It doesn't avoid sending out your IP address per se- it has to, in order to allow the reply to be sent to you- but 'anonymizes' it through two techniques. Firstly, the tunnels serve to introduce distance between the sender and the receiver of a packet, preventing a single user from watching the full transit. Secondly, I2P makes every user a node by default. This, critically, makes for plausible deniability- an external observer, without watching a large part of the network, can't tell whether any packet you send is your own or someone else's.

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