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DeFi platform sees strong interest in halal-approved crypto products

Navigating crypto is made more difficult for those with religious considerations and the founder of an Islamic law compliant DeFi platform has thousands of users seeking approved cryptocurrencies.

Australian-based crypto platform Marhaba DeFi says there has been a strong take-up of Halal-approved cryptocurrency products on its platform, with aims to release a suite of new products which align with Islamic law by the end of 2022.

Launched in 2020, the platform is focused on adhering to the rules of “Islamic finance” which refers to how businesses and individuals raise capital in accordance with Sharia, or Islamic law.

Speaking to Cointelegraph, Marhaba DeFi founder and CEO Naquib Mohammed said active users of their non-custodial multichain “Sahal Wallet” have grown to around 40,000 since its launch, stating:

“People need a platform where they can trust every token they interact with, so we don't have to go hunting on different platforms, tapping into different [Islamic] scholars or experts asking ‘can I invest in this protocol, this token, this strategy?’”

“You just download a wallet, and it will give you everything that's halal in the crypto ecosystem,” he adds.

Marhaba, meaning “welcome” in Arabic, also has four more Islamic law aligned crypto products releasing this year, something Mohammed says will be an “end-to-end halal ecosystem” for those excluded from the market due to the lack of Sharia compliance.

The first is TijarX, what he says is the first halal decentralized exchange (DEX) for commodity-backed tokens, a halal DeFi staking solution, a liquidity harvesting platform, and a new version of its existing halal non-fungible token (NFT) marketplace.

“The fundamental property of blockchain is its transparent, it's immutable, so bringing Islamic finance onto the blockchain makes perfect sense. Because of that transparency blockchain is the perfect puzzle piece that fits this gap.”

The first cryptos launching this month on the TijarX DEX will be tokenized silver and gold backed by real and audited bullion reserves. Mohammed says there's more to be added to the platform such as tokenized wheat, barley, soya, and cocoa.

Mohammed says discussions are already underway but nothing is added to the platform without a vetting process which ensures not only that the provider has enough liquidity to handle the volume but also is complying with Islamic laws.

“If the business is not Sharia compliant, if it's not halal, then we can’t list it on the platform. All of this is a very time-consuming and intensive process, but we are absolutely fine with it.”

It’s this process which meant its M.I.R.O. staking platform took eight months to build “because of the difficulty of addressing the Shariah compliance within the space.”

The staking platform is based on the Islamic concept of Ju’ala, something Mohammed describes as “rewards for working”. Users earn a “commission”, part of a share of the platforms' revenue for doing work within the platform such as participating in governance and voting on proposals.

Marhaba’s liquidity harvester works on a separate Islamic financial profit and loss sharing arrangement called “Mudarabah” where on one party provides the capital while the other provides labor and both share in the profits and loss.

Mohammed explains charging or earning interest in Islam is considered exploitative, and the liquidity harvester will be a “game changer” for those barred from accepting interest due to their beliefs as they’ll gain exposure to a similar style product.

Related: NFT and Islamic education: A new frontier to teach religion?

Marhaba is also providing solutions for Islamic businesses using NFTs, the second version of its NFT marketplace will be tailored to businesses, Mohammed revealed it's already partnered with five organizations that will be utilizing NFTs.

In April, Marhaba issued the first NFT Halal certification and Mohammed expressed this was an area he wants to personally ensure finds usability and adoption as it will give consumers greater transparency over the validity of a business' Halal certification.

“This NFT certification is a way to authorize, authenticate and ensure that the certification is valid, and is not expired, that the business has renewed their certification.”

“We were appreciated greatly within the community for that,” he added.

TijarX is set to go live on Sept. 27, with the revamped NFT market set for late October, M.I.R.O. and the Liquidity Harvester are slated for the first weeks of November and December respectively.

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New Australian Islamic finance DeFi platform is ‘guided by Sharia’

Islamic finance is not always compatible with DeFi's focus on risk and yield. A new platform aims to blend the best of both.

A team based out of Sydney, Australia is building what it claims is the world’s first “Shariah-guided” decentralized finance platform to navigate a course between the advantages of DeFi and the beliefs of Islamic finance.

The Marhaba Decentralized Financial Platform — Marhaba translates to “welcome” in Arabic — is expected to launch in the coming months and seeks to offer the Islamic world a DeFi platform informed by the core tenets of Shariah.

Speaking to Cointelegraph, Blockchain Australia Solutions CIO and Marhaba’s CEO and founder, Naquib Mohammed, emphasized a core tenet of Shariah-based finance is ensuring that “both the financial body providing a service and the client must win in the financial transaction.”

“We are building a platform that aims at the inclusivity of the community and a trusted place where faith-conscious Muslims can be onboarded without any hesitation or doubt.”

After founding enterprise-focused platform Spherium Finance in early 2020, Mohammed turned his attention to designing a platform that caters to the world’s Muslim population of two billion.

Mohammed noted the Marhaba team has done research into the attitudes of many Arabic communities regarding crypto assets. He recounted:

In the Muslim countries, we found that 99% of the time, people ask: ‘Is this token Halal? Is this token Shariah compliant?' [...] Question number two is: ‘Where do you buy this?’”

While most new crypto projects begin by tinkering on a testnet and seeking out talented meme-lords on social media, Marhaba’s journey began with Mohammed seeking out respected Islamic scholars who also understand the crypto asset sector and believe decentralized finance can be conducted in a way that adheres to Shariah thought.

The Islamic concept of “Riba” (usury) prohibits “high-interest loans or aggressive derivatives” products as well as transactions akin to gambling (“Maysir”), and those that pose excessive risk or doubt (“Gharar”) are also banned. Mohammed noted:

“The reason that Bitcoin is still under discussion by some scholars in the Islamic ecosystem is because nobody knows who the creator of Bitcoin is. If you don’t know who created it — that means the thing is under doubt.”

Marhaba DeFi will first launch its non-custodial “Sahal Wallet,” which will support custody and transfers in “Shariah-screened tokens and NFTs.” 

Marhaba will hire a team of “highly qualified in-house Shariah advisors” tasked with ensuring the products and tokens supported by the platform are Shariah-guided. The team will systematically assess the tokens listed on crypto data aggregators from largest to smallest, and will conduct regular reviews of projects after they have been approved.

Future versions of the wallet will be integrated with Marhaba’s forthcoming “ethical trading,” “yield maximizer buckets,” decentralized charity, payments solution, and NFT marketplace products.

Mohammed describes Marhaba’s yield maximizer buckets as a “shariah-compliant version of yield farming, noting:

“It’s not exactly yield farming, it's pretty innovative because we are making different investment buckets for you to maximize profits.”

Although charging interest on lending is banned under Shariah, Marhaba is also exploring borrowing and lending products that mobilize the depositors' assets without charging them interest.

The NFT marketplace is scheduled for launch later this year, with the Marhaba team working to onboard respected artists creating traditionally-inspired Islamic calligraphy to tokenize on the platform.

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