Binance announced a new service called Sharia Earn. This service is considered a solution for users looking for earning methods that comply with Islamic law.
In this article, I will explain everything you need to know about Sharia Earn.

What is Sharia Earn?

It is a service launched by Binance to provide an option for staking digital currencies in exchange for profits in accordance with Islamic law.
Through Sharia Earn, you can achieve profits from what is called Halal Staking, which is done through staking rewards on Proof of Stake networks like Ethereum, BNB Chain, and Solana.

How is Sharia Earn compliant with Islamic law?

In order to provide products aimed at the Islamic community, Binance collaborated with one of the consulting companies in the Islamic finance sector to validate the legality of the Staking product offered by Binance.

This company is called Amanie Advisors, and it has a history in the digital currency sector by providing consultations for projects that wish to offer services compliant with Islamic law. Furthermore, the company has a proven track record of partnerships with many financial and banking institutions.
This company researched Staking products for Binance and worked with them to issue a product that meets the conditions of Islamic law such that:

  • The product should not have usurious benefits

  • The product should not have excessive uncertainty

  • The product should not participate in prohibited activities

Based on that, Halal Staking was launched, which is a staking service for Proof of Stake networks.

What is the difference between Halal Staking and traditional Staking?

To understand the difference between Halal Staking and traditional Staking, you must understand that Staking can be classified into three categories:

First type: Staking for a specific project coin

In this type, the project asks you to stake the coin in exchange for giving you a fixed percentage of the coin as profits.
These profits come from minting new coins, and the goal of this type of staking is to reduce the total supply of the coin in the market.

Second type: Staking on DeFi protocols

In this type, you simply give your coins to the protocol or project, and the project lends them to other users, and in return, you receive profit in the form of interest.

Third type: Staking for Proof of Stake networks

We all know that networks like Ethereum, Solana, and BNB Chain follow a system called Proof of Stake.
The idea is that the auditors responsible for processing the network's transactions stake the network's coins in exchange for securing them.
The more coins the auditor stakes, the greater their capacity to process transactions, and in exchange for processing transactions, they receive rewards that come from transaction fees and others.
Now, Staking on POS networks requires significant technical knowledge, so most people delegate their coin storage to the auditor and share the profits with them.

In this detail, the Halal Staking product is classified as the third type, and for this reason, it is considered compliant with Islamic law according to Amanie Advisors in Islamic finance, because by participating in Staking on Proof of Stake networks, you are participating in the network's auditing and receiving rewards for processing transactions, and you are considered a participant for the auditor, and the profit you receive is from this effort and is your profit due to your participation in the capital in the agency contract.