Earn Debt (ED) Tokens represent fractional ownership of Senior, Junior, and Mezzanine real estate debt instruments. Individual shares are represented by ERC1400 security compliant tokens which can be traded on the Earn platform providing lenders with maximum liquidity.
Types of Debt
Senior debt is a project’s first tier of liabilities, typically secured by a lien against the project’s real estate assets (collateral). Senior debt is secured for a set interest rate and time period. The borrower provides regular principal and interest payments to lenders based on a preset schedule.
This makes the debt less risky, but also commands a lower return for lenders. If a borrower files for bankruptcy, senior debt claims are paid first. All other debt is subordinated. Collateral from asset-backed debts may be sold to pay off senior secured debt.
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