Hey, thanks for your question.

Essentially, you are right, you are loaning ETH to fund a project, based on the terms of the underlying contract (which is also tradable in the future). While there are no guarantees in this case and it is an unsecured loan, the loan contract is a legally binding document under European law that gives the borrower a claim to payment in the future.

There are risks associated with any financial agreement of this nature, as well as this one, so you should exercise your own judgement when deciding whether you will participate.

To explain it a little more...

The ILP platform allows the lender and borrower to agree to terms based on a human-readable contract, which can be signed electronically via a digital ID system. The ILP provides borrowers (project founders) with an opportunity to raise money via debt-financing. The terms of the contract can be designed by the borrower, in any way they feel is a right fit for their fundraise. In this case, the team behind Project B11G is able to offer 14% per year for 24 months, regardless of the extent to which they succeed.

Other companies may offer x% of net operating profits for 5 years, for example, making the opportunity more long-term oriented and/or speculative in nature. ILP was designed in Estonia, where digital contracts and signatures have been accepted for a while, with their eResidency program and other regulatory initiatives, providing welcoming environments for tech entrepreneurship.

You can learn more about the ILP platform at https://tokenote.io.