With the total value of assets surging from $1.76 trillion to $3.96 trillion between 2012 and 2021 and projected to reach $5.9 trillion by 2026, the Islamic finance sector has experienced significant growth.
Market participants are now venturing into the blockchain industry, embracing the potential of this emerging technology and building new, innovative projects while upholding Islamic ethics and values.
Haqq, a community-driven blockchain platform, stands as a promising initiative in this field, dedicated to establishing an ethical and Shariah-compliant financial ecosystem.
Fact One: Scalable and Interoperable With Fast Finality
Haqq is a community-driven blockchain network that allows Muslim users to engage in the cryptocurrency market while adhering to Shariah principles and guidelines. The native currency of this ecosystem, Islamic Coin (ISLM), has received a Fatwa from leading authorities in Islamic Finance, with no objections to the core concepts outlined in the asset’s whitepaper.
Fully compatible with the Ethereum Virtual Machine (EVM), Haqq was designed with a focus on interoperability. The blockchain is built on top of the Cosmos SDK framework, enabling a seamless exchange of values with other Cosmos chains through the Inter-Blockchain Communication Protocol (IBC).
In addition to interoperability, Cosmos SDK offers high throughput via the Tendermint Core, a Byzantine Fault Tolerant (BFT) consensus engine based on the Proof-of-Stake (PoS) mechanism. Tendermint Core can handle thousands of transactions per second (TPS) with fast transaction finality, with a block time of approximately 6 seconds. Moreover, Haqq achieves horizontal scalability through IBC.
With its high scalability and fast transaction finality, Haqq aims to provide convenient access to thousands of decentralized applications (dApps) and Web3 solutions for Islamic community members. As one of the pioneering dApps to launch on the chain, the project recently partnered with the Sushi decentralized exchange (DEX).
Fact Two: The Shariah Oracle
Due to their inherent limitations, blockchains cannot independently access data outside their networks. This is where oracles come in. Acting as intermediaries that bridge the gap between the on-chain and off-chain worlds, they retrieve external information from various sources and reconcile it into a smart contract through an additional layer of verifiability.
In the case of Haqq, this external data includes Halal Certificates, which serve as a means for both Web 2.0 businesses and dApp developers to demonstrate their ethical relevance to Muslim users. To achieve this, they must list their products and services in the Haqq Wallet, which is directly integrated with the platform’s native Shariah Oracle.
The Shariah Oracle, functioning as an on-chain registry of Halal Certificates, ensures that Haqq users exclusively interact with whitelisted Shariah-compliant dApps. While anyone can freely participate in the network and deploy their decentralized applications on top of the blockchain, the network has inbuilt mechanisms to minimize unethical or Haram activity.
Operating on top of the layer one governance mechanism, the Shariah Oracle follows a two-level approach to whitelist new projects. In the first stage, the community, consisting of all Islamic Coin stakers, votes on whether to approve or reject the proposals put forth by dApp developers. Upon acceptance, the smart contract of the approved application is whitelisted in the Haqq Wallet, albeit without a Shariah-compliance mark (yet). This allows users to interact with the dApp at their own risk, with the network displaying a warning message.
Fact Three: The Shariah Board
After successfully clearing the community level, dApp developers can obtain an explicit Shariah-compliance mark through Haqq’s Shariah Board. New projects can request audits conducted solely by the Shariah Board by submitting a separate proposal and paying a service fee to the board in the form of a deposit, which is then directly received by the scholars.
Currently, the Shariah Board of Haqq comprises esteemed scholars in the field, including:
- Sheikh Dr. Nizam Mohammed Saleh Yaquby, an internationally renowned Shariah scholar who serves on over 40 Shariah Advisory Boards.
- Sheikh Dr. Mohamed Zoeir, a professor of Islamic finance with over 45 years of banking experience.
- Sheikh Dr. Essam Khalaf Al-Enezi, a professor of Islamic finance and a faculty member of Shariah and Islamic Studies at the University of Kuwait.
- Sheikh Mohamed Fathiddin Beyanouni, a leading expert in blockchain and Shariah-compliant cryptocurrencies.
- Sheikh Mohamed Abdel Hakim Mohamed, a member of an Islamic finance powerhouse with more than 20 years of experience.
In the future, Haqq aims to empower the Shariah Board to authorize additional auditors for compliance audits. This approach will promote decentralization in the whitelisting process for dApps, reducing potential bottlenecks and ensuring a streamlined procedure.
Connecting Blockchain With the Muslim Community
As a promising participant in the field, Haqq aims to bring the advantages of blockchain and the decentralized world to the Muslim community and has all the capacities to do so. With plans to launch its mainnet in 2023, the platform has already achieved significant milestones on its roadmap.
The project possesses the necessary technical foundation with EVM compatibility, Cosmos SDK, Tendermint Core, and IBC, while the Shariah Oracle mechanism safeguards users and ensures adherence to Shariah principles. Simultaneously, the Fatwa received by Islamic Coin signifies that Haqq’s solution aligns with the values of the Muslim community.