HALAL Screening Cryptocurrency
Is Aave Halal?
Complete Shariah Compliance Screening of Aave to determine if it is a Halal or Haram cryptocurrency
Legitimacy Screening
What is Aave
AAVE is a type of cryptocurrency that operates on a decentralized finance (DeFi) platform, allowing people to lend and borrow digital assets without needing a bank. Imagine it like a community lending library, but instead of books, people are sharing cryptocurrencies. Users can deposit their crypto to earn interest or take out loans by using their crypto as collateral. This way, you can make your digital assets work for you, whether you're looking to earn some passive income or need quick access to funds.
What makes AAVE unique is its focus on flexibility and innovation. It offers features like "flash loans," which let you borrow money without collateral for a very short time, as long as you pay it back in the same transaction. This opens up exciting opportunities for traders and developers. Plus, AAVE has a strong community and governance model, meaning users can vote on changes and improvements to the platform. So, it’s not just about the money; it’s about being part of a growing movement in finance!
Transparent and Credible Team
The report identifies Stani Kulechov as the founder and CEO, detailing his background and the project's history. This suggests a transparent team with a credible history.
Score: 80
Clear Use Case or Purpose
Aave is a decentralised non-custodial liquidity protocol that allows users to lend and borrow cryptocurrencies. The protocol's documentation clearly outlines its purpose, design, and technical details. However, as the use case is a lending platform, which is against Islamic principles, this score is halved.
Score: 45
Absence of Fraudulent Behavior
Aave has undergone regular audits by top-tier security firms like Trail of Bits, OpenZeppelin, and Certora. These audits, along with the community governance and the use of blockchain explorers for verification, indicate an absence of fraudulent behaviour.
Score: 90
Ethical Practices
Aave emphasizes community-led governance and transparency. The platform operates on the Ethereum blockchain, ensuring all transactions are secure and verifiable. However, Aave facilitates lending which is viewed as problematic in the "Islamic Scholars Opinions". Therefore the score is halved.
Score: 42.5
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Aave Halal Project Screening
- Are the project’s purpose and operation Shariah Compliant.
- Does the project operate ethically and transparently, without harm to society.
- Does the project promote positive societal or environmental outcomes.
Aave Financial Screening
- Does the revenue involve Riba (interest), Gharar (excessive uncertainty), or Haram activities.
- What red flags are hidden within the projects finances and are within permissible limits.
- Types of revenue generation activities and the percentage that may be Riba or interest based.
- Audits from reliable sources
Aave Token Screening
- Is the Token governance fair and ethical?
- Are profit-sharing mechanisms (e.g., staking rewards, dividends) compliant with Islamic Finance?
- Does the token’s design, or unlock schedule raise unethical concerns?
- Halal underlying asset, and free from impermissible elements
Is Staking Aave Halal?
- Are the staking operation aligned with Shariah-compliant structures.
- Does the staking avoid Gharar (excessive uncertainty) and Maysir (gambling)?
Aave Shariah Compliance Score
- Total Shariah Compliance Score out of 100
- 27 different components researched
- More comprehensive than any other platform