IOU.fi is a decentralized platform for creating, funding, and managing on-chain, tokenized loans. Each IOU represents a fraction of a loan, letting lenders and borrowers interact transparently and without needing to trust a middleman. Here’s a detailed look at how it all works.
If you’re seeking to borrow, you can launch a specialized loan contract by specifying:
This contract monitors contributions, accumulates interest on the outstanding principal, and orchestrates repayment logic until the loan is finalized.
As a lender, simply select a loan and click “Fund.” You’ll deposit the designated token into the loan contract, receiving IOUs that reflect your proportion of the total funds raised. These tokens let you claim principal and any accumulated interest once repayments begin.
Once enough capital is raised, the borrower can withdraw part or all of the funds to use as needed. Over the loan’s duration, they’re responsible for repaying the principal plus accrued interest. Partial repayments are possible, and each one updates the amount available to lenders.
Borrowers can manage the frequency and size of repayments, but interest continues to accrue on any outstanding principal until it’s fully settled.
Interest is calculated in real time based on the annual rate and the remaining principal. As the borrower repays, the contract allocates a share of the interest to each IOU holder. Lenders can claim this interest whenever they choose, without any complex manual calculations or extra steps.
When principal repayments take place, that repaid portion becomes available for IOU holders to redeem. Redeeming burns the IOUs you surrender, granting you the corresponding share of principal. Once redeemed, those IOUs no longer earn future repayments or interest, so you can decide whether to wait for more principal to accumulate or redeem early for partial liquidity.
If the borrower hasn’t yet withdrawn your contribution, you can back out by “unfunding.” This action returns your tokens and burns the IOUs you received, freeing you to reallocate your capital elsewhere if circumstances change.
After connecting your wallet, you can set up a new loan or fund existing ones. In “My Loans” you'll see all loans you've created and “My IOUs” for all loans you’ve funded. Each section displays interest due, principal redeemed, and more. Explore IOU.fi and experience decentralized lending firsthand!
Note: IOUs are for use with private loans and not public sale. We do not guarantee any liquidity or value of loans. Make sure to check local laws or regulations before participating.
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