Marhaba is Bringing Islamic Finance to DeFi

Muslim also, not Muslim only..

Written by Guest Contributor, Adam Matthews,

Product Manager of RegTech system, Gecko Governance

Islamic Finance. Many/most of us are familiar with the term. Indeed, the Islamic community makes up almost a quarter of the world’s population. Or, maybe you work in finance. For those of you who aren’t familiar with the term, bear with us. We’re letting you in on something special.

You may well be a seasoned crypto ‘hodler’ or still just dipping your toes in. In any case, we thought you might be interested in learning a little bit about how Shari’ah-compliant finance relates to crypto and the rising trend of DeFi.

In this article, we’ll give you the lowdown on what Shari’ah-compliant DeFi is and why it’s relevant to everyone. Not just the Muslim community.

“Ok, just remind me what DeFi is again..”, I hear you say.

DeFi, or decentralized finance, is a form of finance that is carried out on blockchain without the use of a centralized intermediary, such as a bank or financial brokerage. Financial transactions are executed through the use of smart contracts. In other words, the agreements of a contract are automatically carried out through computer code. Or, if X happens, then Y will happen.

Through DeFi, participants can lend or deposit their cryptocurrencies and potentially receive a higher interest rate than they would by depositing money in a traditional bank. They can also use their cryptocurrencies as collateral and take out a loan in crypto or in their regular fiat currency, such as EUR or USD.

Just so we’re all on the same page, Islamic Finance, or Shari’ah-compliant finance is an alternative to the conventional financial system. Islam provides a code for living. A set of principles and guidance not only for worship but for how people interact with one another. This guidance also covers how businesses and individuals interact with one another for the purpose of financial transactions and what investments are permissible under Shari’ah law.

Characteristics of Shari’ah-compliant finance:

• Interest or usury (Riba) is not permitted under Shari’ah law. Instead, a bank will pay you a share of their profits for lending them the money you deposit.

• Islamic finance bans the participation in financial dealings with excessive risk or uncertainty (Gharar)

• Shari’ah law also prohibits any form of speculation or gambling (Maisir)

When it comes to crypto assets and DeFi, there has been a lot of ambiguity in Islamic economies around which DeFi projects or cryptocurrencies could be considered Shari’ah-compliant. As you can imagine, this has meant a lot of missed opportunities to benefit and take part in the growing trends in the crypto space.

Socially responsible investing

Marhaba, a company based out of Sydney Australia, is building the world’s first Shari’ah-compliant DeFi solution. The name Marhaba translate to ‘Welcome’, and this reflects the company’s vision of a ‘Muslim also, not Muslim only’ platform. The company aims to bridge the gap between the Muslim community and the world of blockchain and digital assets.

Marhaba is being built by a team of dedicated experts in the fields of finance, technology, and Islamic Finance & Theology. The governance of the company’s product development is supervised by the in-house Shari’ah team. The world-class team will screen new and existing digital assets to ensure the platform maintains its Shari’ah-compliant status.

Marhaba’s goal is to promote Participation Finance, where all communities including those from the Islamic community can benefit from financial services based on the principle of shared risk and reward.

So, If you are interested in participating in one of the latest trends in DeFi, or you wish to diversify your crypto portfolio in a socially responsible way, head on over to Marhaba DeFi to find out more.