What Does Islamic Finance Bring To Defi?

3 min readJun 8, 2021

Crashing the age-old methods of finance comes decentralized finance where no one is governing your finances. The traditional method of finance or centralized finance has its loopholes like a centralized authority governing your funds, lending funds in return for heavy interests, and many more. Decentralized finance was coined to omit the aforementioned loopholes.

Islamic finance is the only type of financing and investing method that comes close to the new-in-market decentralized finance system. In the Islamic financial system, the rules of investing and lending money are interest-free and based on Sharia laws. This pious method of financing brings a change in the field of decentralized finance, wanna know how?

Stay with us till the end while we explain to you how Islamic finance polishes the concept of decentralized finance.

The mechanism of Decentralized Finance

Decentralization is based on the concept of blockchain where the information of the recipient is safe and stored in cloud storage or blocks. It is a distributed ledger of financial information assigned in different blocks across the network. This system is end-to-end encrypted and protected with the help of cryptography. It is a permission-less financial system that offers a platform where your transaction is safe and transparent without any hindrance by a third party.

Blockchain technology in compliance with Islamic financial laws

Islamic financial system is considered to be the most transparent and sacred method of financing in the eyes of investors as well as borrowers. This system is based on laws approved by Islamic scholars that include justice, fairness, equality, and trust in finance. Following the Blockchain, as mentioned above, this method of finance is close to Defi in terms of cryptocurrency or digital currency.

Crypto geeks are in for a massive treat because cryptocurrencies like Caizcoin are here to make you finance with an Islam-compliant blockchain. Yes, you can easily purchase Caiz tokens with the help of fiat currency and be assured of data security and encryption. It has built its blockchain that abides by the Islamic financial laws of security, trust, and transparency. These factors align the Defi with the Sharia principles quite naturally.

Positive aspects of Defi with the help of Islamic finance

Since decentralized finance is already a method of secure financing without the disturbance of any higher authority. In this case, enters the Islamic financial system to strengthen the concept of Defi. With the help of digital currencies like Caizcoin, you not only get to finance according to the laws approved by the almighty but also get a platform where your transaction is safe and encrypted with multiple layers of protection.

Introduction of Islam-compliant finance in blockchain-based banking assures you of equality and fairness during the financing. Since this system is approved by the scholars of the field, so it shoos away doubt of fraudulent activities in the name of finance. The method of decentralized finance as per the holy and pious laws is expected to reach new heights amongst the investors.

One of the best aspects that Islamic finance brings to Defi is not only the assurity of data security, interest-free finance, and reliability but also the fact that it will be open for everyone globally irrespective of religion and culture. This point makes it a well-grounded and flexible concept for everyone.

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