Islamic Finance Principles Assessment
Riba — Does BSquared Network involve interest?
BSquared's core L2 gas/fee model is a permissible service-fee structure, but its affiliated U2 stablecoin explicitly generates yield through funding-rate arbitrage and delta-neutral hedging on perpetual-swap markets. This derivative-based income stream sits closer to interest-like, speculative return than genuine profit-sharing. For Muslim investors, the B2 token's own utility function is not inherently riba-based, but the ecosystem's stablecoin yield mechanism warrants caution and separate scrutiny.
Assessment: Riba Dominant
Score: 44/100
Our methodology examines 10 criteria to evaluate how well BSquared Network avoids interest-based mechanisms.
BSquared's stated revenue sources are L2 gas and transaction fees, plus planned sequencer-fee sharing with B2 holders — a legitimate, service-based income model comparable to toll or utility fees. However, the U2 settlement stablecoin's yield is explicitly generated via funding-rate arbitrage and delta-neutral hedging on derivatives markets, distributed to stakers and the ecosystem. This is a derivative/interest-adjacent income stream at the protocol level, distinct from B2's own gas-fee utility. No detailed treasury balance-sheet or interest-bearing-holdings disclosure was found, leaving overall treasury composition beyond a 24% ecosystem reserve allocation largely undocumented.
Staking rewards derive from multiple sources: real mining income routed through the Mining² module, PoSg consensus incentives, and an "AI signal" scoring mechanism converted into validator voting weight. These are variable, activity-linked returns rather than fixed guaranteed interest, which favors permissibility. A separate "HIVE" allocation vests over 96 months on a schedule, while flexible-pool rewards adjust monthly based on network activity. The complexity of the "AI signal" weighting mechanism is not fully documented, and slashing conditions or risk disclosures are incomplete, making the precise reward-generation logic harder to fully verify.
Gharar — How much uncertainty does BSquared Network involve?
BSquared carries a moderate degree of uncertainty: it is a genuine, functioning Bitcoin L2 infrastructure project with public code and multi-year vesting discipline, yet key disclosures — audit reports, treasury composition, and staking risk terms — remain incomplete. The MAS licence revocation of an affiliated "Bsquared" entity adds a documented, external trust concern. On balance, gharar here is real but tied more to disclosure gaps than to the protocol's fundamental design.
Assessment: Excessive Gharar (High Uncertainty)
Score: 45.9/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Publicly identifiable team members are limited to a handful of individuals traceable via LinkedIn — a business-development director and a Head of Corporate Finance at an MAS-licensed affiliate — with no comprehensive, credentialed founding-team profile disclosed. The project did raise seed funding from named VC and crypto-native investors in January 2024, indicating some institutional vetting. A public GitHub repository and official documentation exist, supporting technical transparency, but the thin leadership disclosure and the unrelated-but-branded MAS enforcement action against "Bsquared Technology Pte Ltd" compound uncertainty about who ultimately stands behind the project.
CertiK's scan lists "1 Audit available" for the B2 contract, but the report itself is marked "Non-Disclosed," and other Halborn audit reports surfacing in research belong to unrelated projects entirely. This means no verifiable, dated, named-firm audit of BSquared's own core contracts could be confirmed — a genuine and material gharar concern that should be named plainly rather than assumed away. Staking documentation covers reward timing (unlocks on the 21st monthly) but omits slashing conditions, custody status, and full risk disclosure, leaving participants without complete terms before committing funds.
Maysir — Does BSquared Network involve gambling or speculation?
BSquared is not designed as a gambling or meme-speculation vehicle; it is infrastructure — a Bitcoin L2 rollup with gas utility, staking, and a collateralized stablecoin. Speculative trading of B2 on exchanges is a secondary-market behavior common to virtually all listed tokens and does not reflect the protocol's own design intent. The overall maysir profile is low relative to the project's genuine technical function, though secondary-market volatility remains a factor investors should weigh.
Assessment: Moderate Maysir (High Risk)
Score: 50.4/100
Our methodology examines 11 criteria to determine whether BSquared Network is a gambling instrument or a genuine economic tool.
BSquared provides tangible, productive utility: a zk-EVM rollup and PoSg-based "Layer 1.5" for Bitcoin transaction settlement, a mining-reward routing module (Mining²), and a BTC-collateralized stablecoin (U2). B2 itself is consumed for gas, discounted fees, staking-based network security, and governance voting on upgrades and grants. This functional role — paying for real computational and settlement services — distinguishes B2 from a zero-sum betting instrument, since token demand is tied to actual network usage rather than pure chance-based payout structures.
Weighed against this utility, B2 trades on multiple exchanges including Binance Wallet, Kraken, BitMart, Bitget and HTX, and like most listed tokens is subject to short-term speculative trading independent of its underlying infrastructure use. Vesting cliffs (12 months) and multi-year linear unlocks for team and investors, plus one documented burn of unclaimed mining rewards, suggest some deliberate anti-speculation design. Still, CertiK's "Poor" community-trust and code-security sub-scores, combined with owner-privilege/mint-function risk flags, mean secondary-market uncertainty and manipulation risk cannot be dismissed, even though they do not stem from the protocol's core design purpose.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 35/100 | Only a couple of individual team members are named via LinkedIn profiles; no full founding-team disclosure with credentials was found in the sources. |
| Fraud & Scam Risk | 20/100 | MAS revoked the Major Payment Institution Licence of a "Bsquared" branded entity for providing false/misleading information and weak risk controls, a directly documented and serious trust concern. |
| Use Case Legitimacy | 70/100 | Sources describe genuine Bitcoin L2 rollup, data-availability and AI-settlement infrastructure with real technical architecture, not simply hype. |
| Ethical Practices | 50/100 | Core L2/gas/staking design is not in a prohibited sector, but the protocol's own U2 module explicitly runs derivative-based funding-rate arbitrage strategies, a design feature (not third-party misuse) that raises some concern. |
Summary: BSquared is a real Bitcoin L2/AI-settlement infrastructure project with some named personnel but an unresolved, seriously documented regulatory enforcement action against a brand-affiliated entity.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 78/100 | The base protocol is Bitcoin scaling/settlement infrastructure, a sector with no inherent Shariah prohibition. |
| Transaction Fees | 45/100 | Fees fund gas/data-availability and one large unclaimed-reward burn occurred, but no systematic, disclosed fee-burn or fee-distribution policy is described. |
| Treasury Assets | 50/100 (low evidence) | Sources describe an "Ecosystem Reserve" token allocation but give no detail on whether treasury holds interest-bearing instruments or other assets. |
| Revenue Model | 35/100 | Protocol revenue explicitly includes funding-rate arbitrage and derivative hedging income on the U2 stablecoin, which is riba/derivative-adjacent. |
| Transparency | 68/100 | Extensive public documentation and a GitHub repository are cited in the sources. |
| Governance | 48/100 | Token-holder voting on upgrades/fees/grants exists, but sequencer selection and real decentralisation depth are only partially described. |
| Launch Fairness | 42/100 | Sources detail investor/team allocations with vesting cliffs alongside a paid IEO subscription round, indicating a launch that was not fully egalitarian. |
| Token Distribution | 45/100 | Allocation tables show large team, investor, and reserve tranches (roughly 44% combined) alongside community/staking shares. |
| Speculation/Utility Ratio | 52/100 | Real utility functions exist (gas, staking, governance) but marketing campaigns and prize-pool incentives suggest speculative trading is still a significant driver. |
Summary: The protocol runs a modular rollup, data-availability hub, mining-reward router and BTC-collateralized stablecoin, with governance voting rights but a vesting-heavy, non-fully-fair launch structure.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 35/100 | Derivative funding-rate arbitrage income is an explicitly cited protocol-level revenue source. |
| Financial Status | 50/100 | Exchange listings and market-tracking pages exist, but no detailed financial/balance-sheet disclosure was found. |
| Interest Assessment | 30/100 | The U2 module's delta-neutral hedging and perpetual-swap funding-rate capture is an explicit interest/derivative-like mechanism at protocol level. |
| Audit Quality | 20/100 | CertiK's own listing shows an audit exists but its report is marked "Non-Disclosed," and no named-firm, dated, public audit of B2's core contracts could be located. |
Summary: Protocol revenue includes derivative-based funding-rate arbitrage income tied to its U2 stablecoin, and no verifiable named-firm public audit of B2's own contracts could be found in the sources.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 68/100 | B2 has stated functional uses (gas, staking, governance, fee discounts) beyond speculation. |
| Governance Rights | 58/100 | Sources state token holders can vote on protocol upgrades, fee parameters and grant allocations. |
| Rewards Distribution | 48/100 | Rewards mix a long fixed multi-year emission schedule (HIVE) with monthly-adjustable, activity-linked flexible-pool payouts. |
| Speculation Controls | 52/100 | Multi-year cliffs/linear vesting for team and investors, and a documented reward burn, provide some anti-speculation structure. |
| Asset Backing | 42/100 | B2 itself is not asset-backed; its value rests on network utility and staking demand rather than a hard collateral pool. |
Summary: B2 is a genuine utility/governance token with fixed supply and vesting-based anti-speculation controls, though it is not asset-backed and its reward structure mixes fixed and variable elements.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 48/100 | A flexible and fixed-term staking platform is documented, but custody arrangements and slashing terms are not clearly specified. |
| Islamic Contract Classification | 32/100 | Rewards flow from a novel PoSg/AI-signal/mining hybrid that is not described in classical Islamic contract terms, making classification uncertain. |
| Rewards Structure | 45/100 | Reward source is partly variable (mining/PoSg activity) and partly a fixed long-term emission schedule, a mixed structure. |
| Documentation | 48/100 | Some staking terms (unlock dates, burn events) are documented, but full risk disclosures and custody detail are missing. |
| Shariah Alignment | 35/100 | The combination of derivative-based yield (U2) and an unclassified PoSg/signal reward mechanism leaves a core Shariah question unresolved. |
Summary: A native flexible and fixed-term B2/BTC staking mechanism exists with activity-linked rewards, but documentation leaves custody, slashing and precise Islamic contract classification unclear.
Overall Assessment: BSquared shows genuine technical substance and utility but carries material, sourced concerns around a regulatory enforcement action, undisclosed audit findings, and derivative-based yield mechanisms that leave key Shariah questions unresolved.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar