How It Works

1. IOU Wallet Protocol

In short, an IOU can represent any obligation (current or future).

The IOU Wallet protocol creates a digital representation of an informal obligation in order to record, track, and help settling it. It is designed for real-world situations where something is borrowed, a service is provided, or money is owed, and both parties require clarity without formal contracts or legal enforcement.

At its core, the protocol follows this sequence (schematic):

-> A creates an IOU

-> B accepts

-> B settles

-> A confirms settlement

2. Consensus Mechanism: Virtual Handshakes

An IOU is activated and completed through two virtual handshakes.

A) Accepting Handshake

A sends IOU for acceptance to B. Available actions to B:

-> Accept - confirms his agreement and activates the IOU

-> Decline - requires a message

Accepting an IOU does not transfer money, items, or services. It confirms agreement on the recorded terms only.

B) Settlement Handshake

B has fulfilled the obligations initiates Request Settlement. Available actions to A

> Accept - A checks his records and inventory. Confirms Settlement

> Decline - requires an explanation reverts IOU into Active state

Settlement confirmation does not transfer assets. It records mutual agreement that the obligation has been fulfilled.

Important: Nature of IOUs & Dispute Resolution!

– IOUs are not legally enforceable.

– IOU Wallet does not institutionalize obligations; it makes recording and settlement frictionless when both parties intend to honor the obligation. A “Handshake Agreement” captures the spirit precisely.

– IOUs do not constitute contracts, securities, or transferable claims.

– IOU Wallet does not arbitrate disputes.

– An IOU records what both parties agreed at the time of acceptance. In the event of disagreement, users are encouraged to resolve matters through direct communication and verbal clarification.

– IOU Wallet is designed to support trust - not replace it.

3. UX

Authentication

3.1.1 IOU Wallet uses link-based authentication to verify your email address. No passwords are required.

3.1.2 IOUs are associated with your authenticated identity.

Create a New IOU

Choose Your Role

-> "I Owe You" - You acknowledge that you owe a favour, item, service, or amount.

-> "I Am Owed" - You record that someone owes you a favour, item, service, or amount.

3.2.1.3 You can initiate an IOU as owing or owning party (A/B). In either case the counterparty must accept the IOU to become active.

Enter Email Address of B for notification, authentication and acceptance of IOU.

-> Green email badge confirms email and IOU have been delivered

-> Green tick next to the name indicates B has authenticated on the platform

Define IOU Title and Accompanying Message

Choose the Type of IOU

3.2.4.1 - Personal IOUs are informal by design and reflect favours or personal undertakings, such as babysitting, helping with a move, or an apology.

3.2.4.2 - Cash IOUs may represent shared expenses, such as dinner or a gift purchased together.

3.2.4.3 - Item IOUs may include anything from clothing to DJ equipment or tools.

3.2.4.4 - Service IOUs can reflect services like loan mowing or baby sitting.

Optional IOU Parameters

+ Due Date (Date of returning Item, providing Service, returning money)

+ Value (Value + Accrued Value = Outstanding Value)

+ Rate (applied from acceptance date or from due date)

+ Redemption (Items only, in case of loss or damage)

+ Enable Crypto Settlement (Settle a $ obligation using ur Crypto)

IOU Variations

Using the correct combination of the parameters, many variations can be structured to reflect real-world informal obligations:

-> IOU: My Equipment

-> IOU: My Equipment return by due date

-> IOU: My Equipment AND After Due Date $5 a day

-> IOU: My Equipment AND $5 for every day you have it

-> IOU: A Dinner soon

-> IOU: $50 for Dinner last night

-> IOU: Babysitting

-> IOU: $50 for Babysitting

-> IOU: $50 for Babysitting, settle until [] after which we agree on $5/day (late settlement)

-> IOU: a hug, an apology, time and many more

IOUs are subject of p2p agreement and understanding, IOU Wallet helps to represent and formalise the understanding of what is agreed.

IOU Accepted

3.4.1 Until accepted, the IOU remains in Pending Acceptance state. Once accepted, the IOU enters Active state.

3.4.2 The IOU will appear in the IOU Wallet. And displays:

+ Name of counterparty (for personal reference)

+ Auth type (email)

+ Auth status (authed / un-authed)

+ Delivery status (Delivered / Pending / Bounced)

+ IOU State (Pending Acceptance / Active / Overdue / Pending Settlement / Settled)

+ Direction (owe or owed)

+ Type of IOU (Personal, Item, Cash, Service)

+ Outstanding Value if any (Value plus accrued rate if any)

+ IOU Title

+ Personal Message if any

+ System Message (Tool Tips)

+ Due Date if any

+ Rate if any

+ Rate Type (from acceptance, from due date)

+ Action Buttons

3.4.2 In Active state:

3.4.2.1 - You may communicate using Remind and Respond.

3.4.2.2 - Settle at any time

3.4.2.3 - IOU parameters cannot be modified. (AB may agree off-platform)

Settlement Process

Request Settlement

3.5.1.1 Once the owing party feels she has returned/fulfilled the obligation,

3.5.1.2 Depending on the type of obligation multiple forms of settlement are available:

Manual Settlement (Off-Platform)

Used when:

3.5.2.1.1 - A favour or promise is fulfilled

3.5.2.1.2 - An item is returned

3.5.2.1.3 - A service is completed

3.5.2.1.4 - Cash is exchanged in-hand

On-Platform Settlement

3.5.3.1 For monetary IOUs, IOU Wallet may generate payment links using supported settlement rails. Settlement options are controlled by the receiving party and enabled in Settings.

Supported Settlement routes:

- Bank Settlement: Add your IBAN,Swift

- PayPal Settlement: Add your PayPal Name

- Solana (crypto settlement). Add your Solana Public Wallet

Integration of multiple settlement rails provides flexibility.

3.5.5.2 Example: IOU €50 for dinner last night may be settled via:

+ Cash in hand

+ Bank transfer

+ PayPal

+ Solana (using live conversion rates)

For All Settlement routes using Rates: Rate Freeze During Pending Settlement

Request Settlement freezes accruing rates:

3.5.5.4.2 - No additional charges accumulate during confirmation

3.5.5.4.3 - Outstanding amount gets locked

3.5.5.4.4 - Decline Settlement will re-activate the IOU and re-instate rate from the point of freeze. Any discrepancies to be discussed and mitigated off platform

Details & Limitations for Settlement rails. (click)

3.5.4.1 Bank Transfer requires manual trigger.

PayPal

3.5.4.2.1 Payments initiated via generated PayPal links.

3.5.4.2.2 PayPal payments cannot be automatically detected.

3.5.4.2.3 Settlement must be confirmed manually after payment.

Solana auto detection Settlement

3.5.4.3.1 Detects payment and activates Request Settlement. Best used with two devices:

->Desktop displays QR code

-> Mobile wallet scans and executes transfer on Solana Network

Automatic settlement detection requires the correct payment reference.

If the reference is missing or altered, the IOU remains open and requires manual confirmation.

Solana Conversion Rates

3.5.4.4.1 When settling a $ IOU using Solana

3.5.4.4.2 IOU Wallet applies the conversion rate at the time settlement is generated.

3.5.4.4.3 Conversion data is provided by Helios, the pricing and conversion provider.

3.5.4.4.4 Displayed values are indicative and shown for transparency.

3.5.4.4.5 Final rates depend on the external payment network.

Network Fees

3.5.4.5.1 IOU Wallet does not charge platform fees.

3.5.4.5.2 Payment networks may apply fees:

3.5.4.5.2.1 - For Bank Settlement transaction and currency conversion fees may apply

3.5.4.5.2.1 - PayPal transaction and currency conversion fees

3.5.4.5.2.2 - Solana network (gas) fees

3.5.4.5.3 Such fees are defined and charged by the respective networks.

Confirm Settlement

3.6.1 Receiving party checks their off-platform records and inventory for receipt and once satisfied, Confirms Settlement of IOU. IOU is moved to Archive.

3.6.2 If Settlement is Declined, the IOU reverts to Active state until both parties agree (off-platform dispute resolution).

3.6.3 Owing party can also Self Settle at any time.

Other Features

View Details

3.7.2 Each IOU provides a complete event trail, including all actions and messages for reference.