> For the complete documentation index, see [llms.txt](https://docs.ibis.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ibis.app/platform/deposits-and-withheld-principal.md).

# Deposits and principal delivery

## Overview

A deposit transfers the admitted asset from the paying wallet to the facility for a lender. A Continuous facility issues the lender's shares at once; an Epochs facility holds the deposit pending settlement. Newly funded principal stays in the facility, reserved in full as withheld principal, until the facility delivers it to the borrower.

Each role named here, other than the lender and its delegate, is held by the entity named for that role in the facility's agreement.

The figures shown in the apps and described here are informational. The Master Lending Agreement governs amounts, dates, defaults and remedies.

## Deposit cap and minimums

Deposit eligibility includes the following requirements, subject to the facility's current operating status:

* The facility is Open and not Settling. A registered facility that has not yet been activated refuses deposits, and so does a facility that is Winding down, Claims only or In recovery.
* The paying wallet and the wallet that receives the shares are both eligible under the facility's [Eligibility, compliance and agreements](/getting-started/compliance-perimeter.md).
* The amount is at least the minimum deposit.
* The deposit fits under the deposit cap, as set out in the cap rule below.

On a Continuous facility, neither the borrower receiving wallet nor an active liquidity sleeve receiver can pay for a deposit. On an Epochs facility, the lender or its delegate must make that lender's first pending deposit of an epoch. Each epoch accepts a bounded number of pending deposits.

The paying wallet must authorize the deposit through a prior approval or, where the asset supports it, a signed authorization. A signature from another wallet cannot fund it. If the asset does not support signed authorization, the paying wallet's prior approval must cover the amount.

The facility takes exactly the deposited amount. It refuses a deposit if the asset transfer delivers a different amount.

{% hint style="danger" %}
Sending the asset directly to a facility's address does not create a deposit and issues no shares.
{% endhint %}

### Cap rule

Deposit exposure adds the value of all outstanding shares, pending deposits and owed value. Shares issued for withheld principal already count toward exposure, so withheld principal is not added again. The facility accepts a deposit only if exposure plus the deposit stays within the deposit cap, or the cap is 0.

**Deposit exposure and the cap rule**

$$
E = \lfloor s\_{out} \times I \rfloor + P + O, \qquad E + a \le cap
$$

Where:

* $$E$$ is the facility's deposit exposure, in asset units to 6 decimals.
* $$s\_{out}$$ is the number of outstanding shares of the facility, including shares held for open withdrawal requests, to 18 decimals.
* $$I$$ is the current share price, in asset units per share to 18 decimals.
* $$P$$ is pending deposits waiting for settlement, all lenders, in asset units to 6 decimals.
* $$O$$ is owed value fixed at settlement and not yet funded, all lenders, in asset units to 6 decimals.
* $$a$$ is the amount of the new deposit, in asset units to 6 decimals.
* $$cap$$ is the deposit cap set per facility, in asset units to 6 decimals; a cap of 0 means no cap.

The share term is rounded down to 6 decimals; the other terms are asset amounts to 6 decimals. The cap must be 0 or at least the minimum deposit (bound); see [Facility terms, limits and fees](/platform/facility-terms.md). Lowering the cap below current exposure stops new deposits and leaves existing positions unchanged.

Illustrative example: 3,750,000.000000000000000000 outstanding shares at a share price of 1.040000000000000000 are worth 3,900,000.000000. With pending deposits of 600,000.000000 and owed value of 300,000.000000, exposure is 4,800,000.000000. Under a cap of 5,000,000.000000, a deposit of 250,000.000000 is refused, because exposure would reach 5,050,000.000000, and a deposit of 200,000.000000 is accepted, because exposure reaches the cap exactly.

### Minimums

**Minimum deposit and minimum residual**

$$
0.000001 \le m\_{res} \le m\_{dep}, \qquad m\_{dep} \le cap \text{ when } cap \ne 0
$$

Where:

$$m\_{res}$$ is the minimum residual set per facility, in asset units to 6 decimals. $$m\_{dep}$$ is the minimum deposit set per facility, in asset units to 6 decimals. $$cap$$ is the deposit cap set per facility, in asset units to 6 decimals.

The comparison is exact, with no rounding: every term is an asset amount to 6 decimals. The facility checks these relations (bound) whenever its terms change; see [Facility terms, limits and fees](/platform/facility-terms.md). The figure 0.000001 is the asset's smallest unit (bound).

Every deposit, including an addition to a pending deposit, must meet the minimum deposit. The minimum residual applies to [withdrawal requests](/platform/withdrawals-owed-value-and-claims.md).

Illustrative example: a minimum residual of 1,000.000000, a minimum deposit of 5,000.000000 and a cap of 5,000,000.000000 satisfy the relations. A minimum deposit of 6,000,000.000000 under the same cap does not, and the facility refuses those terms.

## From deposit to shares

### Continuous deposits

An accepted Continuous deposit issues shares at the current share price. The facility divides the deposit by that price and rounds down, as described on [Shares and the share price](/platform/shares-and-the-share-price.md). It refuses a deposit that would issue no shares.

The facility reserves the full deposit as withheld principal, then attempts delivery as part of the same deposit.

### Epochs deposits

An accepted Epochs deposit stays pending until settlement, holding no shares and earning nothing. Before settlement begins, the lender or its delegate can cancel it in full for a refund or cancel part of it if at least the minimum deposit remains. Cancellation is unavailable while Settling.

Settlement converts pending deposits into shares at the pinned continuing-holder price, as described on [Epochs and settlement](/platform/epochs-and-settlement.md). The converted amount becomes withheld principal. The facility attempts delivery after settlement completes. A deposit too small to issue any shares at that price is credited to the lender's claimable balance.

If a lender is a restricted address when settlement reaches its deposit, the facility credits the cash to the compliance escrow under that lender instead of converting it. If the credit cannot complete, the deposit stays pending and refundable. Until that deposit is canceled in full, the facility refuses new deposits for the lender.

In Winding down, Claims only and In recovery, pending deposits never convert and remain refundable with no time limit.

A withdrawal is funded only when the facility holds cash to fund it, normally from borrower repayment.

## Withheld principal and delivery

The facility delivers principal to the borrower receiving wallet (Borrower funds), less any liquidity sleeve leg on a Continuous facility. Undelivered principal stays reserved in the facility as withheld principal.

When settlement opens a protected withdrawal window, principal converted at that settlement stays withheld. It funds the priority withdrawals first.

There is no borrower-initiated draw.

![Principal delivery from a lender through the facility to Borrower funds and the optional Continuous sleeve receiver](https://1212871591-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FAPyk7jtRhMNFPRuPw5d3%2Fuploads%2Fgit-blob-c01667e8fa6b0355b39fbc5ac7a2e975d31f7037%2Fprincipal-delivery.svg?alt=media)

*Figure: Principal enters the facility with a deposit and leaves it on delivery to the borrower receiving wallet and, on a Continuous facility with a split, to the sleeve receiver.*

Total delivered principal is a historical figure recorded by the facility. It is not cash, a reserve or backing for any withdrawal.

### Liquidity sleeve split

A Continuous facility may send part of each delivery to a liquidity sleeve receiver (the sleeve receiver), set per facility and holding no facility role. The Admin sets the split and receiver before activation or while Open. Changes apply only to later deliveries. An Epochs facility has no liquidity sleeve.

**Liquidity sleeve split**

$$
a\_{sleeve} = \left\lfloor \frac{A \times \sigma}{10{,}000} \right\rfloor, \qquad a\_{borrower} = A - a\_{sleeve}
$$

Where:

$$A$$ is the principal amount being delivered, in asset units to 6 decimals. $$\sigma$$ is the liquidity sleeve split set per facility, in basis points; 10,000 bps is 100%. $$a\_{sleeve}$$ is the leg sent to the sleeve receiver, in asset units to 6 decimals. $$a\_{borrower}$$ is the leg sent to the borrower receiving wallet, in asset units to 6 decimals.

The sleeve leg is rounded down to 6 decimals and the borrower leg takes the remainder, so the two legs add up to the full amount. The split is bounded at 0 bps (0.00%) to 10,000 bps (100.00%) (bound). Its default of 0 bps (0.00%) (configured) sends all delivered principal to the borrower receiving wallet. A positive split requires a sleeve receiver different from the borrower receiving wallet and the Redemption operator.

Illustrative example: a delivery of 10,000.000000 under a split of 1,500 bps (15.00%) sends 1,500.000000 to the sleeve receiver and 8,500.000000 to the borrower receiving wallet.

Both legs must complete together. If either fails, the full amount stays withheld. Withheld principal tracks the full amount rather than the separate legs.

### Reclassification

Entering Winding down or defaulting reclassifies withheld principal as ordinary facility cash and ends principal delivery. Pending deposits, claimable balances and owed value stay unchanged. Withheld principal is always zero in Winding down, Claims only and In recovery.