Islamic Finance Principles Assessment
Riba — Does Pharos involve interest?
Pharos's base-layer revenue comes from gas fees and inflation-funded staking rewards, not interest-bearing lending by the protocol itself. However, ecosystem messaging promotes third-party products, including Morpho-based lending and RWA yield vaults advertising fixed-sounding APYs of roughly 10.9%-14%. For Muslim investors, the chain's own economics look closer to permissible fee/participation income, but affiliated yield products warrant separate, case-by-case riba screening.
Assessment: Riba Dominant
Score: 43.7/100
Our methodology examines 10 criteria to evaluate how well Pharos avoids interest-based mechanisms.
Disclosed protocol revenue is limited to transaction gas fees (EIP-1559-style, with the base fee burned and priority tips paid to validators) and staking-linked issuance. No sources describe the treasury holding interest-bearing instruments, bonds, or fixed-yield reserves; the asset composition of the Foundation (16%) and Lab Co. (9%) treasuries is simply not disclosed. This absence of detail is a disclosure gap rather than confirmed riba exposure. The base protocol does not itself function as a lending institution generating interest income, though it is architected to host such products from partners.
Staking rewards derive from a "dual-incentive" pool: epoch-end inflation minting plus transaction priority fees, not a fixed guaranteed coupon divorced from network activity. This is structurally closer to profit/participation-sharing than to interest, since rewards vary with issuance schedule, validator performance, and fee volume, and slashing risk applies. However, one documented inflation schedule (9.125% initial, decaying toward 1-2%) conflicts with another source describing a flat 5% annual rate — foundation-adjustable in either case — meaning reward variability is partly discretionary rather than purely market-driven, a nuance worth noting though not itself riba.
Gharar — How much uncertainty does Pharos involve?
Uncertainty here is moderate: the team and technology are well-documented, but financial and audit disclosures leave real gaps. Named leadership and public technical docs reduce gharar, while the missing audit and inconsistent inflation figures increase it. On balance, informational uncertainty is present but not extreme.
Assessment: Excessive Gharar (High Uncertainty)
Score: 44.1/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Leadership is named and credentialed: CEO Wish Wu (former Ant Group ZAN CSO) and co-founder Alex Zhang (former Ant Group Digital Technologies CTO, IEEE Blockchain committee vice chair), corroborated by third-party coverage citing roughly $52M raised across two funding rounds. Public documentation and example smart contracts exist at docs.pharos.xyz, though full open-source status of the validator client is unconfirmed. Testnet metrics (4.3B transactions, 209M wallets) suggest genuine infrastructure development rather than an anonymous or purely speculative venture, which meaningfully lowers gharar relative to unnamed-team projects.
No named, dated third-party audit of the Pharos protocol was found in available sources; CertiK's own tracker explicitly states "Not Audited By CertiK" with "3rd Party Audit: No." This is a plain, unresolved audit gap and should be named as a gharar concern for any prospective participant. Compounding this, sources disagree on the actual inflation schedule (9.125% decaying versus a flat foundation-adjustable 5%), and delegated (non-validator) staking lock-up terms are not clearly documented, leaving material uncertainty around reward mechanics and risk exposure.
Maysir — Does Pharos involve gambling or speculation?
Pharos is not designed as a gambling or meme-speculation vehicle; it is infrastructure aimed at RWA tokenization, stablecoin settlement, and DeFi throughput. Genuine utility and enterprise-grade lineage distinguish it from purely speculative tokens, though secondary-market trading behavior around any listed token can still carry speculative dynamics. The design itself is productive, not chance-based.
Assessment: Minor Maysir (Incidental)
Score: 70/100
Our methodology examines 11 criteria to determine whether Pharos is a gambling instrument or a genuine economic tool.
Pharos targets real-world asset tokenization, stablecoin settlement, and high-throughput "RealFi" applications on a modular, EVM-compatible Layer-1 using AsyncBFT/PoS consensus. Its testnet scale (4.3B transactions, 209M wallets) and Ant Group-linked engineering team point toward genuine infrastructure-building rather than a chance-based instrument. PROS itself functions as gas, staking collateral, and governance token, with prospective use in stablecoin collateralization — utility-driven roles that are structurally distinct from wagering or zero-sum speculative contracts, even though any traded asset can attract speculative behavior from third parties.
The chain's stated purpose and technical architecture support productive, adoption-driven value creation rather than gambling. That said, only 1% of tokens were unlocked at TGE against a heavily insider-weighted allocation (65% insiders versus 21% community), which can concentrate early price discovery and invite volatile secondary-market speculation independent of the protocol's own design. Such trading behavior by third parties does not alter the permissibility of Pharos's underlying utility, but investors should distinguish participating in genuine network usage from chasing short-term price movements in a still-thinly-circulated token (roughly 135.6M of 1B PROS).
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 82/100 | Founders Wish Wu and Alex Zhang are named, credentialed former Ant Group executives with traceable public profiles and corroborating third-party coverage. |
| Fraud & Scam Risk | 60/100 | No fraud, hack or regulatory action naming Pharos Network was found, but the absence of a third-party audit and heavy insider allocation are risk signals that temper confidence. |
| Use Case Legitimacy | 78/100 | The protocol has a clearly articulated, non-meme use case (RWA tokenization, stablecoin settlement, high-throughput RealFi) backed by disclosed testnet scale metrics. |
| Ethical Practices | 40/100 | The chain's own architecture and ecosystem messaging center on interest-based lending and fixed-APY RWA yield vaults as flagship use cases, which raises a design-level concern rather than being merely third-party misuse. |
Summary: Pharos has a publicly named, credentialed founding team with a verifiable Ant Group background and no specific fraud allegations found, though it currently lacks a confirmed third-party security audit.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 48/100 | The base protocol is general blockchain infrastructure, but it is explicitly positioned and marketed around enabling interest-bearing lending and yield products as a core sector focus. |
| Transaction Fees | 78/100 | Fees follow an EIP-1559-style model with base fees burned and only priority tips paid to validators, avoiding riba-like fee extraction. |
| Treasury Assets | 40/100 (low evidence) | Treasury allocation percentages are disclosed but the sources say nothing about what assets (interest-bearing or otherwise) the treasury actually holds. |
| Revenue Model | 42/100 | Beyond gas and staking issuance, the ecosystem's promoted revenue-generating products (Morpho lending, RWA credit vaults with quoted APYs) are explicitly interest-based. |
| Transparency | 60/100 | Public documentation and developer guides exist, but no source explicitly confirms full open-source status of the validator/core client. |
| Governance | 35/100 | Governance voting exists nominally, but the Foundation retains discretionary control over inflation and the largest allocations sit with team, investors, and treasury entities. |
| Launch Fairness | 22/100 | Insiders (team, investors, foundation, labs) receive roughly 65% of supply while the community airdrop is only 6%, with just 1% unlocked at token generation. |
| Token Distribution | 25/100 | Distribution is heavily concentrated toward team, investors and treasury entities with long lockups, rather than being broad-based at launch. |
| Speculation/Utility Ratio | 55/100 | The token has real disclosed utility (gas, staking, governance) but a very low initial circulating float and airdrop-farming dynamics suggest meaningful speculative pressure alongside genuine use. |
Summary: The protocol is a modular RWA/RealFi-focused Layer-1 with fee-burning transaction mechanics but a launch and governance structure heavily weighted toward team, investor and foundation allocations over the broader community.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 42/100 | Base-layer revenue (gas, staking issuance) is not itself interest-based, but the protocol's flagship ecosystem products generate and promote interest-bearing yield. |
| Financial Status | 55/100 | Exchange listings and circulating-supply figures are available, but no source provides a fuller financial-stability picture (reserves, runway, liabilities). |
| Interest Assessment | 25/100 | Native restaking and an explicitly "native lending infrastructure via Morpho" integration mean interest-style lending is embedded as a core protocol offering rather than incidental third-party activity. |
| Audit Quality | 10/100 | CertiK's own tracker states Pharos has not been audited by CertiK and lists no third-party audit on file; no named, dated audit report of the base protocol was found. |
Summary: Revenue and ecosystem growth lean significantly on interest-based lending and fixed-APY RWA yield products, and no named audit of the base protocol could be located in these sources.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 72/100 | PROS functions as a genuine utility token for gas, staking, and governance rather than existing purely as a speculative meme asset. |
| Governance Rights | 45/100 | Holders can vote on upgrades and treasury allocation, but the Foundation's retained authority over inflation limits the practical strength of these rights. |
| Rewards Distribution | 42/100 | Staking rewards come from an algorithmic, decaying inflation schedule rather than solely from fee revenue tied to usage, and sources give conflicting figures for the schedule itself. |
| Speculation Controls | 48/100 | Team and investor vesting cliffs provide some anti-dump structure, but no other anti-speculation mechanisms (e.g., broader lockups, buyback/burn beyond fee-burn) are described. |
| Asset Backing | 33/100 | PROS is not collateralized by a specified reserve asset; its value rests on network utility and staking demand rather than tangible backing. |
Summary: PROS is a genuine utility token for gas, staking and governance rather than a meme, but its inflation-funded reward schedule is inconsistently described across sources and it carries no asset backing.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 55/100 | Validators appear to self-stake directly per protocol documentation, but delegated/liquid staking terms are unclear, and third-party custodial staking campaigns (e.g., an exchange lock-up program) exist alongside the native mechanism. |
| Islamic Contract Classification | 35/100 | Rewards are funded by new token issuance (inflation) plus fees rather than a clearly classified profit-sharing arrangement, leaving the underlying Islamic contract structure unresolved in the sources. |
| Rewards Structure | 52/100 | Rewards vary with a decaying inflation curve tied to network participation rather than being a flat guaranteed rate, though the inflation-funded nature still raises a dilution question. |
| Documentation | 62/100 | Official documentation and an in-depth thread disclose validator stake minimums, caps, and the inflation decay schedule in reasonable detail. |
| Shariah Alignment | 40/100 | The mixing of inflation-funded staking rewards with an ecosystem built around interest-based RWA lending leaves an unresolved core question about the token's overall Shariah alignment. |
Summary: Pharos has a native validator-staking mechanism with inflation- and fee-based rewards and stake caps for decentralization, but delegation terms, custody model, and Islamic contract classification are not clearly documented in these sources.
Overall Assessment: Pharos presents as a credible, non-meme infrastructure project with disclosed but insider-heavy tokenomics, an unresolved audit gap, and an ecosystem design that centers interest-based RWA lending and yield products closely enough to its core value proposition to warrant caution rather than outright disqualification.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar