MRHB DeFi Explained — Faith and Finance Inextricably Intertwined
Of all the things that have been driving this world, money, religion, and power stand to be the most effective ones. These are all intertwined and meet each other at one or the other crossroad and form part of the same web that we all crawl on. The world has seen unimaginable technical strides in the last three decades. It’s safe to say that new world orders are emerging and it’s not easy to keep up to speed. Every facet of our lives is seeing changes that mean older norms have to change and adapt to the newer ones. To give a little perspective, who would have thought Bitcoin would take the world by surprise and turn into digital gold crossing over $65,000 on its way to the moon. Something that was seen as a scam by so many has drawn most of those opposers like the light draws the moth. Cut to the chase, our world, and our lives are in a state of constant change. The recent Covid pandemic taught us acceptance and adaptation for things whose very existence was unknown. So where am I going with all this?
Our religions have been in existence way longer than most of the present-day technologies. The core principles of religion are defined however the application of those in our present-day world is not. Imagine the world 1500 years back to what it is at the moment. It definitely isn’t as glorified as the movies portray it to be. At least, it did not have the same technologies and that means the interpretation of those core principles with respect to the technological advances can have multiple views. There can be different understandings and perceptions. China outright banning Bitcoin or Indonesia’s council of religious leaders forbidding the use of crypto assets as a currency for Muslims means a huge part of the world population is denied access. There can only be two outcomes, either they choose to go against the government and religious leaders or they restrain themselves and miss out on the multitude of opportunities on this road to financial freedom.
But life has never been black or white, grey is what balances it out. It’s never just a yes or no, it’s subjective and open to multiple interpretations.
So we have a third solution a middle ground of sorts where the interpretation of the government and religion can be carefully analyzed to obtain a better understanding of the underlying principles to bring solutions to the disagreements.
Is Marhaba trying to do the same?
Before I answer that I want to elaborate on Shariah and Islamic Law.
Derived from the Quran, Islam’s holy book and the deeds and sayings of Prophet Muhammad (Sunnah and Hadith) Shariah defines the way of life for Muslims. Islamic law is drawn from Shariah. Shariah represents the code of conduct every Muslim should adhere to. It constitutes a broad set of rules that govern not only the day-to-day life of a Muslim but also provide moral direction on how to lead an ethical life. These rules pertain to everything from how to eat, how to offer prayers as well as how to treat others.
In Arabic, Shariah literally means “the clear, well-trodden path to water”. Shariah itself is not the law or the legal system. It is the overall way of Islamic life, one that is based on interpretations of the teachings and sayings of the Prophet as well as the Quran. The sources derived from Quran are considered divine or the word of God by Muslims.
It is important to take note Islamic Law is interpreted from Shariah which like I mentioned is interpreted from the Quran and Prophet’s teachings and actions. This makes Islamic Law rather complex as it can mean different things in different places. Its reliance on human interpretation subjects it to multiple meanings. Moreover, the absence of defined laws coupled with the existence of legal scenarios not directly addressed in the Quran or Prophet’s Hadith has made Muslims at large rely on religious scholars who give rulings as guidance. Guidance that is considered a formal legal ruling is called a fatwa. The one that was issued in Indonesia against crypto assets.
For the purpose of this article, I am going to focus on Islam and Finance. Islamic finance requires compliance with Muslims’ religious beliefs stated in Shariah. The following rules constitute the bedrock of Islamic financial principles -
1. According to Shariah, interest is usury (riba), which is forbidden. Favoring the lender at the expense of the borrower is unjust.
2. Participation in ambiguous or uncertain transactions (gharar) is forbidden.
3. Shariah prohibits speculation (maisir) or gambling in any form.
4. Muslims must abide by the religious obligation of charity tax (zakat).
5. Investment in certain industries (pornography, prostitution, alcohol to name a few) is prohibited owing to their harmful impact on society.
Back to Crypto, Shariah, and Marhaba
When it comes to crypto one is unsure whether it is permissible (Halal) or forbidden (Haram) in Islam. There are two schools of thought on this very issue- one classifying it as Halal because all fiat currencies are speculative to some degree and are permissible in Islam, and the other classifying it as Haram owing to cryptocurrencies’ inherent volatile nature.
The aforementioned dilemma has essentially affected and restricted the participation of Muslims in what is pegged as the future of finance- Crypto and more specifically, Defi.
“The Islamic Finance sector is fast growing with total liquidity/assets reaching around US$3 trillion in value- this currently 20x the Total Value Locked in DeFi. Nearly zero of this Islamic ‘liquidity’ is active or ‘locked’ in the DeFi sector……”
Cryptocurrencies paved the way for financial inclusion by providing an investment and transaction option for all irrespective of their nationality, ethnicity, gender, or class. With an aim to bridge the gap between those who practice faith-based financial activities and the crypto-verse the greatest monetary invention of our time, Marhaba is a Shariah-compliant DeFi ecosystem. Introduced as a Muslim also as opposed to a Muslim-only platform, Marhaba means “welcome” in Arabic.
Marhaba’s inception helped the team address and overcome three issues
1. Faith- A halal, ethical, and faith-compliant platform to serve a Muslim population of over a billion as well as various others who refrained from participating owing to faith-based or ethical concerns.
2. Exclusion- A platform that takes pride in providing equal access to low-cost crypto/DeFi services and wealth/business creation tools and opportunities.
3. Complexity- Provision of a single, simple, and user-friendly platform ensuring user security and comfort.
Understanding the importance of faith-based finance, MRHB incorporates ethics into its ecosystem to deliver a unique Shariah-compliant offering. MRHB is a compelling innovation by a team of visionary and experienced individuals who have taken a dramatically different approach to serve the interests of individuals who were excluded from the crypto verse owing to the aforementioned reasons.
In the following section of the article, I am going to cover the various products that form part of the MRHH DeFi Ecosystem.
The MRHB DeFi Ecosystem
Marhaba’s Shariah-compliant offerings consist of eight products that are listed below. The onus is on the team to do the necessary research and present products/tokens/ projects that are safe and ethical. The herculean task of performing research is no longer the user’s responsibility. The user can invest without worrying about ethical and faith-based compliance. However, the downside to this is — projects with lucrative returns may not be listed on the Marhaba platform owing to their inability to comply with Shariah.
Sahal Wallet
One halal wallet to rule them all.
Sahal is MRHB DeFi Ecosystem’s non-custodial, easy-to-use, secure, and Shariah-compliant wallet. It is a multi-chain wallet that enables the use of a single wallet to interact with multiple blockchains. The Sahal wallet is equipped with a filtering technology that ensures access to only Sharia-compliant assets. Thus, the assets available on Sahal for transacting, storing, etc. are approved by the SGB (Shariah Governing Body) and in compliance with Shariah. The wallet is not mandatory for access to the ecosystem but it serves as a gateway to it, providing efficient means for swapping, accessing, and identifying ethical assets.
Souq NFT
True to its Arabic meaning, Souq is MRHB’s Halal NFT marketplace. It is the first marketplace supporting Islamic art and culture. A no-code marketplace that reduces the complexity associated with uploading and accessing NFTs through the use of smart contract technology. Souq boasts several features such as a uniqueness checker to protect creative works, cross-chain support, Sahal wallet integration for securely storing NFTs, and much more.
Liquidity Harvester
A cross-chain passive income generator for the masses.
A DeFi platform sans a Liquidity pool for the users is unheard of in the crypto verse. However, unlike other Liquidity Pools, the one on MRHB operates on the principle of Mudharabah or profit-sharing which is permissible/halal in Islam. Mudharabah is a profit and loss sharing Islamic contract of partnership in which one party (the Rab al Maal) provides investment capital, and the other (the managing trustee, the Mudharib) contributes with management expertise. In Marhaba’s case both the Mudharib, MRHB platform and the Rab al Maal, as investors/harvesters share the risk of the investment, as the harvesters face financial risk/volatility and MRHB faces the loss/expense/cost of non-financial resources (time and efforts). Under this proposition, users will be able to earn 5–15% APY, which is in sharp contrast to the 1% APR Islamic banks offer to Muslims. Users while retaining access to funds at all times will be able to earn passive income across chains on stablecoins through liquidity mining.
The withdrawal fee for liquidity harvester is set at 10% however, users holding over 5000 MRHB tokens are eligible for a discounted fee of 7%.
Cross Chain DEX Aggregator
An aggregator serving to bring the best rates with minimal slippage and TX fees wherever possible.
Most DEXs have high fees and slippage associated with their use. Addressing the pain points associated with DEXs, MRHB’s solution called the DEXregator provides liquidity across chains with minimum slippage and swapping of Shariah-compliant assets at the lowest possible fees.
The DEXregtor will be a hybrid solution utilizing both on-chain and off-chain solutions to connect and analyse several DEXs across multiple chains all in one platform.
The aforementioned products are part of MRHB’s Phase 1 release. Phase 2 of MRHB entails the launch of the following products
DePhi Protocol
World’s first dedicated protocol for decentralized philanthropy.
Decentralized Philanthropy or DePhi, is a key component of the MRHB DeFi Ecosystem. Aligned with the aim of being ethical and community-focused, MRHB through the creation of DePhi brings one of the most important pillars of Islamic Faith- Zakat (charity) to the crypto verse.
The implementation of this protocol will enable users on the platform to send a portion of their portfolio value in crypto to charities linked to the platform. MRHB will create and utilise a set of liquidity pools through its Liquidity Harvester product. Users who wish to fulfill their voluntary (Tithe & Sadaqat) or faith-based obligations (Zakaat) will be able to deposit funds and generate rewards via trading fees on liquidity pools. These donations shall be recorded on-chain for full transparency. Once the deposit is made, assets would be locked for a period of 60 days before being distributed to Shariah-approved charities pre-selected by the donor.
MRHB itself will set aside 5% of its DAO treasury in these pools to generate wealth for the less fortunate. The benefits extend beyond voluntary or obligatory donation, it is the benevolence that shines through.
To ensure compliance with Shariah, MRHB shall invest in due diligence before it lists any charitable organization on the platform. Based on Zero Knowledge proof, DePhi will have an inbuilt Zakat calculator for the ease of the user.
MRHB DeFi backed by Polygon Technology to build new Decentralised Philanthropy Protocol DePhi in World’s 1st Halal Ecosystem
Launchpad
MRHB’s Launchpad is designed to help the less fortunate with their entrepreneurial journey in a Shariah-compliant manner. Utilizing and leveraging off Quadratic Funding, the launchpad is bot resistant and free from whale manipulation. MRHB aims to extend support to entrepreneurs from around the world to onboard Shariah-approved projects that contribute to a better and more just world.
MRHB token is MRHB Ecosystem’s utility token with practical usage and benefits. It serves the primary purpose of payments within the ecosystem. It is set to launch on BSC with a total supply of 1 billion. The token’s current and future usage, features, and all other rights attached to it are approved by the SGB making it a Shariah-compliant asset. Moreover, it is mandatory for participation in the Launchpad.
Any participation for projects launching on this Launchpad will be subject to holding enough MRHB to qualify for a draw and whitelist space.
Interest-Free Lending and Borrowing
This particular offering is a work in progress.
The idea is to offer interest-free lending and borrowing of crypto assets in a secure, transparent, and decentralized manner. In order to deliver Shariah-compliant options, the team in conjunction with SGB and mathematicians is working on the structure and its implementation. The product will plug into all our existing products and will be accompanied by a mathematical formula to assure the system is always in positive cash flow.
DAO Governance
Marhaba has its eyes set on becoming a fully community-driven product in terms of technical changes and advancements (Read DAO). The MRHB token will empower individuals to participate in governing the platform. Governance will enforce changes on certain products, changes to underlying smart contracts, vote on farming strategies to activate, vote on treasury spending, and more. The team assures Shariah compliance in all proposals and governance-related issues.
As of today, Marhaba has two governance boards to receive guidance for its evolution — one that governs the protocol namely The MRHB Governance Board (MGB), and the other that ensures Sharia compliance namely The Shariah Governance Board (SGB).
The final step (Phase 3) on the current roadmap of MRHB is to migrate to the Polkadot ecosystem as a Parachain with the aim of becoming a truly frictionless platform bridging across a range of networks.
MRHB Token
Conclusion
Islamic Law is fallible as it is a result of human interpretations. Moreover, by its very nature Islamic law is built with the capacity for diversity and development. As times change, interpretations alter and new meanings/laws are derived. However, irrespective of the situation the law is derived from Shariah corroborating its importance in the lives of Muslims.
Islamic financial principles guide Muslims to make honest and just investments. Marhaba recognizes the need to comply with these principles and the multitude of opportunities offered by the world of blockchain technology. One cannot ignore the inexorable growth crypto verse is witnessing however this industry has failed to accommodate and include the needs of the Islamic investor. Muslims with a population of over a billion, owing to the uncertainty associated with the Shariah status of crypto assets have refrained from entering the promising world of DeFi. The Islamic Finance community represents USD 3 trillion in value. Marhaba with its faith-based deliverables provides access to the currently excluded communities. Even if Marhaba succeeds in bringing a small portion of this Shariah-sensitive liquidity into DeFi it will provide a sizeable boost to the overall value of the DeFi sector.
The MRHB DeFi Ecosystem welcomes everyone NOT just Muslims to partake in Shariah-compliant and ethical opportunities/products. MRHB taps in on an essential aspect of Decentralized Finance “financial inclusion”.
The ethical and faith-based MRHB Defi is backed by heavyweights like Blockchain Australia, TASCO, Polygon, Coinsbit India, and others. Moreover, Marhaba’s association with Crypto Climate Accord is testimony to its ethical practices.
Listed below are the most relevant links for a deeper understanding of the platform.
MRHB Website, lite paper, and whitepaper, MRHB on Medium.
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