Fatwa ID: 09490
Answered by Muftiyah Humairah Badshah
Question:
Dear Respected Scholars,
I seek your guidance on whether Polygon Bridged DAI, a $1-pegged stablecoin, is halal for receiving payments in a lawful business. DAI is issued by MakerDAO and backed by over-collateralized cryptocurrencies (e.g., Ethereum, valued at $8 billion), not interest-bearing assets, avoiding riba. It operates on the Polygon blockchain, a secure network with low transaction fees, and maintains a stable $1 value through audited smart contracts.
Questions:
1. Is DAI permissible for receiving payments, given its riba-free collateral?
2. Does the volatility of its cryptocurrency collateral (e.g., Ethereum) constitute excessive gharar?
3. Are there other Sharia concerns for using DAI in lawful transactions?
Details:
– Token: Polygon Bridged DAI
– Source: https://makerdao.com
– Blockchain: Polygon
– Purpose: Payments for lawful services
Please provide your ruling according to the Hanafi school of thought. I appreciate your time and wisdom.
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
It is not permissible to use DAI or Polygon Bridged DAI in transactions.
By default, it is permissible for two parties to transact using known digital assets such as cryptocurrencies provided that they are not so speculative and volatile as to render their value fundamentally uncertain. This is because transactions where one side of the exchange is uncertain would constitute an impermissible gharar transaction.[1] A stablecoin which is successfully and reliably pegged to a fiat currency which has a known and stable value such as USD would therefore not constitute gharar.[2]
However, there is an intrinsic problem in the minting of DAI, and therefore the use of Polygon PoS Bridged DAI which relies on DAI and essentially represents it.[3] To mint DAI, one must deposit (ie: pawn) Ethereum (a widely-used and therefore non-speculative cryptocurrency) for a loan of a certain amount of DAI.[4] This loan of DAI accumulates interest and therefore must be repaid for a greater amount at a later date.[4] This is riba (usury), which is prohibited.[5] While an individual could buy and sell DAI without personally entering into a riba contract, the fact that all DAI fundamentally originates in prohibited interest-based loans would make involving oneself in this interest-based system (and therefore facilitating, encouraging and seeking the minting and liquidation of DAI which creates DAI and gives it its value) prohibited.[6]
Jabir [ra] said that Allah’s Messenger (ﷺ) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said: “They are all equal.” [Sahih Muslim 1598][7]
Since DAI is issued on the Ethereum blockchain, it cannot be directly used on the Polygon PoS network: instead, a person can deposit DAI and receive a directly equivalent amount of a cryptocurrency known as Polygon PoS Bridged DAI, which can be used on the Polygon PoS network and is a ‘wrapper’ for DAI, acting as a direct DAI representative.[3] Due to the fundamental equivalency of Polygon PoS Bridged DAI and DAI, using Polygon PoS Bridged DAI falls under the same ruling as DAI and is therefore also prohibited.
Only Allah ﷻ knows best.
Written by Muftiyah Humairah Badshah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
References:
[1]
الْغَرَرِ فِي الْبَيْعِ «وَنَهَى رَسُولُ اللَّهِ ﷺ عَنْ بَيْعٍ فِيهِ غَرَرٌ» وَبَيَانُ تَمَكُّنِ الْغَرَرِ أَنَّ الْغَرَرَ هُوَ الْخَطَرُ وَفِي هَذَا الْبَيْعِ خَطَرٌ مِنْ وُجُوهٍ: أَحَدُهَا: فِي أَصْلِ الْمَعْقُودِ عَلَيْهِ
Badaai’ Al-Sanaai’ (Daar Al-Kutub Al-‘Ilmiyyah, https://shamela.ws) v.5 p.163
[2]
https://www.investopedia.com/terms/s/stablecoin.asp
[3]
https://iq.wiki/wiki/polygon-pos-bridged-dai
https://www.coingecko.com/en/coins/polygon-pos-bridged-dai-polygon-pos
https://atomicwallet.io/academy/articles/polygon-bridge
[4]
https://truepositiontools.com/crypto/dai-stablecoin-explained
https://www.kraken.com/learn/what-is-dai
[5]
ذَكَرَ الرِّبَا، لِأَنَّ فِي كُلٍّ مِنْهُمَا زِيَادَةً إلَّا أَنَّ تِلْكَ الزِّيَادَةَ حَلَالٌ، وَهَذِهِ حَرَامٌ
…
تَعْرِيفُ رِبَا الْفَضْلِ، لِأَنَّهُ هُوَ الْمُتَبَادَرُ عِنْدَ الْإِطْلَاقِ، وَلِذَا قَالَ فِي الْبَحْرِ فَضْلُ أَحَدِ الْمُتَجَانِسَيْنِ. نَعَمْ هَذَا يُنَاسِبُ تَعْرِيفَ الْكَنْزِ بِقَوْلِهِ فَضْلُ مَالٍ بِلَا عِوَضٍ فِي مُعَاوَضَةِ مَالٍ بِمَالٍ
فَإِنَّ الْأَجَلَ فِي أَحَدِ الْعِوَضَيْنِ فَضْلٌ حُكْمِيٌّ بِلَا عِوَضٍ، وَلَمَّا كَانَ الْأَجَلُ يُقْصَدُ لَهُ زِيَادَةُ الْعِوَضِ كَمَا مَرَّ فِي الْمُرَابَحَةِ صَحَّ وَصْفُهُ بِكَوْنِهِ فَضْلَ مَالٍ حُكْمًا
Radd Al-Muhtaar (Halabi ed., Daar Al-Fikr, https://shamela.ws) v.5 p.168
كُلُّ قَرْضٍ جَرَّ نَفْعًا حَرَامٌ
Radd Al-Muhtaar (Halabi ed., Daar Al-Fikr, https://shamela.ws) v.5 p.166
[6]
وَتَعَاوَنُوا۟ عَلَى ٱلْبِرِّ وَٱلتَّقْوَىٰ ۖ وَلَا تَعَاوَنُوا۟ عَلَى ٱلْإِثْمِ وَٱلْعُدْوَٰنِ ۚ وَٱتَّقُوا۟ ٱللَّهَ ۖ إِنَّ ٱللَّهَ شَدِيدُ ٱلْعِقَابِ
Surah Al-Ma’idah [5:2]
مَاحَرَمَ فِعْلُهُ حَرَمَ طَلْبَهُ
أَيْ يُحْرَمُ طَلَبُ الْحَرَامِ كَمَا يُحْرَمُ فِعْلَهُ
إِذَ الْحَرَامُ لَا يَجُوْزُ فِعْلُهُ ، وَلَا الْأَمْرُ بِفِعْلِهِ ، وَالرِّشْوَةُ كَمَا … يُحْرَمُ أَخْذُهَا وَإِعْطَاؤُهَا يُحْرَمُ أَيْضاً طَلْبُهَا مِنْ غَيْرِهِ، وَكَذَلِكَ شَهَادَةُ الزُّوْرِ وَالْيَمِيْنُ الْكَاذِبَةِ وَالظُّلْمِ وَمَا شَاكِلٌ ذَلِك ، يُحْرَمُ الْأَخْذُ وَالتَّوَسُّطُ وَالطَّلْبُ
Al-Qawaaid Al-Fiqhiyyah (Daar Al-Tirmidy ed.) p.78
إِذَا تَعَارَضَ الْمَانِعُ وَالْمُقْتَضَي يُقَدِّمُ الْمَانِع
الشَرَح : إِذَا كَانَ لِلشَّيْءِ ، أَوِ الْعَمَلِ مَحَاذِيْرٌ تَسْتَلْزِمُ مَنْعُهُ ، وَدَوَاعٍ تَقْتَضِيْ تَسْوِيْغُهُ يُرَجِّحُ مَنْعُهُ لِمَا فِيْهِ مِنْ دَرْءِ
…
الْمَفْسَدَة ، وَدَرْءُ الْمَفْسَدَةِ مُقَدَّمٌ عَلَى جَلْبِ الْمَنَافِعِ ، وَقَدۡ وَرَدَ حَرَصُ الشَّارِعِ عَلَى مَنْعِ الْمَنْهِيَّاتِ ، أَكْثَرُ مِنْ حِرْصِهِ عَلَى تَحْقِيْقِ الْمَأْمُوْرَاتِ ، أَخْرَجَ مُسْلِم حَدِيْث ١٣٣٧ فِي الْحَجِّ عَنۡ أَبِيْ هُرَيْرَةَ وَالْبُخَارِيْ بِرَقْمِ [۷۲۸۸ ] فِي الْإِعْتِصَامِ بِالۡكِتَابِ عَنۡ أَبِي هُرَيۡرَةَ عَنِ النَّبِيِّ هُوَ أَنۡهُ قَالَ : ( فَإِذَا أَمَرْتُكُمْ بِشَيْءٍ فَأْتُوْا مِنْهُ مَا اسْتَطَعْتُمْ ، وَإِذَا نَهَيْتُكُمْ عَنۡ شَيْءٍ فَدَعُوْهُ ) وَعَلَى هَذَا تَمْنَعُ شَرْعاً التِّجَارَةَ بِالۡمُحَرَّمَاتِ مِنْ خَمْرٍ وَمُخَدِّرَاتٍ وَغَيۡرِ ذَلِكَ ، وَلَوْ أَنَّ فِيۡهَا رِبْحاً
Al-Qawaaid Al-Fiqhiyyah (Daar Al-Tirmidy ed.) p.34-35
[7]
عَنْ جَابِرٍ، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ
Sahih Muslim (https://sunnah.com) b.22, ch.19, no.132 (1598)