Islamic Finance Principles Assessment
Riba — Does Steem involve interest?
Steem's protocol contains no lending, borrowing, or interest-bearing mechanism at its core. Its economics run entirely on token inflation feeding a content-reward pool, not on interest income. For Muslim investors, riba is not the primary concern here — governance and audit gaps matter more.
Assessment: Minor Riba
Score: 75/100
Our methodology examines 10 criteria to evaluate how well Steem avoids interest-based mechanisms.
Steem generates no protocol-level fee revenue and holds no interest-bearing treasury instruments described in available documentation. Value transfer happens solely through a scheduled, declining token-inflation schedule (starting near 9.5% APR, tapering roughly 0.5%/year toward under 1%) that funds the reward pool split among authors/curators, Steem Power holders, and witnesses. There is no lending desk, no interest-bearing reserve, and no debt-based yield product embedded in the base chain. This absence of an interest mechanism is a structurally clean feature, though it does not by itself resolve other Shariah concerns tied to governance and audit transparency.
Rewards from powering up STEEM into Steem Power are variable, not fixed: they depend on curation activity, voting weight, and community engagement, drawn from the inflationary reward pool rather than a guaranteed interest-like payout. This performance-linked, participatory structure resembles a Ju'alah-style reward-for-effort arrangement more than a riba-based deposit product. The absence of any promised fixed return, combined with the 13-week gradual power-down unlock, reinforces that Steem Power functions as active platform participation rather than passive interest-bearing lending, which is the key distinction Muslim investors should note when evaluating this mechanism.
Gharar — How much uncertainty does Steem involve?
Steem carries moderate-to-elevated uncertainty, driven less by the protocol's mechanics and more by unresolved governance and audit gaps. Founders are named and traceable, and the code is open-source, which reduces informational opacity. However, the lack of any documented third-party audit and the 2020 governance crisis both add real uncertainty that Muslim investors should weigh carefully.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 64.3/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Steem was founded by Ned Scott and Daniel Larimer (also known for BitShares and EOS) through New York-based Steemit Inc., giving the project a credentialed, publicly identifiable origin rather than an anonymous team. Larimer departed as CTO in 2017, and Steemit restructured leadership in 2019, both disclosed transitions rather than silent disappearances. The codebase is open-source under MIT license, with public GitHub repositories, whitepapers, and developer documentation available for independent review. This transparency on team and code is a genuine mitigant to gharar, even though it does not eliminate the governance-related concerns detailed elsewhere.
No source material documents a named security audit firm — such as Halborn or Trail of Bits — having reviewed Steem's own codebase; audit references found in general research point to unrelated projects like Solana or Mochi. This absence of a verifiable third-party audit is a legitimate gharar concern that should be named plainly rather than assumed away. Mechanical documentation (whitepaper, bluepaper, developer portal) explains staking, inflation, and reward mechanics in reasonable technical detail, which helps, but the lack of independent security verification leaves a real, unresolved uncertainty about codebase risk.
Maysir — Does Steem involve gambling or speculation?
Steem is not designed as a gambling or speculative instrument; its core function is rewarding content creation and curation on a social platform. Speculative behavior can and does occur in secondary markets, as with any liquid token, but that is a third-party market phenomenon rather than a feature of Steem's own design. The protocol itself is best assessed as a utility and participation token.
Assessment: Moderate Maysir (High Risk)
Score: 63.6/100
Our methodology examines 11 criteria to determine whether Steem is a gambling instrument or a genuine economic tool.
Steem's "Proof-of-Brain" reward algorithm pays real content creators and curators through crowd-sourced voting, funded by scheduled inflation rather than by extracting value from other participants' losses. The flagship application, Steemit, has sustained over one million accounts and high daily transaction volume across 320+ built applications, indicating genuine, ongoing productive use rather than a purely speculative vehicle. This functional, usage-driven design — feeless transactions, bandwidth-based spam control, and reward distribution tied to actual platform contribution — distinguishes Steem's intended purpose clearly from a zero-sum betting or gambling mechanism.
Weighed against this genuine utility, STEEM the token still trades on open secondary markets where price speculation, independent of platform activity, is common — a pattern true of nearly all liquid crypto assets and not unique to Steem's design. This third-party trading behavior does not reflect the protocol's own purpose and should not be read as evidence of an inherently maysir-based instrument. The 13-week power-down unlock and inflation-funded reward structure further anchor value creation in participatory activity rather than pure price wagering, supporting a cautious but not maysir-driven overall assessment.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 80/100 | Founders Ned Scott and Daniel Larimer are named, credentialed (Larimer previously founded BitShares and later EOS), and their history is traceable through multiple sources. |
| Fraud & Scam Risk | 45/100 | The 2020 Justin Sun acquisition triggered a documented governance crisis in which witnesses froze large user accounts, a real trust/centralization event that must weigh against the score. |
| Use Case Legitimacy | 80/100 | Steem is a functioning social-content platform with documented large-scale historical usage (over 1 million accounts, heavy daily transaction volume), not a hype-only asset. |
| Ethical Practices | 85/100 | The protocol's own design is a content/social-media rewards system with no inherent link to a prohibited industry. |
Summary: Steem has a named, traceable founding team with real blockchain credentials, though a 2020 governance takeover controversy is a documented trust concern.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 85/100 | The base protocol's core business is social-media content curation and rewards, not a prohibited sector. |
| Transaction Fees | 90/100 | Steem transactions are explicitly feeless, using bandwidth quotas instead of fees, so there is no fee-based extraction mechanism. |
| Treasury Assets | 65/100 | Sources describe the reward pool as funded from token inflation with no mention of interest-bearing treasury holdings, but treasury composition is not explicitly detailed. |
| Revenue Model | 80/100 | Revenue to participants comes from scheduled token inflation distributed for content/curation activity, not from interest-based lending. |
| Transparency | 90/100 | The codebase is open-source, MIT-licensed, with public GitHub repositories, whitepapers and developer documentation. |
| Governance | 55/100 | Governance operates via witness voting on a one-STEEM-one-vote basis, but the 2020 takeover episode demonstrated real capture/centralization risk. |
| Launch Fairness | 40/100 | Supply was largely premined with early mining later halted, but detailed fairness of the initial launch and insider allocations is not specified in these sources. |
| Token Distribution | 55/100 | Ongoing inflationary distribution favors authors/curators/witnesses broadly, but initial token distribution details versus insiders are not disclosed. |
| Speculation/Utility Ratio | 65/100 | The protocol has genuine utility (content platform), suggesting utility dominance, though no direct speculation-versus-usage data is given. |
Summary: Steem is an open-source, feeless, DPoS-based content-rewards protocol with inflation-funded distribution to creators, curators, and witnesses, but launch fairness and insider allocation details are thinly documented.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 85/100 | Protocol-level rewards derive from inflation tied to content activity, not from interest-based lending revenue. |
| Financial Status | 55/100 | Sources indicate a long operating history and continuing activity, but figures come mainly from a promotional source rather than independent financial data. |
| Interest Assessment | 85/100 | The base protocol is a content-rewards blockchain with no built-in lending, borrowing, or interest mechanism described. |
| Audit Quality | 10/100 (low evidence) | No named security-audit firm or audit report specific to the Steem protocol could be found in these sources; unrelated projects' audits were the only audit material retrieved. |
Summary: The base protocol has no lending, borrowing, or interest-based revenue model, but no independent audit of the Steem protocol itself was found in the sources.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 80/100 | STEEM functions as a utility token for transactions, governance voting, and powering the reward economy, not as a purposeless meme token. |
| Governance Rights | 75/100 | Holders exercise governance through one-STEEM-one-vote witness elections as described in the whitepaper. |
| Rewards Distribution | 80/100 | Rewards are variable, tied to curation/content performance drawn from an inflation-funded pool rather than a fixed guaranteed payout. |
| Speculation Controls | 65/100 | The mandatory thirteen-week power-down unlock and the declining inflation schedule are documented anti-speculation design features. |
| Asset Backing | 50/100 | The token has no external reserve-asset backing; value is described as derived from platform utility and usage rather than any formal backing mechanism. |
Summary: STEEM is a genuine utility and governance token with variable, activity-based rewards and a lock-up mechanism, though it lacks any formal asset backing.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 80/100 | Steem Power staking is a direct, non-custodial on-chain mechanism with a documented thirteen-week unlock process. |
| Islamic Contract Classification | 55/100 | Rewards tied to curation/content work resemble a reward-for-task structure rather than interest-bearing lending, but no explicit Islamic-contract classification appears in the sources. |
| Rewards Structure | 75/100 | Rewards are drawn from the inflationary pool according to actual curation/voting activity, not a fixed or guaranteed rate. |
| Documentation | 85/100 | The mechanics of powering up/down and reward distribution are documented in the official whitepaper, bluepaper, and developer portal. |
| Shariah Alignment | 60/100 | Terms are reasonably disclosed with low apparent gharar, but no explicit Shariah ruling or classification of the inflation-reward mechanism is present in the sources, leaving some doubt unresolved. |
Summary: Steem Power provides a direct, non-custodial staking-like mechanism with a documented unlock period and activity-based rewards, though its precise Islamic-contract classification is not addressed in the sources.
Overall Assessment: Steem presents as a genuine, long-running utility protocol with reasonable transparency and non-interest reward mechanics, but a past governance crisis and the complete absence of a documented third-party security audit leave meaningful gaps in the compliance picture.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar