YouToken Smart Contract Analysis #2: Debt
As mentioned before, YouToken has four, unique smart contracts that each bring a different experience to entrepreneurs and investors. You can catch up on #1 here. Today, we're moving up the ladder one step to look at the contract entitled "debt." It has some of the same principles as the "donation/sponsorship" model but with a few innovative additions.
YOUTOKEN SMART CONTRACT: WHAT IS DEBT?
You are familiar with the term "debt" right? Most likely, you have some on your credit card. Simply put, debt involves borrowing money to be repaid, plus interest. Now, we're going to apply that logic to the YouToken platform. With this smart contract, an investor can lend money to an entrepreneur of their choice. In exchange, the entrepreneur gives the investor his or her creator tokens (YTN_"creatorname") plus interest.
The investor is entitled only to the repayment of the agreed upon principal of the loan, plus the interest. The contract is then terminated after payment. From that point on, the lender has no direct claim on future profits of the business they originally invested in.
HOW DOES THIS YOUTOKEN SMART CONTRACT WORK?
To further explain the nature of this contract, let's give an example in the form of a story. Everyone loves a good story, right? Let's say guy by the name of Ron McDonald has this new idea to create the world's first "blockchain fast food restaurant" that only accepts cryptocurrency. For the sake of the story, we'll call it Block Burger.
Now, for Mr. McDonald to get Block Burger up and running he needs at least $50,000 (50 ETH). His idea attracts the attention of some investors and the process is ready to begin. Using the "debt" contract, the investors lend Ron McDonald $50,000 (50 ETH) in exchange for YTN_ronmcdonald, plus debt and interest. The repayment of the loan operates through the smart contract until completion.
WHY THIS YOUTOKEN SMART CONTRACT IS RIGHT FOR YOU
Whereas the "donation/sponsorship" contract is merely a simple exchange between investors and creator, the "debt" smart contract adds more options. It's not better or worse than the other contracts but it gives people more freedom. After all, the whole purpose of this platform is to give both entrepreneurs and creators more freedom and more opportunity to connect. Hence, this "debt" contract is perfect for creators who want to keep things simple with their investment and it's also great for investors who want to see some guaranteed return on their investment.
We still have two more smart contracts to cover so make sure you're reading the YouToken blog every day. These are some exciting times and you don't want to miss a thing.