Hi is theta token staking halal
Salem aleykum wa rahmat Allah wa baraket, is the staking on binance for the new Coin REEF halal?
That’s the link : https://www.binance.com/en/support/announcement/fcf9a1563a0345869bf1898c888cc4ce
Salam alikom Mufti Faraz, Jazaka Allahou Khayran for all.
I asked support of crypto.com today about interest and about POS. They answer :
Answer 1 :
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Answer 2 :
So is it Halal or not to “stake” our crypto and earn interest with them if they don’t lend and don’t use this crypto ?
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Salaam guys
Just catching up on this thread.
Key things are:
- In principle, POS is permissible (subject of course to the underlying cryptocurrency itself not being dodgy). Here is the reasoning:
Proof-of-Stake (POS) is an alternative to the standard Proof-of-Work (POW) approach to blockchain verification and cryptocurrency issuance.
POW is the method used by Bitcoin and others and relies on you using your CPU power to do random maths problems, and upon solving that you get to make the new block on the blockhain (and earn some bitcoin as a result of this).
But the problem with this approch is the immense computational power needed. An alternative is the POS approach which essentially allocates the right to create the new block on the blockchain on the basis of your ownership of existing coins. So the older and more coins you own, the more likely you are to be allocated the right to create the new block on the blockchain.
POS is therefore simply a mechanism among a group (the group of those who own this cryptocurrency) to facilitate issuance of new tokens and the creation of new blocks for the blockchain and continued validation. Sure, one could quibble with the implication of it - that the ones with the most coins typically get richer - but ultimately our view is that this is a statistical likelihood and actually depends on who early adopters are (who took a risk at the time). Additionally, POS and other alternatives to POW need to be encouraged given the immense climate change harm that POW does. Finally, POS and other alternatives to POW are inevitably going to be needed with blockchain is to realise its potential. POW just takes too long, uses up too much energy to be any practical use for an actual currency.
- Getting paid interest to give your coins to someone else to stake for you is not generally permissible in my humble view. Sometimes it can be though. Reasoning below.
The people you are giving that money to are themselves engaging in a halal activity, but their transaction with you is impermissible. They are saying to you “lend us £100 and we’ll give you £105 back in 1 month.” That is interest. However, where the payback to you is done in a currency other than the one that you gave them, i.e. they gave you £100 and then paid you back in $, then that can be permissible.
The reasoning behind that is that if we view each cryptocurrency as a digital asset, one can exchange between them as we like, and one can also take a delayed delivery of them as well. So just like I can buy £100 worth of apples to be delivered to me in 1 month, one can also buy £100 worth of BTC to be delivered to me in a month. The amount of apples and BTC are entirely up for negotiation between the two parties.
If in any doubt on this matter, I’d stay clear.
As Salaamu Alaykum Mufti
You said that Yield Farming is very similar or close to riba and should be avoided.
Does that include Liquidity Mining as well? It sounds to me like it does from:
But, I don’t actually understand the difference.
I was interested in investing in BOT (Bounce): https://docs.bounce.finance/
“Bounce is a decentralized auction platform, incorporating liquidity mining, decentralized governance and staking mechanisms. The first principle of Bounce is scarcity of resources, which creates a competitive swap environment.”
Would investing in them be permissible?
Can I know Is binance future trading permissible in islam?
Salaam
Cardano recently introduced staking. I understand you cant look specifically at Cardano, but if the staking is haraam in this case, would it make investing in the coin (without staking) haraam?
But actually you can not sell £100 for $110 after one month. There is a clear Hadith about that. It must be finalized in the same session, hand-by-hand, - aka here moved to your account or wallet and be able to directly spend it as you like.
It’s called Taqabod تقابض in Arabic, I think it’s palpation in English.
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Some or all Proof of Stake models choose which node to give the right to create a token/coin based on randomness (the more tokens you have, the higher your chances of being chosen). Example: Cartesi (CTSI): https://www.coingecko.com/en/coins/cartesi
“Node runners are selected randomly according to a PoS system and gain the right to create the next block.”
Does this make this specific PoS haram? Or is this how all PoS work? Is randomness in a financial system halal?
While I cannot answer your specific question on the permissibility, I can differentiate the 2 from the article.
Liquidity mining is when you use your cryptocurrencies in a pool to increase liquidity for certain tokens on a market. This attracts a share of the trade fees as a reward and a share of another token (called governance token) that is specific to the platform.
Yield farming starts when you extend this a step further by using the rewards from your initial liquidity mining in the form of fees and governance tokens as liquidity on other platforms in order to generate additional income. You can do this ad Infinitum, hence the idea that seeds’ spread on different DeFi platforms can allow a farmer to enjoy a good ‘harvest’ after a while.
I have no idea if any of it is permissible.
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Assalāmu ʾalaykum,
Thank you for your breakdown!
I just have one comment…
Because staking in and of itself is permissible, it’s also permissible to let someone else stake for you. The important aspect to consider is the agreement made between you as an investor and the person that will stake for you.
If that person pays out a fixed percentage of your investment, then you’re right. That’s the same as interest.
But if that person pays out a fixed percentage of the rewards, then that can be considered as sharing the rewards. And that’s permissible.
So if, for instance, 100 US dollars worth of BTC are staked in return for a fixed percentage of 10%, and you have agreed with the person that does the staking that that reward of 10% will be divided 50/50 between that person and yourself, then that’s permissible.
I’m not a scholar and I could be wrong. But this is based on the way I interpreted all the answers of @Mufti_Faraz_Adam about this topic.
I ask Allah to forgive me if I’m wrong about this. Allah knows best.
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I recently found an article about this topic:
You can also watch it on YouTube. What are your thoughts about this? Does this mean that staking is only haram if you are lending? I think COMPOUND uses this system and this is why it is haram, but as I know you are not lending your crypto to anyone if you stake a different cryptocurrency on Binance, Coinbase etc.
Hi,
I have a question… is earning crypto while sleeping on binance with flexible terms halal or haram. And what about staking coins locking them for a period of time and earning APY?
Salamalaykum
My question Is CHZ token hal to trade??
I don’t ask for stake with them only to buy it and to sale it later?
Assalamu Aleikum Sheikh!
I put my money on PoS of UMI crypto. The token was going up and staking was roughly 30 % a month ! Or 360 % a year! So, I was wondering if it was halal or not. First I told myself: Well I’m being rewarded for my service in authenticating transactions. But today I pulled out. Is it normal to have a rate this high ?
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Alsalam Alaikum Sheikh
Please, could you enlighten us if investing in Safe moon crypto halal or Haram? I think it follows the incentives system. I have some money in it. And, i do need your help and Fatwa in that regard.
Jazak Allah Khair Al jaza’
Aoa dear mufti.
My question is regarding future trading and margin trading. Is it halal ??
the use of leverage is haram bro
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