Islamic Finance Principles Assessment
Riba — Does peaq involve interest?
peaq's core design does not embed interest-based lending or fixed-return debt instruments; its revenue comes from transaction fees, device registrations, and NFT issuance tied to real usage. Staking rewards are inflation-funded and variable rather than fixed, which is the key factor separating them from riba. Overall, the protocol's own mechanics present a low riba concern, though the inconsistent fee-burn disclosure warrants some caution.
Assessment: Minor Riba
Score: 85/100
Our methodology examines 10 criteria to evaluate how well peaq avoids interest-based mechanisms.
peaq's revenue derives from transaction fees, machine/device registration, and NFT issuance connected to genuine network activity, not from interest-bearing loans or debt instruments. Sources disagree on the precise fee treatment: one states all fees go to validators/delegators, another says a portion "may be burned" depending on usage, leaving the exact split unconfirmed. Treasury asset composition is not detailed in available disclosures, so it cannot be confirmed that treasury funds are held in interest-bearing instruments. Based on available information, the base protocol's income model is fee-and-usage-driven rather than interest-driven, which is a permissible structure.
Staking rewards are sourced from newly minted, inflationary token issuance — 40% of annual issuance flows to validators/delegators — with reported APY of roughly 5-15% that fluctuates with participation, validator performance, and commission rates. This variability, tied to network activity and validator conduct (including slashing risk) rather than a contractually fixed return, aligns with profit-sharing-like structures permissible in Islamic finance rather than riba-based fixed interest. One notable feature: tokens under vesting lockup can still be staked, and rewards from them are liquid even while principal remains locked, which is a liquidity nuance but does not itself introduce interest.
Gharar — How much uncertainty does peaq involve?
peaq carries a moderate level of uncertainty, reduced by a fully named and credentialed founding team but increased by inconsistent fee documentation and audit findings that remain only partially resolved. Overall transparency is reasonable for an infrastructure project of this stage. Investors should weigh the unresolved audit items as a live but manageable gharar factor.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 62.7/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
peaq's founders — Max Thake, Leonard Dorlöchter, Till Wendler, Julia Ponitzsch, and Pavel Fomenko — are publicly identifiable with LinkedIn and Tracxn/Gate.com profiles, and the project's history traces to 2017 origins in Advanced Blockchain AG, EoT Labs, and a 2020 management buyout, followed by CoinList fundraising. No sources report fraud, hacks, or rug-pull allegations specific to peaq. This is a materially transparent setup relative to anonymous-team projects, though treasury asset composition and precise fee mechanics remain under-disclosed, leaving some informational gaps for investors to weigh.
peaq has been audited by two named firms: Security Research Labs, which found 13 issues including 9 rated high severity, and CertiK, which delivered a June 2024 audit identifying 35 findings including 4 major issues (mostly acknowledged, one mitigated) and 9 medium issues. A Hashlock audit page also exists, though its findings are not detailed in available sources. The presence of multiple audits reduces gharar relative to unaudited chains, but the fact that many findings remain only "acknowledged" rather than fully resolved is a legitimate ongoing disclosure and risk concern that should not be understated.
Maysir — Does peaq involve gambling or speculation?
peaq is not designed as a gambling or purely speculative instrument; it functions as infrastructure for DePIN and Machine RWA applications with documented device and user activity. Speculative trading can occur on secondary markets for any token, but this behavior is not attributable to the coin's own design. The protocol's utility-driven structure is the deciding factor for a maysir assessment.
Assessment: Minor Maysir (Incidental)
Score: 70/100
Our methodology examines 11 criteria to determine whether peaq is a gambling instrument or a genuine economic tool.
peaq supports concrete real-world use cases including EV charging networks, Silencio's noise-pollution mapping, traffic data collection, and ELOOP's tokenized vehicle sharing, with multi-million device and wallet counts reported across independent sources. This productive, machine-economy utility — registering devices, processing payments, and settling data transactions — distinguishes peaq from purely speculative or zero-sum instruments. Value creation is tied to expanding real-world infrastructure adoption rather than to wagering on price movement alone, which supports a favorable maysir assessment of the protocol's own design.
Weighed against this genuine utility, PEAQ tokens are still traded on open secondary markets where speculative behavior can and does occur, as with virtually any listed crypto asset. Such trading conduct reflects third-party market behavior rather than a feature engineered into the protocol itself, and per the governing principle, this speculative activity by outside traders does not push the coin's own ruling toward impermissibility. Given the network's demonstrable DePIN adoption and non-gambling functional design, the balance favors utility over speculation.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 85/100 | Founders are named, credentialed and publicly documented across multiple independent sources with consistent biographical detail. |
| Fraud & Scam Risk | 70/100 | No fraud or rug-pull allegations specific to peaq appear in sources, but unresolved high-severity audit findings introduce some inferred residual risk. |
| Use Case Legitimacy | 85/100 | Multiple sources document deployed real-world DePIN applications (EV charging, noise mapping, energy sharing) with millions of connected devices. |
| Ethical Practices | 80/100 | The base infrastructure design is sector-neutral utility infrastructure; potential third-party misuse via built-on lending dApps does not alter the base protocol's own design intent. |
Summary: peaq has a named, credentialed founding team with a multi-year track record and no fraud or rug-pull indicators found in the sources reviewed.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 85/100 | The base protocol is described consistently as physical infrastructure/data blockchain, not a prohibited-sector business. |
| Transaction Fees | 65/100 | Sources disagree on whether fees are fully redistributed to validators or partly burned, so the exact fee mechanism cannot be confirmed with confidence. |
| Treasury Assets | 50/100 (low evidence) | Sources describe treasury allocation percentages but give no detail on what specific assets (e.g. interest-bearing instruments) the treasury holds. |
| Revenue Model | 75/100 | Revenue is described as usage-fee-based (transactions, registrations, NFTs) with no explicit mention of interest-based income, but this is inferred rather than directly stated. |
| Transparency | 65/100 | Extensive public documentation and audit-referenced GitHub repositories suggest openness, though explicit "open-source license" confirmation is not directly stated. |
| Governance | 55/100 | Token holders can vote on upgrades and inflation, but CertiK's centralization review specifically flags privilege-related issues. |
| Launch Fairness | 40/100 | Specific allocation figures show heavy private/investor (34%) and insider (20%) allocations versus only ~6% public sale, indicating an insider-tilted rather than fully fair launch. |
| Token Distribution | 45/100 | Detailed allocation tables confirm concentrated ownership among investors and insiders (~54% combined) despite multi-year vesting schedules. |
| Speculation/Utility Ratio | 75/100 | Sources document substantial genuine utility usage (device registrations, fee payments, governance) rather than purely speculative trading activity. |
Summary: The base protocol is a DePIN-focused Layer-1 with real-world utility, though its fee-burn mechanics, treasury composition, and governance decentralization are only partially disclosed and its token launch was insider/investor concentrated.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 75/100 | Revenue sources cited (fees, registrations, NFTs) appear non-interest-based, though this is inferred from descriptions rather than an explicit statement. |
| Financial Status | 55/100 | Growth metrics are reported but the network is young (mainnet since late 2024) with no long financial track record established in sources. |
| Interest Assessment | 75/100 | The base L1 protocol itself does not natively lend or borrow; lending/borrowing concepts described are enabled via an SDK for third-party dApps, consistent with the judgment principle. |
| Audit Quality | 50/100 | Named audits (Security Research Labs, CertiK, Hashlock referenced) exist, but findings include high/major severity issues that remain largely "acknowledged" rather than fully resolved. |
Summary: peaq generates fee- and usage-based revenue rather than interest income, does not natively offer lending/borrowing at the base-protocol level, and has been audited by named firms though with unresolved high/major-severity findings.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 85/100 | PEAQ is explicitly described as serving gas, staking and governance utility functions rather than being a purely speculative or meme asset. |
| Governance Rights | 70/100 | Sources confirm holder voting rights over inflation rate, upgrades and treasury allocation. |
| Rewards Distribution | 65/100 | Rewards derive from a declining inflation schedule and validator performance/commission, making them variable rather than a fixed guaranteed rate, though inflation issuance itself follows a preset schedule. |
| Speculation Controls | 50/100 | Vesting cliffs and multi-year linear unlocks are documented as partial anti-speculation measures, but no buyback/burn mechanism exists and public float was low at launch. |
| Asset Backing | 55/100 | The token's value is tied to network utility and fee demand rather than any reserve-asset backing, inferred from its described fee/utility role. |
Summary: PEAQ is a genuine utility and governance token with inflation-funded, performance-variable staking rewards, moderate vesting-based anti-speculation controls, and no reserve-asset backing beyond network utility.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 75/100 | Staking is documented as a non-custodial DPoS system with clear validator/delegator roles and minimum stake requirements. |
| Islamic Contract Classification | 50/100 | Rewards combine a service-fee-like block-production role with inflation-funded token minting, a structure not classified in Islamic contract terms by any source, leaving its categorization (Ju'alah-like service fee vs. Qard-with-increment) unresolved. |
| Rewards Structure | 50/100 | Rewards stem from a fixed, pre-set declining inflation schedule combined with variable APY based on stake ratio and validator performance, a mixed fixed/variable structure. |
| Documentation | 85/100 | Extensive official documentation covers validator/delegator setup, hardware needs, and validator selection criteria. |
| Shariah Alignment | 40/100 | Sources give no direct Shariah analysis, and the inflation-funded reward mechanism raises an unresolved core question about whether it functions like guaranteed increment rather than profit from real economic activity. |
Summary: peaq offers documented, non-custodial DPoS staking with slashing and validator/delegator roles, but the Islamic contractual classification of its inflation-funded rewards remains an unresolved question not addressed in the sources.
Overall Assessment: peaq presents as a legitimate, utility-driven infrastructure project with real-world adoption, but gaps in fee-treatment clarity, treasury disclosure, audit resolution, and unresolved Shariah classification of its staking rewards leave several compliance questions open rather than answered.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar