Islamic Finance Principles Assessment
Riba — Does InfiniFi USD involve interest?
InfiniFi USD's entire yield mechanism is built on depositing USDC into interest-generating venues — Aave, Pendle, Ethena, and institutional private-credit funds. This is not a case of a neutral instrument being misused; it is the protocol's own designed function. For Muslim investors, this makes iUSD's yield-bearing tiers a clear riba concern.
Assessment: Riba Dominant
Score: 21.5/100
Our methodology examines 10 criteria to evaluate how well InfiniFi USD avoids interest-based mechanisms.
InfiniFi's revenue comes from performance fees charged on profits generated by deploying depositor USDC into Aave, Pendle, Ethena, Fluid, Curve, Balancer, and private-credit lenders such as Fasanara, Sentora, FalconX, and Maple. Roughly a fifth of assets are kept liquid; the rest earns yield through conventional lending and credit markets. Reported annualized revenue is about $867,658 with cumulative fees near $8.32M. Because these venues are predominantly interest/debt-based rather than asset-backed trade or equity-style arrangements, the treasury's income stream is fundamentally riba-linked, not merely exposed to it incidentally.
Depositors can stake iUSD into liquid siUSD or lock it (1–13 weeks) into governance-bearing liUSD. Rewards are variable, tied to underlying strategy performance, and subject to an explicit loss waterfall (liUSD absorbs losses first, then siUSD, then iUSD) rather than a fixed guaranteed rate — a structural feature that resembles profit-sharing more than a interest-bearing deposit. However, because the underlying returns being shared originate from interest-bearing lending pools and credit markets, the variability of the payout does not cleanse the riba character of the source income itself.
Gharar — How much uncertainty does InfiniFi USD involve?
Gharar in InfiniFi USD is moderate: the team and mechanics are well documented, but governance centralization and incomplete audit disclosure add uncertainty. Depositors can reasonably understand the loss-waterfall and lock structure, which reduces ambiguity relative to opaque protocols. The overall picture is one of manageable but non-trivial uncertainty.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 51.5/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Founder Rob Montgomery (Georgia Tech background, previously founded Revest Finance) and Head of BD Jeannice Tse (ex-McKinsey, Citi, Centrifuge) are named, traceable figures, which is a meaningful transparency positive versus anonymous teams. One inconsistent source lists different founders and a differing $6M raise figure, uncorroborated elsewhere, alongside the confirmed $3M Electric Capital-led pre-seed. The codebase is open-source on GitHub with test coverage. Governance, however, currently runs through a centralized "GOVERNOR" root-admin role rather than a decentralized process, which is a real disclosure and control concern for depositors.
Certora's formal verification and security review (March 21–May 20, 2025) is confirmed by name and date, providing a concrete audit reference point. InfiniFi's own FAQ claims a second audit in addition to Certora, but no second named, dated audit firm could be confirmed in available sources — this gap should be stated plainly as a gharar concern rather than assumed resolved. Documentation (litepaper, dev docs, FAQ) otherwise describes lock durations, tranche structure, and the loss-waterfall in reasonable detail, which meaningfully aids depositor understanding of risk.
Maysir — Does InfiniFi USD involve gambling or speculation?
InfiniFi USD is not designed as a gambling or speculative instrument; it is a yield-routing and stablecoin-staking protocol with real TVL and integrations. Some secondary-market trading of siUSD/liUSD tokens may carry speculative behavior, but this is typical of tradable DeFi assets generally and does not stem from the protocol's own design. The core function remains capital deployment and yield distribution, not wagering.
Assessment: Maysir / Qimar (Gambling)
Score: 48/100
Our methodology examines 11 criteria to determine whether InfiniFi USD is a gambling instrument or a genuine economic tool.
InfiniFi provides genuine utility: depositors convert USDC into iUSD, which can be held, staked for liquid siUSD, or locked for governance-bearing liUSD, all functioning as claims on diversified DeFi and private-credit positions. TVL reportedly peaked near $175M, reflecting real usage rather than purely speculative activity, and reported revenue and audited (Certora) code point to an operating financial product rather than a betting mechanism. This productive, deposit-and-yield-distribution function is what distinguishes InfiniFi from maysir-type instruments, irrespective of the separate riba concerns already noted.
Against this genuine utility, TVL has reportedly fallen sharply from its peak (one source citing roughly $39M, a decline near 44.6%), showing real volatility and possible speculative capital flows in and out of the protocol. The tranche/waterfall structure (liUSD, siUSD, iUSD) introduces payoff variability that could attract short-term speculative positioning around loss-absorption tiers. Still, this reflects normal DeFi capital-flow behavior rather than a gambling design, and the protocol's fee and yield mechanics remain oriented toward productive capital deployment rather than chance-based payoff.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 78/100 | Founder and Head of BD are named with verifiable LinkedIn histories and prior industry track records, though one source's conflicting founder list is unresolved. |
| Fraud & Scam Risk | 60/100 | No fraud, hack, or rug-pull evidence specific to InfiniFi appears in the sources, but absence of adverse reports is not the same as a confirmed clean record. |
| Use Case Legitimacy | 80/100 | The protocol has real utility as a yield-routing stablecoin system with documented integrations, TVL, and exchange listings. |
| Ethical Practices | 25/100 | The protocol's own design deploys deposits directly into conventional interest-bearing lending and private-credit markets as its core function, not as third-party misuse. |
Summary: The InfiniFi team is publicly named and credentialed with a traceable track record, and no fraud or scam evidence against the protocol itself appears in the sources, though one source's conflicting founder claim is unresolved.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 18/100 | The base protocol's stated purpose is to replicate fractional-reserve banking by routing capital into interest-based lending and private credit. |
| Transaction Fees | 35/100 | Fees are performance fees retained by the protocol as revenue rather than burned, and they are extracted from interest-based yield. |
| Treasury Assets | 12/100 | Treasury reserves are explicitly deployed into Aave lending pools and institutional private-credit funds, which are interest-bearing holdings. |
| Revenue Model | 15/100 | Revenue is generated as a spread/performance fee on interest-based yield sourced from lending and private-credit strategies. |
| Transparency | 78/100 | Code is open-source on GitHub with test coverage and detailed public documentation of architecture and mechanics. |
| Governance | 38/100 | Governance currently rests with a centralized root-admin "GOVERNOR" role, with decentralization only planned for the future. |
| Launch Fairness | 50/100 | Launch was a VC pre-seed raise rather than a public fair launch, though no clear insider-dump evidence exists and the receipt token itself is minted on deposit. |
| Token Distribution | 55/100 | iUSD is minted proportionally to deposits rather than pre-mined, but no distribution data exists for any separate governance token. |
| Speculation/Utility Ratio | 75/100 | The token is structured around genuine yield-access utility rather than speculative meme trading. |
Summary: InfiniFi is an open-source, VC-seeded on-chain fractional-reserve protocol that routes stablecoin deposits into liquid and locked yield tranches, with governance currently centralized in a root-admin role.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 15/100 | Protocol revenue is derived largely from interest-bearing lending and private-credit yield sources. |
| Financial Status | 40/100 | TVL data shows a sharp decline from an earlier peak, suggesting instability, though full financial disclosure is limited. |
| Interest Assessment | 12/100 | The base protocol's core function is to generate returns via lending and private-credit interest markets, making interest central to its design. |
| Audit Quality | 55/100 | A named Certora formal-verification audit with specific dates is confirmed, but a claimed second audit is not independently named or dated in these sources. |
Summary: Protocol revenue and treasury reserves are structurally tied to conventional interest-bearing lending and private-credit markets, and while a Certora audit is confirmed with dates, a second claimed audit is not independently verified in these sources.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 75/100 | iUSD serves a genuine documented utility function as a receipt token for accessing yield strategies, not a meme purpose. |
| Governance Rights | 50/100 | Governance rights attach only to locked liUSD positions, leaving base iUSD and siUSD holders without governance. |
| Rewards Distribution | 50/100 | Rewards are variable and performance-based rather than fixed, though they are sourced from interest-bearing underlying strategies. |
| Speculation Controls | 40/100 | No explicit anti-speculation mechanism for the token is documented in these sources beyond its stablecoin peg design. |
| Asset Backing | 20/100 | The token is backed by USDC deposits redeployed into conventional lending pools and private-credit debt funds rather than halal assets. |
Summary: iUSD is a genuine utility receipt token with variable, performance-based rewards and a documented loss-waterfall structure, but it is backed by conventional debt-based assets rather than halal collateral.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 68/100 | Staking/locking is non-custodial, using clearly documented ERC-20 receipt tokens with defined 1–13 week lock terms. |
| Islamic Contract Classification | 18/100 | The tranche/loss-waterfall structure combined with interest-bearing underlying yield resembles conventional structured credit rather than a clean Islamic contract, leaving a core unresolved classification question. |
| Rewards Structure | 20/100 | Reward source is yield from lending and private-credit interest markets rather than genuine trade or equity-like profit-sharing. |
| Documentation | 75/100 | Litepaper, developer docs, and FAQ disclose lock terms, yield mechanics, and the loss-waterfall structure in reasonable detail. |
| Shariah Alignment | 15/100 | The combination of interest-sourced yield and structured tranche risk-sharing leaves a decisive, unresolved Shariah question at the core of the design. |
Summary: The protocol offers documented, non-custodial staking/locking mechanisms (siUSD/liUSD) with clear lock terms and loss-absorption hierarchy, but rewards derive from interest-based underlying strategies, leaving the Islamic contract classification unresolved.
Overall Assessment: InfiniFi is a legitimate, transparent, and technically documented DeFi yield protocol, but its core design of generating returns through conventional interest-bearing lending and private-credit markets raises significant, currently unresolved Shariah concerns.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar