Islamic Finance Principles Assessment
Riba — Does Pharaoh involve interest?
Pharaoh's core revenue comes from swap fees, not interest, and its staking-equivalent (xPHAR) rewards are variable, tied to trading activity rather than fixed guarantees. No lending/borrowing with interest is confirmed in official documentation. For Muslim investors, the model itself is not structurally riba-based, though treasury composition remains undisclosed.
Assessment: Moderate Riba
Score: 65.8/100
Our methodology examines 10 criteria to evaluate how well Pharaoh avoids interest-based mechanisms.
Pharaoh generates income through swap fees (0.05%, 0.30%, or 1%), a portion of which flows to the treasury and to xPHAR holders as "real yield." This is fee-based commerce, not interest on lent capital. One inconsistent source referencing "lending and borrowing" appears to be a mismatched or impersonating page, contradicted by the primary AMM documentation, and is not treated as representative of the actual protocol. Treasury asset composition — whether it holds interest-bearing instruments — is not detailed in available sources, leaving a minor disclosure gap rather than a confirmed riba exposure.
The xPHAR mechanism is not a fixed-yield product: rewards derive from actual swap-fee revenue, third-party vote incentives ("bribes"), and burned exit penalties from other participants who unlock early. None of these are predetermined interest payments; they fluctuate with trading volume and voter behavior. This variable, performance-linked structure resembles profit-sharing more than interest-bearing deposits. The 50% burn on minting and on early exit further reinforces that returns are tied to genuine economic activity and forfeiture dynamics rather than a guaranteed rate of return, which is the key distinction separating this from riba-based instruments.
Gharar — How much uncertainty does Pharaoh involve?
Uncertainty in Pharaoh centers on undisclosed team identity and unclear treasury holdings, while documentation, named audits, and verifiable on-chain activity reduce ambiguity elsewhere. The overall picture is a functioning, revenue-generating protocol whose operational mechanics are reasonably disclosed even where organizational transparency lags.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 62.9/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
No credentialed, named founding team for Pharaoh is confirmed in available sources; unrelated LinkedIn profiles sharing the "Pharaoh" name are not verified founders. This anonymity is a genuine transparency gap. Counterbalancing this, the project is described as an authorized fork of RAMSES, a known DeFi lineage, and its contract code is referenced on GitHub via DefiLlama, suggesting a degree of technical openness. Documentation exists at docs.phar.gg detailing fee structures and the xPHAR mechanism. Overall, code and mechanics are reasonably visible even though the humans behind the project remain unidentified.
Pharaoh has commissioned multiple named audits: Spearbit reviewed the Shadow Exchange x(3,3) component, Consensys Diligence audited the Ramses V3 concentrated-liquidity model, and yAudit examined the V2 codebase, alongside security competitions via C4rena and Zenith Mitigation. Specific audit dates are not consistently provided in sources, which is a minor disclosure shortfall. Terms around fees, xPHAR conversion, and exit penalties are documented. This is not an unaudited protocol; the presence of several named, reputable audit firms meaningfully reduces gharar relative to unreviewed contracts, though the missing timeline detail and undisclosed treasury composition leave some residual uncertainty.
Maysir — Does Pharaoh involve gambling or speculation?
Pharaoh functions as an operational decentralized exchange with real trading volume and fee revenue, not a betting mechanism or zero-sum game by design. Speculative trading of the PHAR token on secondary markets is possible, as with any listed asset, but this is third-party behavior distinct from the protocol's own function. On balance, Pharaoh's design centers on facilitating exchange rather than gambling.
Assessment: Moderate Maysir (High Risk)
Score: 68.8/100
Our methodology examines 11 criteria to determine whether Pharaoh is a gambling instrument or a genuine economic tool.
Pharaoh provides genuine utility as a concentrated-liquidity AMM on Avalanche, enabling users to swap tokens and liquidity providers to earn fee-based returns tied to real trading demand. Reported figures — $4.9B in Q3 2025 trading volume, 36.7K monthly active users, and tens of millions in TVL — indicate substantive, productive economic activity rather than a purely speculative vehicle. The xPHAR governance mechanism channels rewards from actual fee generation and vote incentives, aligning participant returns with protocol usage. This productive, service-based function is what separates Pharaoh from a maysir-style zero-sum wagering structure.
Against this genuine utility, PHAR's market price can still be driven by speculative secondary trading, as with most listed tokens, and the vote-escrow model may concentrate influence among large holders who chase incentive flows rather than long-term protocol health. Such speculative trading behavior by third parties, however, does not redefine the protocol's own design, which is oriented toward fee generation from real exchange activity. The 50% burn penalty on early exit also discourages short-term flipping of xPHAR specifically, tempering — though not eliminating — speculative incentives within the token's own mechanics.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 20/100 (low evidence) | No sources identify or credential a founding team for the Pharaoh Exchange DEX; unrelated LinkedIn profiles surfaced but do not correspond to this project. |
| Fraud & Scam Risk | 60/100 | No hack, rug-pull, or regulatory action against Pharaoh Exchange is documented, and multiple audits exist, but a mismatched/possibly impersonating "Pharaoh Exchange" site appeared in search results as a caution flag. |
| Use Case Legitimacy | 82/100 | Sources document real trading volume, TVL, fees and growing active users, indicating genuine DEX utility rather than pure hype. |
| Ethical Practices | 78/100 | The base protocol is described as a token-swap/liquidity AMM with no inherently prohibited sector in its own design. |
Summary: The sources show a functioning Avalanche DEX with real usage metrics and named audits, but no verifiable, credentialed founding team could be identified.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 78/100 | Core business is decentralized exchange/liquidity provision, a neutral financial-service function, not a prohibited sector. |
| Transaction Fees | 72/100 | Swap fees are transparent, disclosed percentages paid by users for exchange service, with revenue routed to treasury and fee-earning stakers rather than functioning as interest. |
| Treasury Assets | 35/100 (low evidence) | Treasury asset composition (e.g., whether interest-bearing instruments are held) is not disclosed in the sources. |
| Revenue Model | 78/100 | Revenue is generated from swap fees rather than lending/interest income according to the protocol descriptions. |
| Transparency | 72/100 | Contract code is referenced via GitHub links in DefiLlama and a public documentation site exists describing mechanics in detail. |
| Governance | 52/100 | Governance operates via a vote-escrow model where large xPHAR holders direct emissions, a structure typically prone to concentration, though this concentration is not explicitly confirmed for Pharaoh. |
| Launch Fairness | 68/100 | Token allocation shows a large farming/emission-based share (73.7%) versus a modest insider allocation (7.5%), suggesting a reasonably fair launch structure. |
| Token Distribution | 68/100 | Distribution data shows insiders at 7.5%, airdrop 7.5%, and farming dominating at 73.7%, indicating broad rather than insider-concentrated distribution. |
| Speculation/Utility Ratio | 65/100 | Real fee revenue, TVL and volume growth indicate meaningful utility use alongside typical DeFi token speculation. |
Summary: Pharaoh operates as a concentrated-liquidity AMM with fee-based revenue split between treasury and fee-earning stakers, open contract code, and a farming-dominant token distribution.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 78/100 | Protocol revenue is fee-based from swap activity, not interest-based lending income. |
| Financial Status | 68/100 | Publicly tracked metrics show growing TVL, revenue, and user activity over multiple quarters, indicating reasonable financial transparency and traction. |
| Interest Assessment | 75/100 | Consistent core documentation describes Pharaoh as an AMM/exchange without native lending or borrowing; a single conflicting source appears mismatched with the project's actual design. |
| Audit Quality | 78/100 | Named audit firms including Spearbit, Consensys Diligence, and yAudit, plus security competitions, are documented, though exact dates are not always specified. |
Summary: The protocol shows growing fee revenue, TVL and user activity funded by swap fees rather than interest, with several named security audits but incomplete treasury disclosure.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 72/100 | PHAR/xPHAR serve functional roles in governance and fee-reward distribution, consistent with a genuine utility token rather than a meme. |
| Governance Rights | 72/100 | Converting PHAR into xPHAR confers explicit voting rights over liquidity emissions. |
| Rewards Distribution | 72/100 | Rewards to xPHAR holders come from variable swap-fee revenue and vote incentives rather than a fixed rate. |
| Speculation Controls | 68/100 | A 50% burn on minting and on early exit is an explicit, disclosed anti-speculation/long-term-holding mechanism. |
| Asset Backing | 50/100 | The token's value is tied to protocol fee cash flow and utility rather than described hard-asset backing, but treasury/backing details are not spelled out. |
Summary: PHAR/xPHAR provide governance and variable, fee-derived rewards alongside an explicit burn-based anti-speculation mechanism, though asset backing is not clearly described.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 65/100 | The xPHAR mechanism is documented with clear conversion, voting, and exit-penalty terms, operating via smart contracts rather than a custodian. |
| Islamic Contract Classification | 48/100 | The mechanism blends fee-sharing, vote-incentive ("bribe") income, and burn penalties in a novel DeFi structure that does not map cleanly onto a single classical Islamic contract, leaving classification uncertain. |
| Rewards Structure | 72/100 | Rewards are explicitly tied to actual swap-fee revenue and third-party incentive payments rather than a guaranteed fixed rate. |
| Documentation | 68/100 | Dedicated documentation pages explain the xPHAR and x(3,3) mechanics, including burn and reward rules. |
| Shariah Alignment | 48/100 | Novel elements such as vote-incentive ("bribe") revenue and exit-forfeiture burns leave some unresolved questions about gharar and the nature of third-party incentive income, even though core fee-revenue sharing is comparatively clean. |
Summary: A native vote-escrow style staking mechanism (xPHAR) exists, offering documented, variable, fee-and-incentive-based rewards with an exit-burn penalty rather than fixed guaranteed returns, though its precise Islamic contract classification remains unresolved.
Overall Assessment: Pharaoh appears to be a genuine, revenue-generating DeFi exchange with reasonable transparency and fair-ish distribution, but gaps in team disclosure, treasury detail, and the novel vote-incentive/burn reward structure leave some Shariah-relevant questions open rather than resolved.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar