing for the storage of other information in the blockchain, such as transaction confirmations, token sale distribution schemes, and more, all benefitting from the same decentralization advantages afforded to transaction data. 7 THE TERNION ECOSYSTEM As the name “Ternion” (meaning a group of three) suggests, the Ternion Ecosystem consists of three core components, including the Ternion Reserve, the Ternion Exchange, and Ternion Payments, which are overseen by a singular parent entity in the form of Ternion Ltd. Ternion Exchange Supports Ternion Payments First-class User Experience & Usability 24/7 Support, Security & Transparency Ternion Luquidity Fund Provides Ecosystem Capital Risk Hedging Sustains Ternion Exchange Trading Pool Manages Ternion Payments Liquidity Ternion Payments Accept Cryptocurrency, Receive Fiat Regulated Financial Institution Simple API Integration This corporate structure supports the Ternion Financial Model by removing the need to cooperate with third party exchanges and payment systems and allowing the Ternion Exchange and Ternion Payments to funnel their income inwards to strengthen Ternion liquidity. 7.1. Ternion Ltd Based in Estonia, Ternion Ltd serves as the holding company for the three core components of the Ternion Ecosystem, allowing for the necessary level of control while granting a beneficial degree of formal separation between subsidiaries. Why Estonia? The Republic of Estonia is a diamond in the rough when it comes to jurisdictions for founding corporate entities and performing Initial Coin Offerings. Between the government’s desire for economic growth, favorable regulation regarding ICOs, and residents being allowed to participate in said ICOs, this Eastern European nation is a prime choice for Ternion to take root. Estonia offers tangible benefits that make it the prime spot for cryptocurrencyoriented incorporation Estonia is particularly hospitable to companies looking to raise funds through Initial Coin Offerings, as the nation is actively positioning itself to be a global ICO hub through its favorable legislation, specifically the newest version of the Estonian Money Laundering and Terrorist Financing Prevention Act, which actually allows for the formal registration of cryptocurrency exchanges through the acquisition of a license. Estonia has actively embraced the concept of e-residency, welcoming entrepreneurs from around the globe and proving itself to be a truly technologically advanced nation by allowing incorporation and entity management through digital channels, helping business owners avoid typically lengthy hassles with corporate bureaucratic processes. Estonia’s regulatory agencies have a positive reputation for being easy to work with and generally seeking to assist rather than hinder businesses – all particularly important points for the purposes of building up the Ternion Ecosystem to be trustworthy and reliable. Estonia stands tall among members of the Organization for Economic Co-operation and Development with its highly competitive approach to taxation, including a light tax burden and tax benefits for businesses that reinvest assets on Estonian soil – another powerful benefit given the circulatory nature of the Ternion Ecosystem (see 6.1. Financial Model: Asset Appreciation via Token Burn) Responsibilities As the parent company for the Ternion Ecosystem’s component entities, Ternion Ltd is responsible for carrying out several core tasks. Developing Ternion smart contracts and other building blocks for the Ternion cryptocurrency. Developing a web application for the Ternion Initial Coin Offering to allow users to purchase Ternion not only by means of other cryptocurrencies but with fiat funds too. Developing the backend infrastructure for the Ternion Initial Coin Offering to facilitate the distribution of Ternion tokens, as well as token storage and management via hot wallet. Enacting the Ternion Public Presale to support critical timeline goals by accelerating the development of the Ternion Exchange and contributing to Public Sale promotion. Enacting the Ternion Public Sale, including all marketing efforts and efforts for the distribution of raised funds. Releasing Ternion tokens to launch the Ternion Financial Model lifecycle. Corporate Structure Ternion Ltd will be structured to facilitate proper separation of concerns while maintaining standard management structure for the sake of reliable performance in developing and maintaining the Ternion Ecosystem and promoting the Ternion brand. Advisory Board Management Team Financial Department Manages financial resources to facilitate the company’s goals Handles financial modeling and analytics Investment Department Attracts investment and fosters connections with partners and funds R&D Department Designs and develops Ternion Ecosystem products Performs market research in the field of decentralized applications Tech Support Department Provides technical support for client-side user interactions Maintains backend systems integrity Marketing Department Develops the Ternion brand and its sub-brands Develops and enacts Ternion marketing strategies Promotes Ternion products through inbound and outbound marketing Coordinates and performs public relations duties 7.2. Ternion Reserve The Ternion Reserve’s primary function is to provide the Ternion token with a reliable price floor to combat cryptocurrency market volatility. Funds entrusted to the reserve will help ensure Ternion liquidity and facilitate asset appreciation for token holders thanks to the Ternion Financial Model. The Ternion Reserve will house a diversified, majorly risk-averse investment fund. To attract a wide variety of investors, the fund will consist of two investment portfolios for purposes of diversification. Each portfolio will be managed by an independent management company with a reliable track record and stellar reputation, thereby boosting investor confidence by taking control of the Ternion Reserve’s assets out of the hands of the Ternion team. The reserve fund will consist of two portfolios formed with the goal of optimal diversification to ensure reliable, long-term support for Ternion liquidity. Traditional Portfolio A traditional risk-averse portfolio with traditional financial instruments such as stocks, bonds and other securities with a unified low risk, stable return theme. This portfolio will be managed by a top-tier investment company specializing in traditional investments, creating a solid foundation and boosting investor confidence for the long term. Cryptocurrency Portfolio Cryptocurrency investments entail high risk, high return models, making the presence of this portfolio within the Ternion Reserve effective as a diversification tactic. This portfolio, under the management of renowned cryptofinance experts, will allow us to make up for any shortcomings from the Traditional Portfolio through the more profitable nature of cryptocurrency investments, resulting in a combination of traditional and cryptocurrency investments to create a balanced strategy. 7.3. Ternion Exchange The Ternion Exchange serves as the first of two profit-generating subsidiaries that support the Ternion Reserve and thus Ternion liquidity as a whole. The Ternion Exchange will support the trading of not only the Ternion itself but a variety of other cryptocurrencies, similarly to other prominent cryptocurrency exchanges. However, that’s where the similarities end. The Ternion Exchange will be: Regulated: The Ternion Exchange will be regulated and thus stand in stark contrast to other cryptocurrency exchanges that seek to avoid regulation at all cost. However, due to our hybrid, balanced approach and goal of unifying the traditional financial infrastructure with its decentralized counterpart, this step is critical to ensuring long-term success for the entire Ternion Ecosystem. Accessible: Aside from a general focus on optimal user experience design to make life easier for experienced cryptocurrency traders, we pay special attention to making the exchange accessible to newcomers into the cryptocurrency field, which further invigorates our overarching goal of creating a digital reserve currency for everyone. Efficient: Our approach is simple. The frontend must have high usability, and the backend must support that high level of usability. Both the end user experience and our system architecture will support this goal to create a seamless experience for even the most demanding power users. Aboveboard: The exchange will be fully KYC-compliant, which will stack upon the transparency inherent to the blockchain infrastructure to give users a sense of security and comfort that is all too rare among competing solutions. Total Feature Set The Ternion Exchange will launch with baseline cryptocurrency exchange functionality, but the end goal for this pillar of the Ternion Ecosystem is to offer a truly all-encompassing solution for cryptocurrency traders. The total planned feature set for the Ternion Exchange consists of: Crypto-to-Crypto & Crypto-to-Fiat Standard Trading via Order Book Interface Margin Trading Supported by Marginal Lending Platform Major Aggregator Integration to Support Large Cap Players Peer-to-Peer Trading via Decentralized Exchange Functionality 7.4. Ternion Payments The second pillar supporting the Ternion Reserve is the Ternion cryptocurrency payment processing system that will be integrated directly into the Ternion Exchange for maximum efficiency in processing cryptocurrency transactions, offering numerous tangible benefits when integrated into online stores, donation pages, and fundraising platforms. On the flipside, users looking to pay for goods and services with cryptocurrency will be able to do just that, initially when making purchases from the early adopter set of merchants signed up during the development process, and later throughout the web as we work to enact an aggressive expansion strategy in line with our aim to expand cryptocurrency niche use cases. Volatility Compensation Merchants looking to accept cryptocurrency payments for goods and services will be provided access to the Ternion Payments API, allowing the Ternion Ecosystem to essentially extend beyond its core components by promoting cryptocurrency market activity and thus further strengthening Ternion liquidity. Our payment processing system serves to further the widespread adoption of cryptocurrencies as means of payment by allowing anyone to use cryptocurrency to pay for goods or services regardless of the constant fluctuations in the cryptocurrency market. That’s exactly why Ternion Payments is integrated with the Ternion Exchange, since such a direct connection allows us to: Enact fixed cryptocurrency rates for the duration of transactions. Implement a transaction confirmation system that will prevent fraudulent interactions between merchants utilizing the Ternion Payments API and their clients. This approach will be possible with the help of Ternion Payments’ integration into the Ternion Exchange by allowing our system to convert cryptocurrencies as needed when transactions are initiated. Transaction Cancellation In the event of cancelled transactions, we will take the hit rather than passing on the conversion losses over to users of our API. This is made possible by the percentage of fraudulent activity among everyday cryptocurrency transactions being small enough for us to handle and the benefits of such transaction security far outweighing that percentage of losses. To facilitate this functionality, Ternion Payments will need to have a considerable store of cryptocurrencies. As such, a large portion of the funds raised for Ternion Payments will go towards the purchase of various cryptocurrencies at favorable rates over the course of the payment system’s development process. Regulation As with the Ternion Exchange, the Ternion Payments entity will be a regulated financial institution, cultivating an aura of trust and security unmatched by many of our competitors. Ultimately, regulatory oversight along with the aforementioned measures will grant the Ternion Ecosystem a reputation of reliability to rival fiat-oriented institutions (VISA, PayPal, etc.). 8 TERNION INITIAL COIN OFFERING The funds raised during the Ternion Initial Coin Offering will be used to infuse the Ternion Reserve with the necessary capital and to develop the Ternion Ecosystem, all in the interests of the Ternion mission to create a reliable digital currency empowered by natural market forces. 8.1. Public Pre-Sale The pre-sale will allow us to raise the necessary funds to execute on our efficiency-oriented roadmap plans, allowing for considerable reduction in time between the public sale and the launch of the Ternion Exchange. At the same time, the pre-sale will help us acquire valuable feedback that will also contribute to heightened efficiency during the development process. The funds raised during the public pre-sale will be used primarily for development and growth efforts, though a fraction will still go towards laying the foundation of the Ternion Reserve. TERNION ICO Ternion Initial Coin Offering 8.2. Public Sale To fully capitalize the Ternion Reserve and complete the development of the pillars that make up the Ternion Ecosystem, the public sale will be the final leg of the Ternion ICO. Funds raised through the public sale will be distributed as follows. 8.3. Token Distribution The Ternion Initial Coin Offering follows the baseline principle of non-minable, Ethereumbased token distribution, in that all Ternion tokens are generated and distributed as part of the public sale process. Ternion tokens will be distributed in accordance with the following model: Will be available for purchase to the public during the Ternion Initial Coin Offering Will be distributed between the Ternion team with a five-year vesting period Will be distributed among the Ternion advisory board Will reward Ternion bug bounty program participants TERNION ICO Ternion Initial Coin Offering 9 ROADMAP Working on the Ternion Ecosystem, our primary concern is to reduce the amount of time lost between major milestones, as doing so will give us a decisive edge against competitors who tend to be mired in lengthy delivery times post-ICO. We want to not only give contributors access to the Ternion Ecosystem immediately following the public sale, but to also minimize the amount of development time between the initial coin offering and the full launch of both the Ternion Exchange and Ternion Payments. To this end, we’ve constructed the following roadmap, starting after the preliminary setup process that encompasses registration of relevant corporate entities, formation of the Ternion team and advisory board, and the establishment of agreements with portfolio managers. Roadmap 10 SUMMARY Ternion is a digital currency. It was created to address the ongoing problem of cryptocurrencies being used as nothing more than temporary investment schemes. Instead, the Ternion is meant to serve as an actual currency that incentivizes its holders to actively use it. Ternion is also an ecosystem. One comprised of three components that work in unison to ensure Ternion liquidity by means of a financial model that relies on natural market forces and the business activity they facilitate. But the Ternion Ecosystem offers a value proposition that extends beyond just the Ternion token itself. The Ternion Exchange and Ternion Payments, the two businesses that act as supporting pillars for the Ternion Reserve, are open to a variety of cryptocurrencies and share the benefits of the Ternion Financial Model with the cryptocurrency market at large. What are the benefits? We target the most pressing financial and user experience concerns plaguing both individuals and corporate entities attempting to use cryptocurrency to buy and sell goods and services. The Ternion Ecosystem allows users to: Avoid failed transactions through rate freezing Accept payment in cryptocurrency, but receive fiat Manage cryptocurrency trading and transactions in one place And reliably combat the devaluation and inflation plaguing fiat These advantages are responsible for Ternion’s inevitable success in a young, immature market that’s in dire need of the kind of reliable solutions that give the fiat market its equilibrium. They’re also what makes Ternion such a valuable opportunity for our contributors. Why contribute to Ternion? In 2018, purely speculative digital coins that promise enormous windfalls have proven to be nothing but pipe dreams, while stablecoins continuously fail to showcase a tangible value proposition. Summary The Ternion is a balanced approach to the chaos of digital currency markets that relies on the one thing we know is a constant in this field: natural market forces. As with the fiat market, these forces ensure the kind of reliability that make cryptocurrencies usable for actual transactions while simultaneously allowing a level of volatility that makes said currencies attractive to traders and investors – valuable and necessary members of a healthy market. In short, Ternion is poised to become the next global currency and the next PayPalTM all in one. Summary