Islamic Finance Principles Assessment
Riba — Does Pangolin involve interest?
Pangolin's income model is built on swap fees rather than interest-bearing lending, which is a structurally favorable starting point. However, the sharp decline in real revenue raises questions about whether reward mechanisms can remain fee-funded long-term. On balance, the protocol's design avoids riba in its core function, though sustainability concerns merit caution.
Assessment: Minor Riba
Score: 71.8/100
Our methodology examines 10 criteria to evaluate how well Pangolin avoids interest-based mechanisms.
Pangolin's revenue derives entirely from a 0.3% swap fee on trades, split between liquidity providers (0.25%), PNG stakers (0.0425%), and a DAO treasury (0.0075%-0.05%); V3 shifts more heavily toward treasury and stakers (10% each). This is a genuine fee-for-service model, not interest income from lending or debt instruments. DefiLlama data shows cumulative revenue near $9.03M historically, but annualized revenue has fallen to roughly $45,206, with some chains generating single-digit daily dollars. There is no evidence the treasury holds interest-bearing instruments; its economic base is transactional fee revenue, consistent with a riba-free structure, though now a thin one.
PNG staking rewards are not fixed or guaranteed; they derive from biweekly market buybacks funded by real swap-fee revenue, which the team explicitly frames as "self-sustainable" rather than reliant on external token emissions or subsidy. This variable, revenue-linked structure resembles a profit-sharing arrangement rather than an interest-bearing deposit, which is the more permissible model under Islamic finance principles. However, given the described drop in trading volume and fee revenue, the practical size and reliability of these rewards is now uncertain. The mechanism itself is riba-free in design, but Muslim investors should note that shrinking real revenue may make staking yields negligible in practice.
Gharar — How much uncertainty does Pangolin involve?
Pangolin exhibits moderate uncertainty: its team and code are identifiable and open-source, and independent audits exist, but declining activity and unclear staking risk disclosures introduce gharar. Transparency measures reduce ambiguity, while thin current documentation on lock-up terms increases it. Overall, informational uncertainty here is manageable but not negligible.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 67.7/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Unlike anonymous meme projects, Pangolin names real team members, including CTO Brandon Mino, alongside designers and business-development staff, with a documented "Core Team Election" showing a transition from a small founding group toward broader community governance. Smart contracts are open-source on GitHub, and governance operates via Snapshot voting with multisig/timelock execution, adding operational transparency. Reported AvaLabs involvement lends further credibility. Notably, several search results describe an unrelated VPN company also named "Pangolin," a naming collision worth flagging so investors do not conflate unrelated entities when researching this token.
Pangolin's Exchange contracts were audited by Halborn (Feb 28-Mar 1, 2022), finding zero critical or high-severity issues and three medium findings, most resolved. A second audit by Paladin Blockchain Security (April 8, 2025) identified further medium and high-severity findings, with some still unresolved. CertiK's own Skynet page confirms Pangolin is not CertiK-audited, so investors should not mistake platform presence for endorsement. Key staking risk details — lock-up duration, unstaking delay, slashing conditions — are not specified in available documentation, leaving a genuine disclosure gap that constitutes a real, nameable gharar concern rather than a resolved one.
Maysir — Does Pangolin involve gambling or speculation?
Pangolin's core function is a decentralized exchange facilitating token swaps and liquidity provision, not a betting or wagering mechanism. Speculative trading can occur on any liquid secondary market, but this is a use pattern, not a design feature, and does not by itself render the protocol impermissible. The underlying protocol is utility-driven, though secondary-market speculation around PNG remains a factor for investors to weigh.
Assessment: Moderate Maysir (High Risk)
Score: 69.9/100
Our methodology examines 11 criteria to determine whether Pangolin is a gambling instrument or a genuine economic tool.
Pangolin performs a genuine economic function: it enables decentralized token exchange and liquidity provision across multiple chains (Avalanche, Hedera, Flare/Songbird, EVMOS, NEAR), earning fees for real liquidity providers who bear real market-making risk. This is comparable to a currency exchange or brokerage service rendering value through facilitation, not chance. A separate third-party protocol, Unbound Finance, allows PNG liquidity-provider tokens to be used as loan collateral, but this is explicitly an external integration and not Pangolin's own designed function, so it does not alter the base protocol's classification.
Pangolin's 100%-community token launch, with 95% distributed via liquidity mining and 5% via airdrop and zero team/investor allocation, reflects a fair-launch structure that discourages insider speculative dumping, a positive relative to many DeFi tokens. That said, PNG trades on open markets where price speculation independent of protocol usage is possible, as with virtually any liquid token, and this is not attributable to the protocol's design. Given the substantial decline in trading volume and revenue from historic peaks, current utility-driven demand appears weaker than in Pangolin's early years, making speculative price behavior a relatively larger share of market activity today.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 60/100 | Some team members and a "core team election" process are named and described with roles/credentials, though full biographical/legal accountability for founders is not established in these sources. |
| Fraud & Scam Risk | 72/100 | No fraud, hack or regulatory action tied specifically to Pangolin DEX appears; unrelated SEC cases retrieved do not implicate it, but absence of evidence is not the same as a clean audit trail. |
| Use Case Legitimacy | 82/100 | Sources describe a functioning multichain DEX with real trading volume, liquidity provision and swap utility, not a purely speculative token. |
| Ethical Practices | 78/100 | The base protocol is a neutral token-swap/AMM facility; a third-party integration offers "interest-free" loans, and any misuse of the swap function by others does not alter the protocol's own neutral design. |
Summary: Pangolin (PNG) is a real, operating decentralized exchange with a named core team and no evidence of fraud or regulatory action, distinct from an unrelated same-named VPN startup that also surfaced in the search results.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 82/100 | Core business is decentralized exchange/liquidity provision, a sector not itself prohibited. |
| Transaction Fees | 72/100 | Swap fees are a disclosed percentage split transparently among LPs, stakers and treasury, resembling a service fee rather than interest extraction. |
| Treasury Assets | 45/100 (low evidence) | Treasury composition (what assets it actually holds, whether any are interest-bearing) is not described in these sources beyond vesting/bonding mechanics. |
| Revenue Model | 82/100 | Revenue is generated from trading/swap fees, not interest-based lending. |
| Transparency | 82/100 | Contracts are open-source on GitHub with public documentation of fee flows and vesting logic. |
| Governance | 60/100 | Governance uses Snapshot voting with DAO structure, but execution still runs through multisig/timelock, and an audit flagged governance-privilege risks. |
| Launch Fairness | 88/100 | Launch allocated 100% of supply to the community via airdrop and liquidity mining with no team, advisor or investor allocation. |
| Token Distribution | 82/100 | Distribution was broad-based through liquidity mining and an airdrop tied to prior UNI/SUSHI holdings, without insider concentration. |
| Speculation/Utility Ratio | 68/100 | The token has clear utility (governance, fee-sharing) rather than meme design, but recent very low trading/active-address figures raise questions about how much genuine usage now underpins its value versus speculative holding. |
Summary: The protocol runs an open-source, community-launched AMM DEX with fee-splitting among liquidity providers, stakers and a DAO treasury, and no team or insider pre-mine.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 82/100 | Protocol revenue comes solely from swap fees, not interest-based lending activity. |
| Financial Status | 40/100 | Reported metrics show a steep decline in fees, revenue and trading activity from early highs, indicating financial stability concerns. |
| Interest Assessment | 82/100 | The base AMM protocol offers no native lending, borrowing, or interest; any interest-free loan feature cited belongs to a separate third-party protocol. |
| Audit Quality | 72/100 | Named firms Halborn (2022) and Paladin Blockchain Security (2025) conducted audits with disclosed findings, though CertiK notes it has not audited the project. |
Summary: Revenue comes purely from swap fees and has been independently audited by Halborn and Paladin, but activity and revenue have declined substantially from early highs, and the base protocol itself offers no lending or interest.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 78/100 | PNG functions as a governance and fee-sharing utility token rather than a pure meme asset. |
| Governance Rights | 68/100 | Holders can vote on proposals via Snapshot, giving clear if partially centralized governance rights. |
| Rewards Distribution | 78/100 | Staking rewards are variable, funded by periodic buybacks from actual swap-fee revenue rather than a fixed schedule. |
| Speculation Controls | 40/100 | Fair, insider-free launch offers some structural protection against speculative dumping, but no explicit anti-speculation mechanisms (lockups, caps, cooldowns) are described. |
| Asset Backing | 55/100 | The token's value is supported by protocol fee revenue and utility rather than any described hard-asset reserve, but this backing is inferred rather than explicitly stated. |
Summary: PNG functions as a governance and fee-sharing utility token distributed fairly at launch, with variable staking rewards sourced from actual protocol revenue rather than fixed interest.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 68/100 | Staking is on-chain and non-custodial via a documented contract, though specific lock-up/withdrawal terms are not detailed in these sources. |
| Islamic Contract Classification | 62/100 | Rewards are distributed from real trading-fee revenue in a profit-sharing-like structure, but no source classifies this against Mudarabah/Wakalah frameworks, so classification is inferred rather than confirmed. |
| Rewards Structure | 78/100 | Reward source is explicitly tied to actual swap-fee revenue via periodic buybacks, not a guaranteed fixed rate. |
| Documentation | 55/100 | Contract-level documentation and a mechanism-change blog post exist, but explicit disclosure of lock-up periods, risks, and slashing conditions is not found. |
| Shariah Alignment | 62/100 | The reward mechanism appears to avoid fixed guaranteed interest and ties returns to real activity, lowering gharar, but no explicit Shariah classification is present in the sources, leaving a residual open question. |
Summary: A native, non-custodial staking mechanism exists that shares real swap-fee revenue with stakers through periodic buybacks, though detailed lock-up and risk-disclosure terms are not confirmed in the sources.
Overall Assessment: Pangolin presents as a genuine, fairly-launched, audited DEX with utility-driven tokenomics and revenue-based staking rather than fixed interest, though declining activity, limited treasury/disclosure detail, and the absence of explicit Shariah contract classification leave some open questions.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar