Islamic Finance Principles Assessment
Riba — Does Sturdy involve interest?
Sturdy's entire economic engine runs on interest: lenders deposit assets to earn yield, and that yield is generated by staking borrower collateral into third-party interest-bearing protocols like Lido, Convex, and Yearn. This is not a peripheral treasury choice but the protocol's stated core mechanism. For Muslim investors, this places Sturdy squarely in riba-based lending territory rather than a profit-and-loss-sharing or fee-for-service model.
Assessment: Riba Dominant
Score: 43.8/100
Our methodology examines 10 criteria to evaluate how well Sturdy avoids interest-based mechanisms.
Sturdy's revenue and lender returns are generated by capturing yield spreads from borrower collateral that is staked into Lido, Convex, and Yearn — all interest/yield-bearing venues. Borrowers reportedly pay no direct borrowing fee; instead, the yield extracted from their pledged collateral is redirected to lenders as their return. This means the protocol's income stream is definitionally interest-derived: value is created purely through the time-value deployment of staked capital rather than through a trade, service, or shared-risk equity position. No source indicates an alternative, non-interest revenue model exists alongside this.
The base business model is a lending/borrowing platform in the fullest sense: siloed single-asset/collateral pairs sit beneath aggregator vaults that route deposits toward whatever yield-bearing venue the Bittensor subnet SN10 determines is optimal. Lenders receive variable, yield-driven returns; borrowers access liquidity against staked collateral. This is not an ancillary DeFi feature bolted onto a neutral base layer — lending-for-yield is the protocol's entire reason for existing, and its partnerships with Lido, Convex, and Yearn are all conventional interest-bearing staking/yield-farming venues.
Gharar — How much uncertainty does Sturdy involve?
Sturdy carries moderate uncertainty: the team and mechanics are transparently documented, but auditing coverage and disclosure of SN10-specific tokenomics are incomplete. Named leadership and open-source code reduce ambiguity, while the absence of a major named-firm security audit beyond Quantstamp and a single 2022 contest leaves some risk unquantified. On balance, informational uncertainty here is real but not extreme.
Assessment: Moderate Gharar (Material Uncertainty)
Score: 60/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Founder Sam Forman is named, traceable, and has given multiple public interviews discussing both the base protocol and its SN10 subnet integration, which is a strong transparency signal relative to anonymous projects. Code is open-source on GitHub, and governance is described as token-holder-driven rather than centrally controlled. Token allocation percentages (contributors ~19%, investors ~19%, treasury 18–60.5%) are disclosed, along with vesting schedules. However, some figures vary between source snapshots, and SN10-specific tokenomics (supply, distribution) were not clearly documented in available material.
Security coverage is partial: a Quantstamp certificate exists, and a 2022 Code4rena public audit contest scoped the contracts and surfaced issues that were addressed. No Halborn or other major named-firm audit specific to Sturdy was found in available sources, which is a legitimate gharar concern for a protocol handling staked collateral across multiple integrated venues. Borrower and lender risk terms (variable yield, no fixed rate, collateral routed to Lido/Convex/Yearn) are disclosed at a conceptual level, but granular risk disclosures for SN10's TaoFi liquidity scoring mechanism are thin.
Maysir — Does Sturdy involve gambling or speculation?
Sturdy is not designed as a gambling or speculative instrument; it functions as a yield-routing lending infrastructure. Some uncertainty exists around SN10's liquidity-mining incentive scoring, but this is a functional mechanism, not a betting structure. The protocol itself should not be judged as maysir-driven.
Assessment: Moderate Maysir (High Risk)
Score: 54.5/100
Our methodology examines 11 criteria to determine whether Sturdy is a gambling instrument or a genuine economic tool.
Sturdy's genuine utility lies in its isolated-risk lending architecture, which lets lenders earn yield on deposits while borrowers access liquidity against staked collateral, with capital allocation optimized algorithmically across whitelisted silos via Yearn V3 and Bittensor subnet SN10. This is productive financial infrastructure — capital is deployed toward real yield-generating activity (staking, liquidity provision) rather than pooled purely for chance-based payouts. The SN10 subnet's TAO<>USDC liquidity incentive on TaoFi likewise rewards actual fee capture and market-making service, not speculative wagering.
Weighed against this genuine utility, STRDY's secondary-market behavior carries typical crypto speculative risk: it launched non-transferable and governance-only, later intended to be unlocked for trading, which could invite short-term speculative flows once liquid. Contributor and investor tokens vesting over three years with a one-year cliff somewhat tempers early dumping risk. Such secondary-market speculation is a feature of the broader trading environment rather than of Sturdy's own protocol design, and it should not by itself be treated as determinative of the project's own permissibility.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 70/100 | Founder Sam Forman is named, credentialed, and publicly interviewed multiple times, giving reasonable traceability. |
| Fraud & Scam Risk | 55/100 | No fraud, hack, or rug-pull specifically involving Sturdy is reported, but this is inferred from absence rather than a direct confirmation of clean history. |
| Use Case Legitimacy | 75/100 | Sources describe a functioning lending/leverage-yield protocol and a Bittensor liquidity-optimization subnet, indicating genuine technical utility rather than pure hype. |
| Ethical Practices | 65/100 | The protocol's own design is lending and liquidity provision, not a haram industry, though its interest-like yield mechanics are addressed separately under financial criteria. |
Summary: The founder is publicly identifiable and credentialed, and no direct fraud or rug-pull evidence against Sturdy appears in the sources, though broader confirmation of clean regulatory history is limited.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 65/100 | The base protocol operates in lending/liquidity provision, a sector not inherently prohibited, though the yield-pass-through structure raises separate riba-adjacent questions. |
| Transaction Fees | 40/100 | Sources mention fee-sharing arrangements (e.g., partial CRV fee splits) only partially and do not clearly document a burn or fully transparent fee-distribution policy for Sturdy/SN10. |
| Treasury Assets | 35/100 (low evidence) | Treasury size and governance control are documented but the composition of treasury assets (interest-bearing or not) is not described in the sources. |
| Revenue Model | 30/100 | Revenue is generated from yield captured on collateral staked into interest/yield-bearing third-party protocols, which resembles an interest-linked revenue model. |
| Transparency | 80/100 | Code repositories are public, documentation exists, and a public audit contest scoped the contracts, indicating strong transparency. |
| Governance | 55/100 | Governance is token-holder driven with no single core team, but voting-power concentration and process details are not clearly described. |
| Launch Fairness | 55/100 | Contributor and investor allocations (~19% each) carry multi-year vesting with a cliff, moderating but not eliminating insider advantage. |
| Token Distribution | 50/100 | Two source snapshots show meaningful concentration in contributors, investors, and treasury (30-60%), which is a moderate centralization signal. |
| Speculation/Utility Ratio | 60/100 | Initial non-transferability limited early speculation, but eventual transferability and leveraged-yield use cases could increase speculative activity. |
Summary: Sturdy operates a two-tier isolated lending architecture augmented by a Bittensor subnet (SN10) for yield-allocation optimization and liquidity mining, with governance-controlled treasury and vested insider allocations.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 30/100 | Protocol revenue comes from yield spreads on collateral staked in interest/yield-bearing venues, an interest-adjacent revenue source. |
| Financial Status | 45/100 | Only a $3.9M seed raise is documented; broader financial stability metrics like TVL or revenue are not given in the sources. |
| Interest Assessment | 40/100 | The base protocol is fundamentally a lending platform where lender returns derive from staking yield on borrower collateral, an interest-like structure despite "interest-free" borrower framing. |
| Audit Quality | 55/100 | A Quantstamp certificate and a public Code4rena audit contest are documented; no named-firm audit like Halborn was found specifically for Sturdy in these sources. |
Summary: Protocol revenue is generated from yield captured on collateral staked into third-party yield venues, and while a Quantstamp certificate and public audit contest exist, no named top-tier audit firm coverage of Sturdy specifically was found.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 65/100 | STRDY is described as a governance-only, non-transferable token at launch, indicating genuine (if narrow) utility rather than meme design. |
| Governance Rights | 75/100 | Sources state holders use the token to vote on protocol decisions, indicating clear governance rights. |
| Rewards Distribution | 65/100 | Lender rewards are explicitly variable, tied to underlying staking/farming yield rather than a fixed rate. |
| Speculation Controls | 55/100 | Initial non-transferability and multi-year vesting with cliffs act as documented anti-speculation measures. |
| Asset Backing | 45/100 | The token's link to protocol treasury and governance suggests some functional backing, but explicit backing composition is not detailed. |
Summary: STRDY functions as a governance token with variable, yield-linked rewards and some anti-speculation lockups, though its underlying interest-adjacent yield mechanics raise a distinct Shariah question.
5. Staking Mechanism
Sturdy has no native staking mechanism, so these five criteria are not applicable and are excluded from the score entirely rather than counted as zeros.
Overall Assessment: Sturdy is a technically substantive, non-meme lending and liquidity-optimization protocol with reasonable transparency and team traceability, but its core yield-generation model carries an interest-adjacent structure that remains a central unresolved Shariah question.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar