What is Islamic Coin as it secures another $200 million in funding?
What is Islamic Coin and how did it secure an additional $200M in funding?
Original Title: “What is ‘Islamic Coin’, which recently received 200 million dollars in funding?”
Author: Zhuorui Fu, BlockBeats
BlockBeats note: This article was written in January 2023, when the project had already received over 200 million dirhams (about 400 million yuan) in funding, mainly from Russian investors, and had signed a plan to be listed on Coinbase.
Islam is the world’s second-largest religion, with nearly 2 billion followers, accounting for one-quarter of the world’s population. Muslims make up the majority of the population in 47 countries. Moreover, users in the Middle East have a high ARPU, making it a huge market for business people.
Shariah, Islamic law, is an important part of the Islamic tradition, guiding and governing many aspects of Muslim life around the world, including financial activities. One of the core principles of Islamic finance law is the prohibition of paying or receiving interest, which makes the modern financial system of non-Islamic systems basically non-compliant with Islamic regulations, since interest is one of the core businesses of non-Islamic financial institutions. Islamic-compliant banks generally do not give customers “interest,” but instead share “profits” with them through “profit sharing.”
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According to the Global Islamic Economy Report, the size of the Islamic financial sector was $2.88 trillion in 2020 and is expected to grow to $3.69 trillion by 2024. Two of the four main factors that influence expansion are the rapid growth of the Muslim population and the spread of digital technology and mobile communication.
The “Halal-Compliant Chain”
Islamic finance has been almost unaffected by recent financial crises due to its prohibition of speculative trading and uncertainty, as well as its focus on fairness and risk-sharing, making it a rare example in finance.
Against this backdrop, the United Arab Emirates has given birth to the Islamic Coin project. According to my understanding of non-public information (which may be erroneous), the project has already raised more than 200 million dirhams (about 400 million yuan) in funding, mainly from Russian investors, and has signed an agreement with Coinbase to prepare for listing.
Islamic Coin (ISLM) was founded by the UAE-based private technology company ICNetwork Ltd. The website claims that the team consists of experts in blockchain and ethical finance. One of the early contributors and founders of IC Tech is Andrey Kuznetsov, an engineer from Belarus. ICNetwork Ltd is the developer of the Haqq blockchain.
Haqq (Arabic for truth) blockchain is a PoS network that is primarily compatible with Ethereum and Cosmos, currently supporting Cosmos using Cosmos SDK’s Evmos, and Ethereum support is planned for the future. It meets modern industry requirements with fast finality and high transaction throughput. Haqq is the first decentralized ledger that complies with Islamic law.
Islamic Coin is the ecological currency of Haqq, with a limited total supply, and 10% of each issuance is automatically deposited into Evergreen DAO. Evergreen DAO is a non-profit virtual foundation that is used to further invest in projects that benefit the Muslim community or donate to Islamic charitable organizations. In some cases, Evergreen DAO may also fund activities required for Haqq network operation and development. Key decisions are made by a committee consisting of the top 5 validators of the Haqq blockchain.
Islamic Coin cannot be arbitrarily “printed” and therefore devalued, and there are no interest rates in the system, nor can arbitrary deflation be caused by raising central bank interest rates. The price of Islamic Coin is determined by the market.
Islamic Coin based on Cosmos is cast using Tendermint BFT. After casting is enabled, until 1 trillion coins are cast, each block will produce new ISLM coins and gas fees charged to users. New ISLM tokens and Gas fees are distributed among validators, delegators, and Evergreen DAO:
- 10% goes to Evergreen DAO.
- 1% to 5% is allocated to the block proposer and their delegators.
- The rest is distributed proportionally to all bonded validators and their delegators.
The supply of ISLM is limited to 100 billion tokens. Each interval is 2 years, and the emission rate of ISLM decreases by 5%. Emission will stop 100 years after the first block of the first epoch. In the first interval, the project will mint 4.33% of the coins, followed by 4.12%, and the 9th epoch will mint 2.87%. More than 50% of the total supply will be minted starting from the end of the 9th epoch when the mainnet goes live, including the initial supply. 100% (100 billion ISLM) will be minted when the 50th epoch ends, and no more ISLM will be minted after that.