$BTC

What is Staking?

Staking is a system used in many cryptocurrency (blockchain) projects to secure the network and participate in transaction verification, where users freeze their cryptocurrencies for a specified period in exchange for rewards. This system is often used as a means to distribute new coins in the project.

- The Sharia Controls for the Concept of Staking

Although staking itself is not problematic from a Sharia perspective, the legal ruling depends on the nature of the project in which it is used and the mechanism for achieving rewards. Here are some controls and precautions:

1. The Nature of the Underlying Project:

- It must be ensured that the cryptocurrency project itself does not contradict Sharia provisions.

- For example, if the project supports prohibited activities such as gambling or usury, then participation in it becomes forbidden.

2. Mechanism for Achieving Rewards:

- Rewards must arise from actual contributions to securing or improving the network.

- If rewards depend on lending coins with interest (as in some DeFi projects), this falls under the forbidden usury.

3. Absence of Gharar or Unauthorized Risks:

- Risks must be clear and acceptable. If there are unauthorized risks, such as losing capital without justification, this is considered a violation.

4. Distinction between Staking and Liquidity Mining: