Is the system of Crowdloan halal ? Auction on Kusama and Polkadot

As salam aleykoum wa rahmatAllah,

Is the system of crowdloan on the ecosystem Polkadot/Kusama halal ?

Quick explanation :
The point of Kusama/Polkadot ecosystem is to connect differents blockchains through a parachain.
To obtain a parachain and connect their blockchain to the others, the projects must participate in a candle auction where they will bid some KSM or DOT.
The project that win the auction obtain a parachain for a duration predefined.

The KSM/DOT that have been use to bid are locked for the period of the parachain and released to the biders at the end of this parachain.

To raise a large amount of KSM/DOT to bid, the projects have put i place the system of crowdloan. We can lend KSM/DOT to the project and they distribute us tokens of the project if they win the auction. If they dont win the auction, they give you back your KSM/DOT.
If they win the auction and obtain a parachain. Our KSM/DOT are blocked for the duration of the parachain and retrieved at the end of the parachain.

I’v been searching to know if this system is halal or not but i’v found nothing, so I don’t want to invest in this without a clarification.
JazakoumAllahu kheyran for all your work


Have you had a response to this from anywhere else?

At first, going by the idea of a ‘loan’, I leaned towards thinking it’s interest based. I.e. you’re giving an amount and receiving more back.

But a couple of points based on discussions from others have me thinking whether there’s some permissibility in it:

  • One response is that it’s not necessarily lending out your money to be used but it’s actually largely a vote of confidence in that project. They can’t do anything with your tokens or use them as you do with money. Your tokens are used by the project to show their value and level of trustedness so they can get access to the parachain. ie If a project has so many loaned KSM tokens, it proves it’s a trustworthy project. People would only lend their tokens if they believed in the project. This is not how traditional money is usually loaned out or used.
  • It’s an investment in that you take a risk on a project (the risk being your tokens are locked up and can’t be used and so you lose out on staking opportunities and can’t cash out if the crypto market crashes), and in return, you could gain no rewards from it if the project doesn’t win, but you could gain some new tokens from the project if it does win. If I was to make an analogy - perhaps not 100% accurate - I’d see it like pooling some money together in a business and if the business doesn’t take off, everyone gets their money back, but if it does take off, you get your cash back as well as some additional profits.
  • Another possible ‘risk’ you take is that the new tokens you get rewarded IF the project wins aren’t guaranteed to be worth a lot. They could be worth little or even tank in the future. This is all different to traditional money lending which has a fixed lending and interest agreement.

Those were some responses I’ve heard and I can’t guarantee their validity, but now I’m unsure myself on whether the DOT/KSM crowd loans are indeed interest based lending or not.

Would really appreciate a response from @Mufti_Faraz_Adam or @Mufti_Billal.

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For the sake of anyone else who comes across this thread, I found this useful:

If someone finds something regarding this thread that please inform us.
It would be nice if our Ummah will start to get more involved in the world of cryptocurrencies is the future we are heading towards.

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The polkadot crowdloans start tomorrow, if @Mufti_Faraz_Adam or @Mufti_Billal have time to look into it we’d really appreciate it