Your capital will be transferred to a borrower of the loan vault. The borrower will set up and redistribute your capital according to their business model and the loan agreement with the vault or, respectively, with Florence Finance. Upon maturity of the loan, Florence Finance may redeem loan vault tokens, however, there is no guarantee of redemption as long as funds can still be utilized within the vault mandate. This basically means: if you wish to exit your position, you are primarily dependent on the secondary market – alternatively you can choose to wait for vault expiry or maturity.

The main risk associated with lending on Florence Finance is credit risk. This basically refers to the uncertainty that arises through the default of a borrower. However, determining the specific default risk of any borrower in a loan vault is required. So it's imperative to do due diligence on any and all of the vaults' borrowers and their respective business models – which, at the outset, will be handled by Florence Finance. Our aim is to promote and simplify credit information transparency over time. In the meantime, we're building a default reserve that absorbs smaller default losses if they occur.