Islamic Finance Principles Assessment
Riba — Does Quai Network involve interest?
Quai Network's core revenue mechanism, SOAP, converts merge-mined subsidy rewards from other Proof-of-Work chains into QUAI purchases that are burned or paid to stakers, which is not an interest-based structure. There is no evidence of the protocol holding interest-bearing treasury instruments or offering fixed-rate lending. On riba grounds, Quai appears largely clean, though documentation gaps around treasury asset composition warrant some caution.
Assessment: Minor Riba
Score: 73/100
Our methodology examines 10 criteria to evaluate how well Quai Network avoids interest-based mechanisms.
Quai's revenue does not stem from interest-based lending, bond yields, or fixed-return debt instruments. Instead, SOAP routes rewards earned from merge-mining Bitcoin Cash, Litecoin/Dogecoin, and Ravencoin into protocol-controlled addresses that buy and burn QUAI or fund staker payouts. This is a market-driven buy-and-burn mechanism tied to real computational work on external chains, not a riba-bearing income stream. The Foundation and treasury allocations (roughly a third of genesis supply) are not described as being parked in interest-bearing instruments in available sources, which supports a riba-free reading of the treasury model, though full asset-composition transparency is not confirmed.
Quai's staking mechanism under SOAP directs externally-sourced merge-mining subsidy revenue to "time-locked stakers," explicitly described as generating yield "without token inflation." Because rewards derive from real mining activity on other PoW networks rather than a pre-set interest rate or newly-printed tokens, this resembles a variable, performance-linked return rather than riba. However, sources do not clarify whether the lock-up carries a fixed promised rate, the precise duration, or slashing conditions, leaving some ambiguity about the exact contractual nature of the staking arrangement (e.g., whether it resembles Wakalah-style variable profit-sharing).
Gharar — How much uncertainty does Quai Network involve?
Quai Network carries a moderate degree of uncertainty, driven mainly by governance concentration and thin public documentation on staking mechanics, rather than by anonymity or an unaudited codebase. The named team, open-source code, and completed security audit meaningfully reduce gharar. The unresolved details around token distribution renegotiation and staking terms are the main residual concerns for investors.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 58.7/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Quai's founding team is fully named and credentialed, including Alan Orwick, Karl Kreder, and Professor Sriram Vishwanath, with academic ties to UT Austin and Georgia Tech and advisory involvement from Stephen Wolfram. This is far from an anonymous or pseudonymous project. The codebase is open-source on GitHub, a litepaper is publicly available, and mainnet is live. No sources allege fraud, hacks, or rug-pull activity specific to Quai. This level of public accountability and transparency substantially reduces informational gharar compared to opaque or anonymous-team projects.
Halborn Security, a known blockchain security firm, completed a Layer1 audit of Quai Network, publicly announced around December 2024 to January 2025. However, the detailed findings of that audit were not reproduced in available materials, limiting independent verification of specific vulnerabilities addressed. Staking documentation exists via stake.qu.ai, but lock-up duration, slashing conditions, and custodial versus non-custodial structure are not clearly specified in reviewed sources. This partial disclosure — a named audit without accessible findings, and staking terms without full detail — constitutes a moderate, rather than severe, gharar concern.
Maysir — Does Quai Network involve gambling or speculation?
Quai Network is not designed as a gambling or purely speculative instrument; it functions as a working Layer-1 blockchain with genuine consensus, transaction processing, and dual-token utility. Speculative trading can occur on any liquid secondary market, but this is a feature of markets generally, not of Quai's protocol design. The overall maysir profile is low from a design standpoint.
Assessment: Minor Maysir (Incidental)
Score: 70/100
Our methodology examines 11 criteria to determine whether Quai Network is a gambling instrument or a genuine economic tool.
Quai Network's real-world utility lies in its EVM-compatible smart contract execution, its novel Proof-of-Entropy-Minima consensus enabling horizontal scaling, and its dual-token economy separating a deflationary store-of-value asset (QUAI) from a cash-like medium of exchange (QI). Fees are paid based on computational complexity, and SOAP ties protocol growth to real merge-mining activity on established PoW chains. This productive, work-based value creation — rather than a zero-sum betting mechanism — distinguishes Quai from gambling-oriented tokens and supports its classification as a legitimate utility asset.
Like most liquid tokens, QUAI and QI can be subject to speculative trading, leverage, or short-term price betting on secondary markets, and features such as the QI/QUAI conversion mechanism could theoretically attract speculative arbitrage behavior. However, such third-party trading conduct does not stem from the protocol's own design and is not determinative of its Shariah classification, just as speculative fiat trading does not render currency impermissible. Genuine technical utility, real staking tied to external mining rewards, and productive network functions outweigh incidental speculative activity in secondary markets.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 90/100 | Founders are named, credentialed (UT Austin, Georgia Tech, Apple), and publicly discuss the project in interviews and on a public team page. |
| Fraud & Scam Risk | 65/100 | No fraud, hack, or rug-pull allegations specific to Quai were found, but this is inferred from absence of adverse findings rather than a positive confirmation. |
| Use Case Legitimacy | 80/100 | The project has a detailed litepaper, live mainnet, and articulated use cases (payments, DeFi, smart contracts) beyond speculation. |
| Ethical Practices | 90/100 | The protocol's own design is a general-purpose PoW blockchain and dual-currency system with no built-in ties to a prohibited industry. |
Summary: Quai Network has a publicly named, credentialed founding team and no fraud or hack allegations specific to the project appear in the sources reviewed.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 85/100 | Core business is blockchain infrastructure (L1 PoW network with EVM support), a neutral, non-prohibited sector. |
| Transaction Fees | 80/100 | Fees fund computation and, via SOAP, are converted into buybacks/burns or staker rewards rather than extracted as interest. |
| Treasury Assets | 65/100 | Treasury allocations are described as native-token percentages (Foundation, Community, etc.) with no mention of interest-bearing instruments, but composition of held assets is not detailed. |
| Revenue Model | 85/100 | Revenue comes from SOAP's merge-mining subsidy conversion mechanism, not from interest-based lending. |
| Transparency | 90/100 | Code and documentation are open-source on GitHub with extensive public developer docs. |
| Governance | 35/100 | Key protocol changes (e.g., the Singularity Fork) were negotiated among Foundation, developer entity, and investors rather than through broad token-holder voting, indicating centralization. |
| Launch Fairness | 40/100 | The token had a pre-mined 3B genesis supply allocated to team, investors, and foundation with vesting, not a no-premine fair launch. |
| Token Distribution | 40/100 | Over half of supply is allocated to Foundation, Team/Insiders, and Investors combined, versus a smaller community share. |
| Speculation/Utility Ratio | 65/100 | The project has genuine technical utility, but heavy insider allocations and large pending unlocks suggest meaningful speculative dynamics alongside utility. |
Summary: Quai is an open-source, EVM-compatible Proof-of-Work Layer-1 with a dual-token design and a pre-mined, vested genesis distribution concentrated toward foundation, team and investors, alongside a centralized governance process.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 85/100 | Protocol revenue is generated via mining-subsidy conversion (SOAP), not interest-bearing instruments. |
| Financial Status | 50/100 | Some financial transparency exists (supply dashboards, fee trackers) but overall market stability and financial health are only partially evidenced. |
| Interest Assessment | 85/100 | No lending/borrowing or interest mechanism is described as built into the Quai base protocol; a lending platform referenced in sources belongs to a different, similarly-named chain. |
| Audit Quality | 65/100 | A named firm, Halborn Security, completed a Layer1 audit (announced Dec 2024/Jan 2025), though detailed findings are not reproduced in these sources. |
Summary: Protocol revenue flows from a merge-mining subsidy mechanism rather than interest, and a named third-party security audit (Halborn) exists, though detailed audit findings and broader financial stability data are limited.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 80/100 | QUAI serves clear functional roles as gas/utility token and mining reward, not merely a speculative meme token. |
| Governance Rights | 40/100 | Sources vaguely reference "governance participation" tied to community incentives but do not describe a concrete voting mechanism for holders. |
| Rewards Distribution | 80/100 | Rewards are variable, tied to mining difficulty and SOAP-driven buyback flows, not a fixed rate. |
| Speculation Controls | 65/100 | Long vesting schedules, the Singularity Fork burn, and continuous buy-and-burn design represent concrete anti-speculation measures. |
| Asset Backing | 65/100 | The token is backed by proof-of-work/energy expenditure and hashrate-linked issuance rather than arbitrary or purely speculative backing. |
Summary: QUAI and QI serve distinct utility roles backed by proof-of-work and hashrate dynamics, with variable, activity-linked rewards and several built-in supply-control measures, though formal holder governance rights are unclear.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 50/100 | A time-locked staking mechanism (SOAP) exists, but custodial status and precise lock-up terms are not detailed in the sources. |
| Islamic Contract Classification | 30/100 | The staking reward source (external mining-subsidy buybacks) is not classified against any Islamic contract type in the sources, leaving its structure unresolved. |
| Rewards Structure | 70/100 | Rewards are explicitly tied to external merge-mining subsidy revenue rather than fixed or guaranteed returns. |
| Documentation | 45/100 | A staking calculator/description page exists, but full terms, lock-up specifics, and risk disclosures are not evidenced in these sources. |
| Shariah Alignment | 35/100 | The staking design raises an unresolved classification question (profit-share vs. subsidy-funded yield) that the sources do not clarify, leaving core Shariah alignment undetermined. |
Summary: A native staking mechanism (SOAP) distributes mining-subsidy-funded rewards to time-locked stakers, but its custodial nature, full terms, and Islamic contract classification are not established in the available sources.
Overall Assessment: Quai Network presents as a genuine, technically substantive blockchain project with a credentialed team and non-interest-based revenue design, though centralized governance, heavy insider token allocation, and an unresolved staking classification leave some open questions for a full Shariah assessment.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar