Crypto Staking: Wonderland APY Halal or not?
Question:
Assalamu Alaykum Wa rahmatullahi Wa Barakatuhu. I would like to know if staking crypto specifically on the TIME WONDERLAND platform is Shariah Compliant. They give a big amount of APY back for their holders, and I don't know if that APY is in terms with Shariah. This is the link for all the information about the platform and how they give the APY to the holders. www.wonderland.money. Jazukumullah khair.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
vv
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
We apologize for the belated response.
Staking is a concept in which crypto assets are pledged for verification purposes on a network. Essentially a group of validators are chosen by the blockchain networks to validate a block of crypto transactions who receive rewards or interest as stated for their validation of the network. The concept of staking is based on the structure and nature of the underlying transactions. If the staking refers to a fixed return or interest, then such staking or rewards will be clearly impermissible.
We have reviewed the Time Wonderland APY product. Wonderland is a decentralized platform based on the TIME Token. The TIME Token is backed by a basket of crypto assets including MIM. MIM refers to magic internet money as an interest bearing stable coin which is backed by the Abracadabra network platform. TIME Miners or stakers receive a fixed return for contributing their capital upfront to the TIME Treasury function. APY refers to annual percentage yield in which essentially based on our understanding, the wonderland TIME Staking offers 2% compound interest daily on the staking of your TIME Token. This is based on our understanding and the information as per the Wonderland website accessed on the 27th of December 2021.
Based on our understanding of the Wonderland APY Product as per the above. Such a solution is impermissible since the TIME Token is backed by MIM which is an interest bearing lending entity backed by the Abracadabra network, the platform itself provides for a fixed rate of compounding interest of 2% daily which is also impermissible. We advise against investing in such schemes.
And Allah Ta’āla Knows Best
(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee,
Darul Iftaa, Durban, South Africa
DISCLAIMER: The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
(Announcement: The Darul Iftaa under the auspices of the Mufti Ebrahim Desai Foundation is managed by Mufti Ismail Desai Saheb, son of Hazrat Mufti Ebrahim Desai Saheb RA. Mufti Ismail Desai will continue his academic career by conducting an intensive one year specialist programme in Islamic Finance, Banking and economics (MA) and Iftaa training programme for Ulema and Shariah graduates. Mufti Ismail Desai Saheb will also be conducting various programmes for the public on Islamic Finance, Ishaahi Majlis and general Islamic Q&A. Alhamdulillah the Darul Iftaa currently has over 50 students from over 32 countries globally. The Darul Iftaa will be conducting programmes on Islamic Finance, Business and Economics in various cities/countries. The programme is conducted free of charge and you can request an event by contacting us directly at www.shariahbusiness.com. You can contact the Mufti Ebrahim Desai Foundation for any details on Hazrat Mufti Ebrahim Desai RA at www.muftiebrahimdesai.com. We will keep you updated on our programmes and events via our email data base and other media channels)
and Allah Ta'ala Knows Best
Mufti Ismail Desai
Darul Iftaa
Durban, South Africa
Disclaimer The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
Browse next Fataawa