Is Stellar Halal: Is XLM Coin Halal?

In this article we do a complete Shariah screening of Stellar to determine if XLM is a halal or haram cryptocurrency. The short answer is yes, Muslims may trade and invest in XLM, but have a read and see if you are comfortable with our assessment first.

What is Stellar?

Stellar is an open platform for international finance transactions that uses a native cryptocurrency, Stellar Lumens (XLM). The Stellar blockchain permits anyone to create new assets in Stellar and exchange them for upcoming assets via built-in asset exchanges.

Assets issued and redeemed by anchors, who are trusted entities on Stellar, are traded and traded for deposits of the asset with an anchor. Anchors enable ledger-based assets to be exchanged on the Stellar network by leveraging a distributed exchange that holds an order book for every asset pair.

Stellar can issue any form of asset, including stocks, currencies, cryptocurrencies, and others.

Further details on Stellar website

Who Invests In Stellar?

Stripe

The Hive Index

ValueNet Capital

Stellar Technology

Stellar blockchain consensus mechanism that is Stellar Consensus Protocol (SCP), an implementation of the Federated Byzantine Agreement (FBA). The FBA is a fairly recent consensus mechanism pioneered by Ripple. The SCP is the first provable safe FBA blockchain protocol.

An FBA allows nodes to determine which peers they trust based on factors like intrinsic or extrinsic aspects determined by the nodes. FBAs use quorum slices to reach consensus subsets of a quorum that can convince one node to accept the slice. Stellar network nodes can choose themselves which nodes they trust; FBAs make it possible for nodes to determine how the rest of the network considers their decisions.

Stellar disinventivizes 51% attacks by means of financial rewards that reward forthright actors in the network with fees and various prizes. Stellar adds an aspect of trust and reputation for party actors by keeping the network actors as known entities, which incentivizes financial institutions to keep up with the interests of their associates.

A financial service called Anchors plays a significant part in the Stellar network. Anchors maintain a ledger of fiat and XLM balances, allowing exchange between the two. Anchors determine the fees they charge for all Stellar network participants to utilize their services, and users can select which anchor handles their exchanges.

The Stellar blockchain also supports launching native assets comparable to using tokens for the Ethereum network. Stellar aims to allow transactions and direct settlements to take place more quickly, thereby reducing account number expenses.

Legitimacy Screening of Stellar

Jed McCaleb and Joyce Kim’s 2013 split from Ripple was the impetus for the creation of Stellar in 2014. To further expand global financial access, literacy, and inclusion, Jed McCaleb and the Stellar Development Foundation formed the non-profit in 2016.

Patrick Collion, the CEO of Stripe, was a collaborator for the Stellar Development Foundation with Stripe COO Jonathan Sternberg. Stripe invested $3 million in seed funding and received 2 billion Stellar Lumens (XLM) as payment.

This gives us the confidence to confirm that Stellar 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 Stellar project aligned with Islamic values?

Yes, Stellar crypto project does align with Islamic values as it operates as a decentralized exchange and marketplace, tracking ownership of Stellar assets. Platform users can manage buy and sell orders, and also choose and manage their desired settlements. XLM is an integrated currency used to reduce commissions. There is nothing anti Islamic about such a technology. 

Financial Screening of Stellar:

Financial screening ensures that the crypto asset meets the financial criteria for Shariah compliance, if it is an equity based token. Stellar 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.

XLM Token Screening for Shariah Compliance

Token Type: Native

Token Uses: Payments

XLM is utilized by Stellar as the medium of exchange in the network. XLM is also used to cover currency exchange charges to keep spammers from clogging the ecosystem. Every account in Stellar network must hold at least 1 XLM to confirm authenticity. XLM also serves as a bridge currency within the Stellar Distributed Exchange, leveraging its nature as the only asset in the network.

This token has a utility that is permissable under Shariah so Stellar’s XLM token is considered halal.

Is Staking Stellar: XLM Halal?       

There is no mining or staking in this system so lets move on to the academic and scholarly opinions

What Does The Muslim Crypto Community Think of XLM?           

Marhaba DiFi‘s Shariah governance board also beleives Stellar is halal.  

Crypto Halal Office for Monitoring and Sharia auditing on cryptocurrency markets thinks Stellar: XLM coin is a Halal digital asset based on its Shariah complaince screening.

Shariah Advisory Board Bahrain has also officially screened this Stellar for Compliance

Islamic Finance Guru (IFG) believes Stellar: XLM is a halal cryptocurrency based on its method of Shariah complaince screening.

Sharlife considers Stellar: XLM as a halal cryptocurrency based on the five areas assessed for Shariah complaince screening. 

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 Stellar Halal: Is XLM Crypto Coin Halal?

Yes, Stellar: XLM crypto coin is Halal as its platform moves financial resources securely and quickly at minimal cost, using stellar links to connect people, banks, payment processors, and users. This is not against Shariah guidelines so Muslims may invest, trade and stake XLM 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.