im just wondering why injective protocol is not sharia compliant
jazak allah
WS. It’s questionable due to the connection to derivatives. Last we checked both Sharlife and Crypto Halal deemed it haram. If you know othewise please let us know. Thanks
A derivative is a financial contract between two or more parties, whose value is derived from an underlying asset, index, or interest rate for example. The underlying asset can be stocks, bonds, commodities or even cryptocurrencies.
Derivatives are used for various purposes, such as:
Hedging: Investors and businesses use derivatives to reduce risks associated with fluctuations in the prices of underlying assets. For example, a farmer might use a derivative contract to lock in a price for their crops, protecting them from a potential drop in prices before harvest.
Speculation: Traders can use derivatives to bet on the future direction of the prices of the underlying assets, aiming to profit from the price movements.
Arbitrage: Investors might use derivatives to take advantage of price differences between different markets or mispricing of related securities.
Common types of financial derivatives include options, futures, forwards, and swaps. Each type has its own terms and conditions, and the value of these contracts will change based on the performance of the underlying asset.
Uncertainty (or Gharar) is the key issue here: Shariah prohibits excessive uncertainty in financial transactions. Some derivatives, especially complex ones, can be highly speculative and involve a high degree of uncertainty about their value and the parties’ obligations. This level of uncertainty could render a derivative haram.
Hope that helps iA
If you dont mind, im quite new to crypro you see. What is derivatives? I was thinking its to do with loans etc, in that case would bnb not be haram?
Jazak allah