1inch Coin in View of Shariah
Introduction to 1inch Coin:
Cryptocurrency is nowadays the talk of the town. Among these cryptocurrencies is also Ethereum. 1inch coin is an Ethereum token which is a decentralized exchange (DEX) aggregator helping the user in finding the best trade price against their token. It suggests the most efficient and effective way of trading tokens by going across different pools of a DEX instead of exchanging through a single liquidity pool. Uniwasp, Kyber, Aave, Curve.fi, Arwasp, mStable, Balancer, dforce Swap, Ox API are some of the transaction platform supported by 1inch. Mooniswap is 1inch’s own transaction platform. These DEX’s entire are structured differently so each platform sells the currency at a slightly different price from each other.
Sergez Kunz and Anton Bukove were the creators of 1inch coin. The network was generated in May 2019, however the coin was introduced in December 2020. The exchange trade of 1inch has been increasing since then bringing it to $250 million dollar a day.
How 1inch Coin Works:
Being a non custodial exchange, you will first have to make your own 1inch compatible wallet to use its services. After that, you connect to you wallet and choose the currency in which you want to trade. The 1inch coin will find the best rate for you. It not only finds the best rate but also the cheapest deals as it partners with several other exchanges. Exchange and gas fees are applicable for every transaction you make. The fee varies with every trade. However, there are no fees for depositing or withdrawing money.
Pros and Cons of 1inch Coin:
There is always positive and negative side of everything. Below we will view some Pros and Cons of 1inch coin:
- It posses a good track record of security as no hacking incident or security breaches have been reported.
- 1inch has clear user interface can easily be accessed
- Except the network fees, there is no other fees to be paid
- Being a DEX aggregator, 1inch makes sure to provide the user with high liquidity on their trade.
- CHI Gas tokens provide further cost reductions for it’s users
- As it is decentralised exchange aggregator, it can only be used by users who already own cryptocurrencies
- It is a bit challenging platform for the beginners
- “Infinity Lock” is likely to become the point of attack
How 1inch Coin is Earned:
Some of the ways of earning 1inch coin are given below:
- Providing liquidity to 1inch’s liquidity platform is the main way of earning 1inch tokens. In this process, staking cryptocurrency which other people can use for trade is involved.
- 1inch token can be traded on different exchanges
- You can allow buy the token by opening an account on an exchange which supports 1inch.
Muslims Perspective of 1inch Coin
Investing in cryptocurrency has always been a major fear of Muslims due to the uncertainty of it being Halal in the eye of Allah and secondly, whether it is according to the principles of Shariah. There are strict rules in Islam regarding finance because it considers currency s a commodity which has intrinsic value such as gold, silver or any other. If we talk about 1inch coin which is a defi crypto, then it Halal according to Muslim club because Defi applications regenerate the traditional financial system with the cryptocurrencies.
Does 1inch Coin Fulfill Shariah Principles?
1inch coin provides the users with the most convenient transaction by collecting information from DEX and DeFi platforms. Following are some of the perspectives which prove that 1inch coin fulfills the Shariah Principles:
- Liquidity Mining: DEX users trade against liquidity provider where the token can be swapped at anytime by anybody. Seeing it from Shariah perspective, the crucial part is the relationship of the pool and the liquidity provider. The liquidity provider should have the ability to gain or lose it’s liquidity according to Shariah. The tokens should also be in compliance with Shariah. The liquidity provider should get a percentage share of the pool rather than a specific amount because in this way liquidity provider would become a lender than a shareholder. In this way, there would be no risk to the liquidity provider. This ia a form of Qard(loan) and any such earning would be Riba which would not be Shariah compliant.
- Transaction Fees: Transaction fees vary with every swap depending upon the proportion contributed to the liquidity provider. In this way, the total personal contribution increases with the accumulated fees. The transaction fees earns token for the LP provider. If the same numbers of tokens are guaranteed back instead of a percentage then this would make the transaction fee Riba as the pooling would be lending. Hence going against the Shariah Principles.
- LP Tokens: LP tokens are tradable assets which the provider could sell, transfer or in any other way. According to the Shariah, the token should have Shariah-compliant utility.
It is concluded that 1inch coin is not Haram if used according to the principles of Shariah. It the coin becomes a lending agent rather than a percentage share, then this coin will be considered as Riba which is not legal.