Wanted to ask that if staking for a specific amount of api on a validator is halal. For the past few days ive been thinking on staking my SOL coins but the validators provide specific API. When I searched that if staking is halal. i got the answer that yes it was halal. Then i searched that if API is related to interest and I got the answer that yes API generated from staking is like interest. This site also states that SOL is a shariah compliant crypto currency and as well as that staking is halal. Im confused and would appreciate is anyone could help.
I’m glad you clarified but for the benefit of others. API is annual percentage interest, and APY is annual percentage yield.
In traditional finance, API is haram and should be avoided due to the interest obviously. APY or yield, on the other hand, may be better compared to a divided. For instance, you have a halal stock like Tesla, and you earn dividends for being a stock holder.
In simple terms if we apply this to crypto, there isn’t any obvious issue with it, so long as the underlying asset itself is halal and the staking method doesn’t involve riba.
There are of course the details that need to be assessed for every aspect of staking to be deemed halal or not, but as a general rule if we adopt the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) guidelines, we shouldn’t be too far off from what is widely accepted to be shariah-compliant or not.
As a reminder the AAOIFI guidelines for stocks are:
- Interest based debt: should not exceed more than 30% of market cap.
- Interest based deposit; should not exceed 30% of market cap
- Haram activities: should not exceed 5% of total income.
Apply this to Solana staking and see how it comes out.
Personally, I don’t stake as the risk (of loss) and uncertainty (of shariah-compliance) are greater. Besides, when a coin has 4X in the past couple of months, I don’t mind missing out on the 4-8%APY, but that’s just me.
Hope that helps.
Sorry, APY* not API