Islamic Finance Principles Assessment
Riba — Does Velas involve interest?
Velas does not operate an interest-bearing lending market at the base-protocol level; its native reward mechanism is staking tied to inflationary issuance and transaction/vote fees. This structure is variable and performance-linked rather than a fixed guaranteed coupon, which is the key distinction from riba. For Muslim investors the base protocol itself does not appear to embed interest-based income, though how one uses VLX on top-layer DeFi apps could reintroduce riba concerns outside the scope of the coin itself.
Assessment: Moderate Riba
Score: 57/100
Our methodology examines 10 criteria to evaluate how well Velas avoids interest-based mechanisms.
Velas's protocol-level revenue comes from network transaction and validator vote fees, plus token issuance that funds staking rewards on a declining inflation schedule (starting 8%, stepping down toward a 1.5% floor, currently around 6.48%). No evidence was found of the treasury holding interest-bearing instruments, bonds, or conventional bank deposits generating yield; disclosed income sources are fee-based and inflation-based. No detailed treasury balance sheet was located in available sources, so a complete picture of reserve composition cannot be confirmed, but nothing in the sources points to riba-based income streams.
Staking rewards on Velas are variable, not fixed: they depend on network inflation rate, transaction-fee volume, staking participation levels and validator commission, distributed proportionally each epoch. Quoted APRs range roughly 9.7-11% by one source and 0.8-1.5% monthly by another, an inconsistency across sources but one that still describes a floating, performance-tied yield rather than a guaranteed contractual return. Because rewards derive from real network activity (fees) and a disinflationary issuance curve rather than a promised interest rate on a loaned principal, the mechanism resembles a profit-sharing arrangement more than riba, though validators can face slashing for misbehavior, reinforcing the risk-bearing nature of the return.
Gharar — How much uncertainty does Velas involve?
Velas carries a moderate degree of uncertainty, concentrated in documentation quality and independent verification rather than in the basic function of the token. The founding team is named and traceable, and the code is open source, which reduces ambiguity; the absence of a confirmed manual security audit and inconsistent third-party staking figures increase it. On balance, informed investors can assess Velas's risks, but material gaps remain that warrant caution.
Assessment: Excessive Gharar (High Uncertainty)
Score: 48.3/100
Our methodology examines 15 criteria including team transparency, audit quality, and governance.
Velas was founded in 2019 by Alex Alexandrov and Farkhad Shagulyamov, both named and verifiable through corporate filings, LinkedIn and press coverage; Alexandrov is separately known as CEO of CoinPayments. Velas Network AG is Switzerland-registered in Zug, with additional entities reportedly in the Cayman Islands, Lithuania and Panama, a multi-jurisdictional structure that adds some complexity to oversight. Code is published at github.com/velas as open source. A founding COO departed in 2023 alongside an announced shift toward DAO governance. This is a transparent, identifiable team, not an anonymous or pseudonymous project.
No named, dated manual audit report from a recognized security firm (such as Halborn or Trail of Bits) specific to the Velas chain was found in available sources. The only located review is CertiK's automated Skynet scan, which rates the project's overall security and centralization posture "Poor" despite "Relatively Good" community trust, and separately flags "Public Information Not Found." This absence of independent manual audit confirmation is a genuine gharar concern that should be named plainly rather than minimized; combined with inconsistent staking-minimum and reward figures across sources, terms are not as clearly and consistently disclosed as they should be for full confidence.
Maysir — Does Velas involve gambling or speculation?
Velas does not involve gambling or maysir in its core design; it is infrastructure for hosting decentralized applications, DeFi, NFTs and gaming. Its value derives from network usage and staking participation rather than a zero-sum betting mechanism. The main speculative element lies in secondary-market trading behavior common to most tokens, which is a market-wide phenomenon rather than a feature of Velas itself.
Assessment: Minor Maysir (Incidental)
Score: 70/100
Our methodology examines 11 criteria to determine whether Velas is a gambling instrument or a genuine economic tool.
Velas functions as an EVM-compatible Layer-1 blockchain supporting real dApp deployment, DeFi protocols, NFT marketplaces, metaverse projects and play-to-earn games, with VLX used to pay transaction fees, secure the network via staking, and mint NFTs. This is productive economic infrastructure: developers build and deploy genuine applications, validators secure the chain and earn fee-and-inflation-based rewards, and users transact for real services. This utility-driven design, comparable to other smart-contract platforms, distinguishes Velas from instruments whose primary or sole function is wagering on chance outcomes.
Against this genuine utility must be weighed the reality that VLX, like most liquid Layer-1 tokens, trades actively on secondary markets where short-term speculation can dominate trading volume, particularly following high-visibility events like the 2022 Scuderia Ferrari sponsorship. Such speculative trading by third parties, however, reflects market behavior around the asset rather than a design feature of Velas itself, and per the applicable judgment principle should not be treated as determinative of the coin's own ruling. The underlying protocol's function remains productive network infrastructure, not a game of chance.
The Full 27-Point Screening
1. Legitimacy (4 criteria)
| Criterion | Score | Analysis |
|---|
| Team Transparency | 70/100 | Founders are named, traceable, and have verifiable public track records including a separate payments company they lead. |
| Fraud & Scam Risk | 55/100 | No direct fraud or rug-pull evidence was found, but third-party security scans flag centralization and contract-risk concerns. |
| Use Case Legitimacy | 75/100 | Sources describe a functioning EVM-compatible chain supporting real dApps, DeFi, NFT and gaming use cases beyond pure hype. |
| Ethical Practices | 75/100 | The base protocol is generic blockchain infrastructure with no indication its own design targets a prohibited industry. |
Summary: Velas has a named, traceable founding team with an established business track record, though independent security scans raise some centralization and trust-signal concerns.
2. Project Operations (9 criteria)
| Criterion | Score | Analysis |
|---|
| Core Protocol Business | 75/100 | The base protocol is a general-purpose smart-contract chain, not itself operating in a prohibited sector. |
| Transaction Fees | 60/100 | Sources give conflicting descriptions of fee handling (burn vs validator/vote-fee retention), so the exact fee flow is not fully clear. |
| Treasury Assets | 0/100 (low evidence) | No information on treasury composition or holdings was found in the sources. |
| Revenue Model | 70/100 | Revenue appears to derive from transaction fees and token issuance rather than interest, but no explicit revenue-model statement was found. |
| Transparency | 75/100 | The protocol is described as open source with public code repositories and extensive developer documentation. |
| Governance | 50/100 | Governance runs through DPoS validator/delegator roles with an announced DAO transition, but decision-making detail and decentralisation depth are not established. |
| Launch Fairness | 0/100 (low evidence) | No details on the VLX token's initial launch, pre-mine or fairness of distribution were found. |
| Token Distribution | 0/100 (low evidence) | No breakdown of VLX token allocation among team, investors and public was found in these sources. |
| Speculation/Utility Ratio | 55/100 | The token has documented real utility (fees, staking, dApp use) but marketing and celebrity-sponsorship elements suggest a meaningful speculative component too. |
Summary: Velas is a genuine open-source, EVM-compatible Layer-1 blockchain with real dApp, DeFi, NFT and gaming use cases, but detailed treasury, launch-fairness and token-distribution disclosures could not be established from these sources.
3. Financial Health (4 criteria)
| Criterion | Score | Analysis |
|---|
| Protocol Revenue | 70/100 | Fee- and issuance-based revenue appears non-interest in nature, though no explicit revenue statement was located. |
| Financial Status | 0/100 (low evidence) | No market capitalisation, treasury health or financial-stability data for Velas was found in these sources. |
| Interest Assessment | 70/100 | No evidence of native lending or borrowing at the base-protocol level was found; staking rewards derive from inflation and fees, not interest. |
| Audit Quality | 20/100 | Only an automated CertiK scan rated "Poor" was found; no named, dated manual audit report specific to the Velas chain was located. |
Summary: The base protocol earns fee- and issuance-based revenue with no native lending function, but no named manual security audit or hard financial-stability data could be confirmed.
4. Token Economics (5 criteria)
| Criterion | Score | Analysis |
|---|
| Token Purpose | 70/100 | VLX is documented as a functional utility token used for fees, staking, governance and dApp payments. |
| Governance Rights | 55/100 | DPoS voting gives holders a governance role and a DAO transition was announced, but concrete voting/proposal mechanics are not detailed. |
| Rewards Distribution | 75/100 | Staking rewards are explicitly variable, driven by inflation schedule, fee volume, participation and validator commission rather than a fixed rate. |
| Speculation Controls | 30/100 | Beyond a possible fee-burn, no dedicated anti-speculation mechanisms such as holding limits or retail vesting were found. |
| Asset Backing | 45/100 | The token is not backed by reserve assets; value rests on network utility and adoption per marketing sources. |
Summary: VLX operates as a utility token with variable, inflation- and fee-driven staking rewards rather than fixed returns, though it carries no asset backing and no clearly documented anti-speculation controls.
5. Staking Mechanism (5 criteria)
| Criterion | Score | Analysis |
|---|
| Mechanism Type | 75/100 | Staking is a non-custodial, direct delegation model with documented minimums and processes for delegators and validators. |
| Islamic Contract Classification | 50/100 | Rewards resemble a delegated-agency arrangement, but reliance on fixed-schedule inflation and quoted APR ranges leaves the underlying contract classification unresolved. |
| Rewards Structure | 55/100 | Rewards are formally variable (inflation, fees, participation) but quoted APR ranges suggest a fairly narrow, semi-predictable band rather than clearly performance-linked variability. |
| Documentation | 75/100 | Official documentation covers staking setup, delegation, commission and reward timing in detail. |
| Shariah Alignment | 55/100 | No single decisive prohibited feature such as interest-based lending was identified, but inflation-driven, semi-fixed-looking rewards leave some classification uncertainty unresolved. |
Summary: Velas offers a documented, non-custodial delegated-staking mechanism with variable rewards and slashing risk, though some source inconsistencies remain around minimum stake amounts and precise return figures.
Overall Assessment: Velas presents as a credible, functioning blockchain infrastructure project rather than a meme coin, but gaps in audit verification, treasury transparency and token-distribution data leave several Shariah-relevant questions only partially answered from available sources.
Written by ThanvirFounder, Ex Director S&P Global Energy
Reviewed by Imam Omar SiddiqiShariah Scholar