In this article we do a complete shariah screening of Polkadot to determine if DOT is a halal or haram cryptocurrency. The short answer is yes, Muslims may trade and invest in DOT, but have a read and see how you feel about it first.
What is Polkadot?
The Polkadot network connects private and consortium chains, public and permissionless networks, oracles, and future projects that have yet to be created. Polkadot facilitates an online environment where independent blockchains can transfer information and transact in a trustless manner through the Polkadot relay chain.
Everybody can now build applications, sites, and services on the Polkadot network, where innovators have more freedom to develop new solutions. We want to free society from the barriers that have endured over time, so that its large institutions no longer inhibit innovation.
Further details on Polkadot website
Who Invests In Polkadot?
Arrington XRP Capital
Digital Currency Group
GT Blockchain Investments
NEO Global Capital
The Cabin Capital
Is Polkadot Halal: Is DOT Crypto Coin Halal? We’d Love to Hear Your Thoughts
Sharing the collective wisdom of thousands of Muslim crypto traders and investors.
Polkadot is a network protocol that permits arbitrary data and not just tokens to be transferred across blockchains. It is a multi-chain environment that allows for things like cross-chain registries and cross-computing.
Polkadot can disseminate this data across public, open, permissionless blockchains as well as private, permissioned blockchains.
Such a setup makes it easy to create programs that acquire explicit consent from a private blockchain and uses it on an open blockchain. As an example, a school’s private, restricted certification data can be on a chain that, then connects to third party varification systems elsewhere.
Legitimacy Screening of Polkadot
Gavin Wood is one of the main founders of Ethereum and the inventor of the Solidity programming language. Wood worked on his idea to develop the Polkadot network in 2016 and released the first draft of the white paper for Polkadot in October of that year. This gives us the confidence to confirm that Polkadot has an underlying fundamental value, that can be considered as “Mal” under Islamic rulings. Therefore, as a project it has legitimacy in terms of Shariah.
Is Polkadot project aligned with Islamic values?
Yes, Polkadot: DOT crypto project does align with Islamic values. Collateralization and crowdfunding aim to secure and normalize the interconnection between two parachains, KUSAMA and POLKADOT. We assessed the mechanisms of both auction and crowdfunding within this network and found them to be neutral, as in nothing against Islamic rulings.
You can view the Shariah screening of KUSAMA here for further details.
Financial Screening of Polkadot:
Financial screening ensures that the crypto asset meets the financial criteria for Shariah compliance, if it is an equity based token. Polkadot is not backed by any equity, so there is no financial screening required on this coin/ token. Here we would typically look at things like debt to income ratio to ensure borrowing is limited to a tolerable level.
DOT Token Screening for Shariah Compliance
Token Type: Native
Token Uses: Payments, Vote
The DOT token is Polkadot’s native token and serves a variety of functions including payments for fees, governance over the network, interoperability, and monitoring. When information is passed between two blockchains on the network, DOTs are used to pay for transaction fees. DOT holders are also responsible for verifying significant events by voting on protocol upgrades and fixes.
Participants on the network must act in a manner that is beneficial for the network, using the token created for that purpose. In order to create parachains, a bonding link is needed, which assures incentive alignment in the network.
Based on this Polkadot or DOT token itself is considered halal.
Is Staking Polkadot: DOT Crypto Halal?
DOT owners on the Polkadot network are responsible for maintaining (often expensive) equipment to protect the network, but anyone can stake their DOTs to constitute a validator.
Adding bonding tokens to the DOT network together with a stake arbitration program will increase its attack cost, allow DOT tokenholders to receive newly minted tokens and earn tokens as rewards. Polkadot aims to obtain a 75 stake rate, which, in its first year of operation, return values of 20 to DOT ICO contributors every year. The bonded tokens will be fixed for 12 weeks and will be subject to slashing.
Therefore, the mechanism used by this protocol is in agreement with the Shariah rulings so staking Polkadot is Halal.
What Does The Muslim Crypto Community Think of DOT?
Islamic Finance Guru (IFG) believes Polkadot is a halal cryptocurrency based on its method of Shariah complaince screening.
Marhaba DiFi‘s Shariah governance board also beleives Polkadot: DOT is halal.
Sharlife considers Polkadot: DOT crypto coin as a halal cryptocurrency based on the five areas assessed for Shariah complaince screening.
Crypto Halal Office for Monitoring and Sharia auditing on cryptocurrency markets thinks DOT crypto coin is a Halal digital asset based on its Shariah complaince screening.
Pratical Islamic Finance (PIF) is comfortable with Polkadot as a halal investment
If you know of other academic or scholarly views on this, please add in comments and we will update accordingly. Alternatively, you may want to join our community of Muslims crypto investors and traders, to share, learn and profit from halal digital assets.
Is Polkadot Halal: Is DOT Crypto Coin Halal?
Yes, Polkadot: DOT crypto coin is Halal as it is a decentralized, application-specific network designed to support cross-chain communication capabilities, known as parachains. None of this is against Shariah guidelines so Muslims may invest, trade and stake DOT crypto coin.
We hope you found this useful. Please view our Halal Crypto List to find suitable digital asset investments, without compromising your Islamic faith.