Islamic Finance Principles Assessment
Riba — Does Haedal Protocol involve interest?
Haedal Protocol's own revenue comes from staking commissions and AMM trading fees, not interest-based lending. Rewards passed to users derive from validator staking yield and buyback flows tied to actual protocol revenue, both variable rather than fixed. For Muslim investors, the base protocol design avoids explicit riba, though third-party lending integrations (Navi, Scallop) accepting haSUI deposits deserve separate scrutiny by users who choose to use them.
Assessment: Moderate Riba
Score: 68.2/100
Our methodology examines 10 criteria to evaluate how well Haedal Protocol avoids interest-based mechanisms.
Haedal's income streams are disclosed clearly: a staking commission (cited as 6% in official docs, though secondary sources mention 10%) and a 0.04% AMM trading fee via the Haedal Market Maker. Treasury flows are transparent — 40% of HMM profits fund the haSUI treasury, 50% fund HAEDAL buybacks for veHAEDAL stakers, and 10% is retained by the protocol treasury. None of this revenue is described as arising from interest-bearing loans or debt instruments; it is fee-for-service and market-making income, which is structurally distinct from riba-based finance.
Rewards flow through two layers: liquid staking yield, where haSUI/haWAL appreciates based on real validator performance rather than a promised rate, and veHAEDAL buyback distributions, funded by actual protocol revenue rather than guaranteed emissions. Both mechanisms are explicitly variable, contingent on network performance and trading activity rather than fixed like conventional interest. No slashing mechanism is documented in available sources, and the classification of the underlying staking contract as Wakalah-like agency versus profit-sharing is not explicitly addressed by the protocol, leaving a minor interpretive gap for Islamic finance scholars to fill.
Gharar — How much uncertainty does Haedal Protocol involve?
Haedal shows meaningful transparency in mechanics, audits, and financial flows, but incomplete team disclosure and a pending secondary audit leave some uncertainty. The overall picture is one of moderate gharar, common to many mid-stage DeFi protocols, rather than severe informational opacity. Investors should weigh the disclosed elements favorably while remaining aware of open gaps.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 63/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Co-founders Cedrick Vajarachitkul and Luke Shi are named and independently verifiable, with Vajarachitkul's background as a former Bangkok Bank business analyst confirmed via LinkedIn. However, sources note that information about the rest of the founding and engineering team remains limited. The project originated at a 2023 Sui Foundation Liquid Staking Hackathon and secured seed funding from named, reputable investors including Hashed, OKX Ventures, Animoca Brands, Flow Traders, Cetus, Scallop, and the Sui Foundation. Code and audit reports are published on GitHub, supporting a reasonably transparent, though not fully complete, disclosure profile.
A MoveBit audit conducted November-December 2023 found no critical or major issues, providing a credible baseline security review. A CertiK audit was listed as "in progress" as of March 2025, with no confirmed final report available in current sources — this incomplete second audit is a genuine gharar concern worth naming plainly rather than assuming resolved. A Halborn audit sometimes associated with this space actually belongs to an unrelated project and should not be credited to Haedal. Documentation on GitBook covering fees, unstaking, and reward formulas is otherwise detailed and public.
Maysir — Does Haedal Protocol involve gambling or speculation?
Haedal does not involve gambling mechanics; it is a liquid staking and market-making protocol serving a functional role in the Sui ecosystem. Speculative trading of the HAEDAL token on secondary markets is possible, as with any listed asset, but this is a feature of open markets generally, not of the protocol's design. The underlying activity is productive rather than chance-based.
Assessment: Moderate Maysir (High Risk)
Score: 65.6/100
Our methodology examines 11 criteria to determine whether Haedal Protocol is a gambling instrument or a genuine economic tool.
Haedal's real-world utility is substantive: users stake SUI or WAL to receive haSUI/haWAL, unlocking liquidity for use across Sui DeFi while still earning validator rewards, and the protocol reports over 900,000 accounts using this service. Governance via veHAEDAL locking (1-52 weeks with time-decay) further incentivizes long-term participation over short-term speculation. This productive, service-based function — capital efficiency plus yield pass-through — clearly distinguishes Haedal from zero-sum betting or purely speculative instruments.
Against this genuine utility, HAEDAL the token trades on roughly 30 exchanges with a market capitalization near $43M, and like most liquid tokens it will attract short-term speculative trading independent of protocol fundamentals. This secondary-market behavior reflects trader choices, not a design flaw of Haedal itself, and should not be conflated with the protocol's own purpose. The vote-escrow locking mechanism, decaying rewards for short-term holders, and revenue-backed buyback structure all favor long-term alignment over speculative churn, tempering — though not eliminating — the maysir-adjacent risk inherent in any freely traded token.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 55/100 | One co-founder is independently verifiable and a second is named across multiple sources, but sources explicitly state the rest of the team is undisclosed. |
| Fraud & Scam Risk | 72/100 | No fraud, hack, or regulatory action against Haedal is reported, and an available audit found no critical/major issues, though overall scam-risk evidence is limited to this. |
| Use Case Legitimacy | 82/100 | The protocol has clear, documented real-world utility (liquid staking, DeFi integration) with substantial user adoption reported. |
| Ethical Practices | 72/100 | The protocol's own design is liquid-staking infrastructure, not an inherently haram business; third-party lending use of haSUI is a downstream choice and does not alter the base design's own ruling. |
Summary: Haedal has partially disclosed founders, notable institutional backers, and no reported fraud or hack incidents in the sources reviewed.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 82/100 | The base protocol's business is liquid staking on a public blockchain, a sector with no inherent prohibition. |
| Transaction Fees | 68/100 | Fees (staking commission, AMM trading fee) are clearly disclosed as service charges rather than interest-like extraction. |
| Treasury Assets | 62/100 | Treasury appears composed of native crypto assets (SUI) accumulated from staking rewards, but sources do not explicitly confirm the absence of interest-bearing holdings. |
| Revenue Model | 68/100 | Revenue comes from staking commissions and trading fees rather than interest-based lending conducted by the protocol. |
| Transparency | 78/100 | Smart contract code and audit reports are published on GitHub and documentation is extensive. |
| Governance | 50/100 | Governance exists via veHAEDAL locking, but detailed voting/proposal mechanics and decentralization safeguards are not clearly described. |
| Launch Fairness | 50/100 | Insider allocations (team + investors) total roughly 35% of supply with vesting, alongside a community airdrop and liquidity fund, indicating a moderately, not fully, fair launch. |
| Token Distribution | 55/100 | Detailed, disclosed allocation and vesting schedules exist, though a significant share is reserved for team/investors versus community. |
| Speculation/Utility Ratio | 58/100 | The protocol has genuine utility and revenue, but token price behavior (rallying ahead of exchange listings) suggests speculation still plays a large role in demand. |
Summary: The protocol runs a documented liquid staking and AMM business on Sui with disclosed fee splits, treasury flows, and vesting schedules, though governance detail and full launch fairness are only partially evidenced.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 72/100 | Revenue is generated from staking commissions and AMM fees, not riba-based lending. |
| Financial Status | 65/100 | Revenue, TVL, and market cap figures are disclosed via third-party trackers, showing a moderately transparent financial position. |
| Interest Assessment | 68/100 | Sources distinguish that lending/borrowing occurs on third-party protocols, while the base protocol itself only provides staking-derived yield. |
| Audit Quality | 52/100 | A named firm (MoveBit) completed an audit with disclosed findings, but a second announced audit (CertiK) was still in progress with no confirmed final report in these sources. |
Summary: Revenue stems from staking commissions and trading fees rather than protocol-level lending, with one completed named audit and a second audit left unconfirmed as finalized.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 74/100 | The token has documented utility functions (governance, yield boosting, fee discounts) beyond pure speculation. |
| Governance Rights | 68/100 | veHAEDAL locking explicitly confers governance/voting rights as described in the documentation. |
| Rewards Distribution | 74/100 | Reward distribution (buybacks to veHAEDAL stakers) is explicitly tied to variable protocol revenue rather than a fixed rate. |
| Speculation Controls | 58/100 | Vote-escrow locking with time-decay is a documented mechanism that discourages pure short-term speculation, though it does not eliminate market-driven volatility. |
| Asset Backing | 58/100 | Token value is functionally linked to protocol revenue and buyback activity, but no explicit statement of formal "backing" was found. |
Summary: HAEDAL functions as a governance/utility token with variable, revenue-linked buyback rewards and a lock-based anti-speculation mechanism, though explicit asset-backing statements are absent.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 74/100 | Staking is non-custodial via smart contract, with clearly documented flexible unstake options and minor fees. |
| Islamic Contract Classification | 52/100 | The fee-for-delegation model resembles an agency/service arrangement, but sources do not explicitly classify it under a specific Islamic contract, leaving formal classification unresolved. |
| Rewards Structure | 78/100 | Rewards are explicitly derived from real validator performance and fluctuate with actual staking activity rather than being fixed or guaranteed. |
| Documentation | 78/100 | Public GitBook documentation details staking mechanics, fees, and unstaking terms in depth. |
| Shariah Alignment | 58/100 | Reward variability and disclosed terms reduce gharar, but the absence of explicit Shariah contract classification leaves a residual open question. |
Summary: Haedal offers a well-documented, non-custodial, variable-reward staking and vote-escrow system, though its precise Islamic contract classification is not addressed in the sources.
Overall Assessment: Haedal presents as a genuine liquid-staking infrastructure project with disclosed mechanics and partial team/audit transparency, but several classification and governance details remain insufficiently evidenced for a definitive compliance judgment.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar