Islamic Finance Principles Assessment
Riba — Does Infrared Finance involve interest?
Infrared Finance's income comes from harvest fees, swap fees, and BGT-emission Dutch auctions rather than interest-based lending. No native lending or borrowing function exists within the protocol itself. Overall, the revenue model appears structurally free of riba, though treasury transparency gaps leave a residual unknown.
Assessment: Moderate Riba
Score: 69/100
Our methodology examines 10 criteria to evaluate how well Infrared Finance avoids interest-based mechanisms.
Infrared's revenue streams are a 10% harvest fee on operator, vault, bribe, and boost rewards, swap fees of 0.05-0.2% on non-iBGT/iBERA pairs, and proceeds from Dutch auctions for BGT emissions. None of these are interest-bearing loan arrangements. However, treasury composition is disclosed only as a percentage of token supply (15-18%), with no breakdown of whether treasury holdings sit in interest-bearing instruments. This gap does not indicate riba exposure but does prevent full certainty about the treasury's underlying composition.
Rewards flow through two layers: sIR staking, where yield derives from protocol revenue via a buyback-and-redistribute mechanism, and iBGT/iBERA vault staking, where returns come from validator delegation, fees, and Proof of Liquidity incentives. Reported APRs have fluctuated significantly (iBGT above 100% early on, settling near 76.62%; iBERA near 2.96%), reflecting genuine activity-linked, variable yield rather than a fixed, guaranteed return. This performance-based structure is consistent with permissible profit-sharing rather than riba-style fixed interest.
Gharar — How much uncertainty does Infrared Finance involve?
Infrared carries moderate uncertainty: strong team and audit transparency is offset by inconsistent financial reporting across data sources. The named leadership and public code reduce ambiguity, while conflicting revenue/TVL figures and partial treasury disclosure increase it. On balance, informed investors can assess the protocol, but should treat published financial metrics with caution.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 64.3/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
The team is named and traceable: CEO Raito (prior roles at New Order DAO, TrueUSD, Redacted Cartel) and CTO Red, a Berachain and MTX Studio co-founder, with a stated 18-person team including alumni from Kraken, Manifold Finance, NASA, Apple, EY, and Credora. Institutional backers include Framework Ventures, Binance Labs/YZi Labs, Hack VC, and Animoca Brands, contributing $18.75M. Code is open-source on GitHub. This level of identifiable leadership and public code substantially reduces gharar relative to anonymous or closed-source projects.
Infrared has undergone multiple named audits: a Halborn Incident Response Security Review (24 February 2025) and two Cantina reviews (21 March 2025 and 7 May 2025), with documentation, contract addresses, and fee structures published via Infrared's docs site. This is a genuine positive against gharar. However, financial reporting is inconsistent: DeFiLlama cites $8.44M cumulative and ~$1.74M annualized fees, Infrared's own post cites $8.35M, while CoinMarketCap cites $118M annualized gross revenue, and TVL estimates range from $189.86M to a stated $1.7B peak. Such divergence is a real gharar concern investors should weigh.
Maysir — Does Infrared Finance involve gambling or speculation?
Infrared is not designed as a speculative meme instrument; it functions as governance and utility infrastructure for Berachain's Proof of Liquidity system. Speculative trading can occur in any listed token's secondary market, but this is third-party behavior, not the protocol's own design, and does not by itself determine the ruling. The core function here is productive: converting staked assets into usable, yield-bearing DeFi instruments.
Assessment: Moderate Maysir (High Risk)
Score: 62.3/100
Our methodology examines 11 criteria to determine whether Infrared Finance is a gambling instrument or a genuine economic tool.
Despite category tagging that flags meme-like traits, Infrared's own design does not resemble a meme coin with no function. IR grants governance rights via sIR staking, a share in protocol fee revenue through buybacks, and access to BGT-emission Dutch auctions. Its value is explicitly tied to protocol usage, fee generation, and underlying BGT/BERA staking activity, not to hype-driven narrative alone. Vesting cliffs (6-12 months) and linear vesting (12-24 months) for team, investor, and foundation allocations, plus a 12-month buyback lock via the "Red Fund," further constrain pure speculative dumping.
Genuine utility is evident: real infrastructure, audited contracts, disclosed fee mechanics, and activity-linked yields (iBGT/iBERA APRs tied to actual staking and delegation flows) demonstrate productive economic function rather than pure chance-based payoff. Against this, secondary-market trading of IR, like most liquid tokens, can attract short-term speculative behavior, and variable TVL/revenue figures suggest the ecosystem is still maturing and volatile. Such trading activity reflects market participants' choices rather than a flaw in Infrared's own design, and should not be treated as decisive against the protocol's underlying permissibility.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 85/100 | The CEO, CTO and core team are named with verifiable professional histories and LinkedIn presence. |
| Fraud & Scam Risk | 65/100 | No fraud or rug-pull indicators tied to Infrared were found, but this is largely an absence-of-evidence inference rather than a direct clearance. |
| Use Case Legitimacy | 85/100 | The protocol has a clearly documented real function (PoL liquid staking infrastructure) with measurable TVL and user activity. |
| Ethical Practices | 80/100 | The protocol's own design is liquid-staking infrastructure; any lending/borrowing use of its output tokens occurs on third-party dApps, which does not implicate the base design. |
Summary: The project has a named, credentialed team, institutional backing, and no fraud indicators surfaced in the sources reviewed.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 85/100 | Core business is liquidity/staking infrastructure for a blockchain network, not a prohibited sector. |
| Transaction Fees | 75/100 | Fees are explicit service/performance fees on reward streams (not on principal), disclosed in a fee schedule rather than structured as interest. |
| Treasury Assets | 40/100 (low evidence) | Sources disclose a treasury token allocation percentage but give no detail on the actual composition or nature of treasury holdings, so interest-bearing exposure cannot be ruled out or confirmed. |
| Revenue Model | 75/100 | Revenue comes from harvest/swap fees and emission auctions rather than interest-based lending income. |
| Transparency | 85/100 | Code is open-source on GitHub with public documentation, contract addresses, and audit reports. |
| Governance | 55/100 | Governance is structured via staking for voting power, but large concentrated allocations to Foundation/team/investors indicate centralisation of influence. |
| Launch Fairness | 35/100 | The TGE distribution heavily favors Foundation, team and investors relative to the community airdrop, indicating an insider-weighted rather than fully fair launch. |
| Token Distribution | 35/100 | Disclosed allocation percentages show concentration in Foundation, team, investor and treasury buckets versus a comparatively small public/community share. |
| Speculation/Utility Ratio | 60/100 | The token has real utility (governance, fee-sharing, auction bidding) but sits within a young, still fairly speculative market environment typical of a recently launched token. |
Summary: Infrared is a disclosed, open-source liquid-staking infrastructure protocol for Berachain's Proof of Liquidity system, with transparent fee mechanics but a token launch and distribution skewed toward insiders and investors.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 80/100 | Protocol revenue is fee-based (harvest fees, swap fees, auctions), not derived from interest/riba mechanisms. |
| Financial Status | 50/100 | Reported revenue and TVL figures vary substantially across sources, making financial stability and scale difficult to confirm precisely. |
| Interest Assessment | 75/100 | The base protocol performs liquid staking, not lending/borrowing; interest-style lending activity occurs only via third-party integrations of its output tokens. |
| Audit Quality | 80/100 | Multiple named audits (Halborn, Cantina) with specific dates are documented and publicly referenced. |
Summary: The protocol earns fee-based (non-interest) revenue and has several named smart-contract audits, though reported revenue and TVL figures are inconsistent across sources.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 80/100 | IR is designed and used as a governance/utility token tied to protocol functions, not marketed as a meme asset. |
| Governance Rights | 70/100 | Holders gain governance rights by staking IR for sIR, though influence is skewed by large non-community allocations. |
| Rewards Distribution | 75/100 | Rewards for sIR and iBGT/iBERA stakers are variable, sourced from protocol revenue and real network activity rather than fixed guarantees. |
| Speculation Controls | 60/100 | Vesting cliffs, linear vesting schedules and a buyback-lock mechanism (Red Fund) provide some structural anti-speculation design. |
| Asset Backing | 55/100 | Token value is linked to protocol revenue and underlying staked BGT/BERA activity, but no explicit reserve-asset backing is described, so this is inferred rather than directly confirmed. |
Summary: IR is a governance/utility token with variable, revenue-linked rewards and some vesting-based anti-speculation design, though large non-community allocations concentrate influence.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 70/100 | Staking is implemented via documented, audited smart contracts and appears non-custodial, though full lock-up terms for sIR are not fully detailed. |
| Islamic Contract Classification | 55/100 | Rewards appear tied to real revenue and staking activity resembling profit-sharing structures, but no explicit Islamic contract classification is provided in the sources. |
| Rewards Structure | 75/100 | Reported APRs for iBGT/iBERA and sIR fluctuate significantly based on protocol performance rather than being fixed or guaranteed. |
| Documentation | 75/100 | Fee structure, contract addresses, and audit reports are documented on the official docs site. |
| Shariah Alignment | 55/100 | No explicit Shariah analysis exists in the sources; variable-yield staking on a PoL system introduces some complexity and gharar that remains unaddressed by the available material. |
Summary: Infrared offers native staking for both its IR token (via sIR) and its liquid BGT/BERA derivatives, with variable, activity-linked rewards documented on-chain, though full lock-up and slashing terms are not fully detailed in the sources.
Overall Assessment: Infrared Finance presents as a genuine, audited DeFi infrastructure project with real utility and disclosed mechanics, though treasury composition, precise financial figures, and Islamic contract classification of its staking yield remain insufficiently detailed in the available sources.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar