Malaysia-based IBF Net and its newly launched tech arm, IBF DigiLabs have announced a strategic partnership with the UK based Amanah Advisors to develop an Islamic decentralized finance (DeFi) ecosystem. The decentralized nature of  financial products driven by blockchain technology and smart contracts aims to provide for the unique “Islamic value” related expectations of the average faithful. And contrary to the conventional DeFi, which is currently a whirlpool of speculation and gambling, the Islamic DeFi ecosystem would focus entirely on fundamental values created by addressing the pain points of believers as participants in the Islamic economy, according to Dr. Mohammed Obaidullah, founder of IBF Net. 

A product that is currently under development at IBF Digilabs aims to enhance the global market for livestock meant for Qurbani for the annual festival of Eid al-Adha, while seeking to curb the trust-deficit that is usually associated with executing the annual ritual through agents in far-off places. The product involves combining a blockchain based platform with RFID tagging to ensure provenance of the sacrificial animals. The product using Algorand protocol also includes a smart contract based Qurbani-Linked-Tokens (QLTs) for raising funds from contributors/ investors worldwide to scale up and widen the portfolio of livestock that undergo a process of “fattening” and augmenting value. The QLTs are of two kinds – one with features of a fixed-term mudharabah muqayyadah or restricted mudarabah and the second with features of qard-hasan terminating with donation of incremental value to a waqf. The QLTs are being engineered targeting the forthcoming Eid-al-Adha, says Mohammed Alim, CEO of IBF Net. The QLT is the second offering of IBF DigiLabs in the Islamic DeFi space after a highly useful benevolent loan or Qard al-Hasan product.

As Shariah Advisors to IBF Net, the UK-based Amanah Advisors have a significant role to play in developing an ecosystem that is fundamentally different from the existing ones. According to Mufti Faraz Adam. a well-known scholar in the arena of Islamic Fintech and Executive Director of Amanah Advisors,  Islamic DeFi goes one step further by bringing a values-based framework to DeFi applications and enables an entire new narrative for Islamic social finance. Powering waqf, zakat and microfinance on an Islamic DeFi platform adds an entire new dimension to reach, scale & social impact. I am really excited to be part of IBF DigiLabs in this journey to design, build and develop the new universe of Islamic DeFi products which will be the story of this decade and the next, he says.

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IBF DigiLabs is a flagship initiative under IBF Net that focuses on providing smart technology- based solutions for Islamic commercial and social finance and for major sectors of the economy contributing to both the objectives of the Shariah and the United Nations Sustainable Development Goals (SDGs).  IBF DigiLabs’s solutions using emerging technologies are driven by its mission to leverage research and technology to create a halal ecosystem. 

Amanah Advisors is a global Shariah Advisory firm that provides end-to-end Shariah consultancy services for corporates, organisations, businesses, investors and asset managers. The Shariah consultancy covers various sectors such as Islamic finance and banking, Islamic fintech, takaful, Islamic capital markets and investments, zakat, wills and estate planning.

 

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