Islamic Finance Principles Assessment
Riba — Does Tarot involve interest?
Tarot's entire economic engine runs on borrower interest, one-time borrow fees, and a performance fee skimmed from vault yield, all set by an on-chain interest-rate model. This is not incidental exposure to interest but the protocol's defining function. For Muslim investors, this places Tarot's core revenue mechanism squarely in riba territory.
Assessment: Riba Dominant
Score: 24.4/100
Our methodology examines 10 criteria to evaluate how well Tarot avoids interest-based mechanisms.
Tarot's revenue comes from three interest-linked sources: ongoing borrower interest, a fixed one-time borrow fee (0.1% on Classic pools, 0.01% on Requiem/Carcosa pools), and a 10% (0-20% range) performance fee on vault yield. Protocol reserves are held as bTAROT/tTokens, which represent claims on interest-bearing lending pools rather than tangible or equity-like assets. Even the treasury's growth-fund allocation is discretionary and tied to this same interest-based revenue stream, meaning there is no halal-compliant income source insulating the protocol's balance sheet from riba.
The core business model is a lending-borrowing platform in the classical interest sense: lenders deposit a single token to passively earn yield funded by borrower interest, while borrowers post LP tokens as collateral to draw loans and leverage yield-farming positions up to 5x. There is no profit-and-loss-sharing structure (no mudarabah- or musharakah-style arrangement) — return to lenders is a predetermined rate-model-driven interest payment, and the borrowing side exists specifically to generate that interest. This is a conventional interest-rate lending market replicated on-chain, not an Islamic-finance-compatible alternative.
Gharar — How much uncertainty does Tarot involve?
Tarot carries a meaningful degree of uncertainty stemming from an unverifiable team and the absence of a confirmed audit of its own contracts, though open-source code and years of on-chain operation provide some offsetting transparency. On balance, the unresolved audit and identity questions leave real gaps investors should weigh carefully.
Assessment: Excessive Gharar (High Uncertainty)
Score: 41.7/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
No verifiable named founding team could be established for Tarot; LinkedIn profiles surfaced in research ("Jiatong Hou," "Johannes Thüroff," "Murat Akdeniz," "Sébastien DiMichele") describe unrelated ventures and cannot be tied to this protocol. A tertiary blog vaguely references "experienced professionals" without naming anyone. On the positive side, core contracts are open-source on GitHub, forked from the established Impermax/UniswapV2 design, allowing independent code review. Governance over reserve strategy and growth-fund allocation, however, is described only as "at governance discretion," with no voting mechanism, quorum, or proposal process disclosed.
No confirmed, dated audit of Tarot's own smart contracts was found. A Halborn audit that surfaced in research explicitly covers a different, unrelated project ("Substance Exchange"), and while a CertiK Skynet page for Tarot exists, no audit findings or content were retrievable. This should be stated plainly: an unaudited (or unverifiably audited) protocol that enables leveraged borrowing and lending carries real smart-contract and counterparty uncertainty. The xTAROT staking mechanism also discloses no lock-up period, unstaking delay, or slashing conditions, compounding the disclosure gap.
Maysir — Does Tarot involve gambling or speculation?
Tarot is not designed as a gambling instrument — it is a functional lending and borrowing market — but its built-in leverage feature introduces genuine speculative risk that users can misuse. That misuse potential does not by itself determine the protocol's own ruling, which rests on its designed function.
Assessment: Maysir / Qimar (Gambling)
Score: 42.3/100
Our methodology examines 11 criteria to determine whether Tarot is a gambling instrument or a genuine economic tool.
Tarot's isolated lending pools serve a real economic purpose: passive lenders earn yield on deposited tokens while borrowers use LP collateral to access capital for yield-farming strategies. Historical usage data — roughly $20 million in cross-chain TVL and about $7.5 million in borrowing on Optimism alone at its peak — indicates genuine productive use by market participants rather than pure speculative churn. This functional lending infrastructure, built on an established open-source lending model, distinguishes Tarot's core design from an instrument built solely for wagering or chance-based payout.
Set against this utility, the protocol's built-in ability to leverage yield-farming positions up to 5x is an explicit speculative feature that amplifies both gains and losses for borrowers, and such leverage can be misused for high-risk speculation — though this reflects user choice rather than the protocol's stated purpose. More notable is the sharp decline in actual usage: cumulative protocol revenue of roughly $66,000 and near-zero fees over the last 30 days, alongside 24-hour trading volume around $2,280, suggest that whatever productive lending activity once existed has largely given way to thin, speculative secondary-market trading of the token itself.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 25/100 | No verifiable named founders for the Tarot lending protocol were found; retrieved LinkedIn profiles appear to belong to unrelated individuals/projects, and one source gives only a generic, unnamed team description. |
| Fraud & Scam Risk | 55/100 | No fraud, hack, or rug-pull report tied specifically to Tarot appears in the sources, but this is an absence of evidence rather than a positive confirmation of safety. |
| Use Case Legitimacy | 70/100 | Sources clearly document a functioning multi-chain lending/leveraged-yield-farming protocol with real historical TVL and transaction volume, indicating genuine utility rather than pure hype. |
| Ethical Practices | 20/100 | The protocol's own core design is an interest-charging lending system, which is an inherent feature of its own construction rather than third-party misuse. |
Summary: The actual founding team behind Tarot's lending protocol remains unnamed and unverifiable in the sources, though no direct fraud or rug-pull allegations were found against it, and usage data suggests a genuinely operating DeFi project.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 20/100 | The base protocol's core business is interest-based lending and borrowing, documented explicitly via its interest-rate model and borrow fees. |
| Transaction Fees | 20/100 | Fees include an ongoing interest charge on borrowed tokens plus a fixed borrow fee retained by the protocol, resembling interest extraction rather than burn or neutral fee distribution. |
| Treasury Assets | 20/100 | Protocol reserves are held as bTAROT and tTokens, which are themselves interest-bearing contract positions. |
| Revenue Model | 20/100 | Revenue is generated from borrower interest and performance fees on lending yield, an interest-based revenue model. |
| Transparency | 80/100 | Core smart contracts are open-source on GitHub and detailed documentation covers fees, vaults, and tokenomics. |
| Governance | 40/100 | Governance is referenced only as having "discretion" over reserves and growth allocations, with no detailed voting or decentralization mechanism disclosed. |
| Launch Fairness | 65/100 | Tokens were distributed via a Liquidity Generation Event rather than a private sale, with explicit multi-year vesting schedules for team and growth allocations. |
| Token Distribution | 65/100 | The majority of supply (59%) is allocated to farming rewards distributed over four years, with team allocation capped at 13.3% and vested over the same period. |
| Speculation/Utility Ratio | 35/100 | The protocol's core feature is leveraged yield farming up to 5x, an explicitly documented speculative mechanism layered atop its lending utility. |
Summary: Tarot is an open-source, multi-chain lending and leveraged-yield-farming protocol with a reasonably documented, vested token distribution, but its fee structure and treasury both rely on borrower interest, and its governance process lacks detailed disclosure.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 15/100 | Protocol revenue is sourced from borrower interest and fees, an interest-based (riba) revenue stream. |
| Financial Status | 30/100 | Reported fees/revenue have fallen to near zero in the most recent 30-day window and current trading volume is minimal compared to historical TVL, indicating financial decline. |
| Interest Assessment | 10/100 | The base protocol explicitly charges interest on borrowed tokens according to an on-chain interest-rate model, placing lending/interest at the core of the protocol itself. |
| Audit Quality | 15/100 | No confirmed, named-firm audit report specific to Tarot was located; a retrieved Halborn audit belongs to an unrelated project and a CertiK profile page exists without visible findings. |
Summary: Protocol revenue derives from interest and fees generated by lending activity, current financial activity appears to have declined sharply from its historical peak, and no verifiable third-party security audit specific to Tarot could be located in the sources.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 60/100 | TAROT has documented utility functions (staking into xTAROT, collateralization, influence over reserve/growth allocations) rather than being a purely speculative meme token. |
| Governance Rights | 35/100 | Governance influence is mentioned only in general terms without a documented voting mechanism or explicit holder rights framework. |
| Rewards Distribution | 70/100 | xTAROT rewards are variable, funded by a buyback-and-distribute model tied to protocol fee revenue rather than a fixed guaranteed rate. |
| Speculation Controls | 25/100 | No anti-speculation mechanisms are described, while the protocol actively provides leverage functionality that can amplify speculative use. |
| Asset Backing | 20/100 | Token-related reserve assets (bTAROT, tTokens) represent claims on interest-bearing lending positions rather than tangible halal assets. |
Summary: TAROT is a utility-oriented token with variable, revenue-linked rewards rather than fixed returns, but it lacks explicit anti-speculation design, incorporates leverage as a core feature, and is backed by reserves that are themselves interest-bearing positions.
5. Staking Mechanism
Tarot 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: Tarot is a real, documented DeFi lending and leveraged-yield-farming protocol rather than a meme coin, but its core revenue, treasury, and staking rewards are structurally tied to interest-based lending, which is the central unresolved Shariah concern, compounded by an unverifiable team and the absence of any confirmed audit specific to the protocol.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar