TENDER has specific features that set it apart from other digital currencies:
- zero cost (micro)transfers
- high transaction bandwidth (billions of tps)
- non-volatility through dynamic supply
- immediate validation and revocable transfers
- support of multiple fiat currencies – users work with e.g. TENDER$ or TENDER€
- fiat currency gateway
Evolution of a transaction system
The TENDER takes the best elements of cryptocurrencies and the best of fiat economies to create a digital currency with the above-mentioned features. We will now look at the (simplified) model for cryptocurrencies (1). We will further suggest why a currency for means of transfer needs dynamic money supply to create stability (2). Then we will show the disadvantages of how the traditional fiat system uses these money emissions (3). Finally, we will show how TENDER creates a decentralised but trusted economy with dynamic supply. (4)
1 Classic cryptocurrency
(Figure 1: Bitcoin example – user buys BTC at exchange with US$ and spends it in an app)
The typical cryptocurrency transaction works with a user paying money (1) to an exchange for receiving a cryptocurrency (2). The user can then transfer it or maybe spend it in an app (3). The recipient will at some point send the crypto currency to the exchange (4) to receive either another crypto or fiat money in return.
Typical cryptocurrencies add emissions of new tokens to this otherwise closed loop. The purpose of these emissions is not to match supply to demand, but purely to incentivise miners/block producers.
2 Creating stability, reducing volatility, preventing speculation
While speculators don’t directly steal money, it nevertheless leaks from the network. If a system is designed as a means of transfer, speculators worsen user experience and spread distrust. TENDER will be a transactional network with a stable currency and no speculative element.
TENDER counters speculation with dynamic money supply where change in demand is mirrored by a change of the amount of money in circulation.
The TENDER system achieves stability by keeping the right amount of money in circulation to meet current demand.
3 Fiat economies
While with most cryptocurrencies, all or most of the tokens are emitted at the beginning or in the early phases, traditional fiat economies work with a dynamic money supply. They react to demand and supply with inflation or deflation.
(Figure 2: Traditional economy – central banks control money supply)
operating in the economy. For example, central banks usually have an inflation target, not zero inflation, and thus create more money than is really needed, thereby devaluing the currency. Crypto economies were originally invented to bypass central banking and such forms of centralised control.
The diagram above shows what having a central bank looks like in a crypto economy. The central bank would hold all the wealth. This would lead to an asymmetric power balance.
4 TENDER economy
Pacio’s digital economy combines dynamic money supply to keep the currency stable with crypto’s invention of circulation without a central bank. The question becomes, how can you replace a central bank and still have emissions as are required for a growing, dynamic system. To whom should the emitted money go and who controls it?
The Pacio solution is that the emissions themselves are done through TENDER code to receiving parties that are trusted by the whole system. We propose that the enterprises whose applications use TENDER will have the greatest trust in the system (more details below). They receive the newly minted TENDER (0). The apps can then sell their TENDERs on an exchange or directly to the user (1).
(Figure 3: TENDER system adds dynamic emission into the circulation)
This model raises a few additional questions: Who can qualify for receiving newly minted TENDER? Who controls the selection of the recipients? Who governs the money supply? How can you ensure that currency is not devalued when emitting new money? And how can all this be achieved in a decentralised way?
TENDER emission is a loan
Emitting TENDER is a means of creating liquidity. Without emission, the network can’t be used. In theory, the system could airdrop TENDER as a gift to certain or all participants. However, a gift devalues the currency, which is contrary to the objective of achieving stable value. The Pacio solution is: newly minted TENDER are emitted as a loan to application developers  at zero interest. That works to everyone’s benefit by building the economy. There will be no shortage of applicants! To keep the queue orderly and to avoid spamming, the proposed solution is to make having a business plan and paying a small application fee mandatory. Funding loans will then be made according to a rating and governance system described below.
In the starting phase of the TENDER economy, there will not be much value behind the loans since the recipients may not yet have buyers for their TENDER. However, as demand for services is created the currency will accrue value in relation to fiat currencies or other cryptos. With enough demand, the currency will become as valuable as its equivalent fiat dollars or euros.
The loan will be paid back to the system through an inbuilt automatic deduction of a small percentage of TENDER that will go to the loan recipient, starting after a set period of time, e.g. two years, as specified in the business plan. The recipient can also pay the loan back faster if desired. Once a loan has been repaid, an applicant can apply for further funding for upgrading, if needed. Alternatively, a developer could submit another application for a new app.
With no bank to pay loans back to, loan repayments will be eliminated. This reduces the circulation of the currency and will be balanced by new emissions in a stable closed loop.
 The term “application developer” means the entity creating an application and not individual programmers. Application most likely, but not exclusively, means a software product. Application could also mean a donation collecting mechanism for a charity.