August 10, 2023
In the ever-evolving landscape of decentralized finance (DeFi), Biokript stands out as a pioneer by offering a Shariah-compliant crypto trading platform that is inclusive to everyone. One new feature to look forward to on their roadmap is Liquidity Mining. For those who adhere to Islamic principles, this innovative platform bridges the gap between the DeFi world and religious obligations. Let’s take a deeper look into the concept of yield farming and its subsets (Staking, Lending, and Liquidity Mining) while exploring the nature of Shariah compliance for each. Furthermore, we'll highlight the key indicators of Shariah Compliant Liquidity Mining, ensuring ethical and Halal financial practices.
Yield farming is the process of providing liquidity to DeFi platforms in exchange for rewards. Liquidity providers (LPs) lock up their cryptocurrency assets in liquidity pools, facilitating trades and transactions on the platform. As a reward for their participation, LPs earn a share of the fees generated within the pool or are given rewards in the form of interest. Yield farming encompasses various subsets, including Staking, Lending, Liquidity Mining, each with distinct characteristics.
The Proof of Stake (PoS) model is a consensus mechanism used in
blockchain networks, particularly in the context of staking. Unlike the Proof
of Work (PoW) model, which requires miners to solve complex mathematical
puzzles to validate transactions and add new blocks to the blockchain,
PoS relies on validators (or stakers) who are chosen to create new blocks
and secure the network based on the number of tokens they hold and are
willing to "stake."
In the PoS model, validators lock up a certain amount of their cryptocurrency tokens as collateral, which demonstrates their commitment to the network's security and integrity. The more tokens a validator stakes, the higher the chances they have of being selected to create a new block and earn block rewards. Additionally, PoS networks often implement a reputation-based system, where validators can be penalized or have their staked tokens slashed if they attempt to act maliciously or validate incorrect transactions.
These rewards act as an incentive for users to hold and stake their assets rather than sell or trade them actively. From a Shariah perspective, staking can be considered compliant as it involves a form of profit-sharing where the rewards earned are contingent on the network's performance, and the individual bears the risk of potential losses.
Lending in DeFi refers to the practice of depositing funds into a smart contract or lending platform, where other users can borrow these funds in exchange for paying interest. The lenders, often referred to as depositors, receive interest on their deposited assets as compensation for participating in the lending process. This aspect of lending in yield farming is unacceptable in Islam and Muslims should stay away from it because it involves Riba. In doing business in a Shariah-compliant manner, Muslims should avoid interest (Riba) and ensure fairness and transparency in the lending terms.
Liquidity Mining involves providing liquidity to decentralized exchanges (DEXs) or DeFi platforms by depositing funds into a liquidity pool. Liquidity providers (LPs) earn rewards in the form of additional tokens or transaction fees generated by the platform. The goal is to incentivize users to provide liquidity to facilitate trading and transactions within the ecosystem. For liquidity mining to be Shariah compliant, certain conditions must be met, such as the tokens being Shariah compliant, the returns not being guaranteed, and the LPs receiving a percentage share of the pool's earnings rather than a fixed amount
Tokens can be designed in accordance with Shariah principles. They include many types including work tokens, utility tokens, asset-backed tokens, revenue tokens, equity tokens, and buy-back tokens. According to the Shariah Review Bureau, in theory, a token holder may gain ownership, get access and utility rights, lay a claim on an asset, or be entitled to cash flows. If properly created, tokens can be Shariah compliant and provide an innovative method of raising funds.
Biokript is committed to Shariah compliance by ensuring that the liquidity pool tokens adhere to Islamic guidelines. These principles restrict dealing in illegal businesses such as alcohol, gambling, and interest (Riba). As a Shariah-compliant platform, Biokript meticulously develops tokens to conform to these rules, providing LPs confidence in the ethical nature of their investments.
The idea that returns on investment should not be guaranteed is key to Shariah-compliant liquidity mining. The ability for LPs to gain or lose liquidity based on the performance of the liquidity pool and market conditions is required. This is consistent with the Islamic concept of shared risk and guarantees that investments adhere to the Gharar (uncertainty) and Maisir (gambling) principles.
In Biokript’s Shariah-compliant liquidity mining, LPs receive a percentage share of the liquidity pool's earnings, not a fixed or guaranteed amount of tokens. If LPs were guaranteed a specific amount of tokens or could recall their tokens at any time, it would resemble a loan arrangement, violating Shariah principles. Biokript's platform ensures LPs become shareholders in the pool, allowing them to bear the risks associated with market fluctuations.
Biokript provides liquidity mining and will pay its LP providers a percentage of their liquidity pool investments. As a limited-time offer, Biokript will provide:
Don't miss out on this exclusive opportunity to grow your wealth the ethical Shariah-compliant way. Join Biokript's Liquidity Mining program today and earn with purpose.👉 Get Started Today 👈Terms and conditions apply. Investment involves risks. APY subject to change. Lock-up periods ensure shared risk and profit-sharing in accordance with Islamic principles.
Biokript's Shariah-compliant liquidity mining platform demonstrates its commitment to Islamic principles through the following key indicators:
Biokript meticulously vets and selects Shariah-compliant tokens, excluding any assets tied to unethical industries.
The varying APY options and fluctuating token prices demonstrate the inherent risk of liquidity mining, ensuring LPs actively participate in shared risk-taking, which is an essential aspect of Shariah compliance.
By not guaranteeing returns, LPs are motivated by the principles of profit-sharing, as opposed to fixed interest, which is prohibited under Shariah law.
Biokript's Shariah-compliant Liquidity Mining platform offers a revolutionary approach to integrating DeFi with Islamic principles. By adhering to the key indicators of Shariah compliance, Biokript ensures that liquidity providers can actively participate in yield farming while aligning their investments with ethical practices and shared risk-taking. As the DeFi space evolves, platforms like Biokript are leading the way in creating a financial ecosystem that embraces the values and beliefs of all individuals, irrespective of their faith.
BIOKRIPT Hybrid Exchange is a spot trading platform that combines the best features of both CEX and DEX. BIOKRIPT provides its BKPT users access to 50/50 profit shares generated from the exchanges trading fees.
Sarajevo, 71,000, Bosnia and Herzegovina
Glendale, Arizona, United States