Baraka
The world's first Shariah-compliant perpetual futures protocol — and a full Islamic financial system.
Zero interest by mathematical proof. A four-layer product stack: perpetuals, everlasting options, perpetual sukuk, mutual takaful insurance, and Islamic credit default swaps — all priced without riba. Built for 1.8 billion Muslims and a $3 trillion Islamic finance industry that today has no access to modern derivative markets.
Where We Are Today — April 2026
Riba-Free by Design
The interest parameter ι is hardcoded to zero. There is no interest term. There is no rate floor. The protocol cannot collect riba — it is structurally impossible.
Transparent by Default
All 13 contracts verified on Arbiscan. Every formula, every parameter, every fatwa stored as an IPFS hash in ShariahGuard.fatwaIPFS. No opaque mechanics, no hidden fees.
Controlled Leverage
Maximum 5× leverage enforced by the ShariahGuard contract. Maysir is mitigated by design. The Shariah board multisig controls this limit — token holders cannot override it.
The Problem
Every major centralised exchange — Binance, Bybit, OKX, dYdX — embeds a fixed interest parameter in their perpetual futures funding formula: I = 0.01%/8h. This is predetermined, non-conditional interest — textbook riba under Islamic law.
1.8 billion Muslims and a $3 trillion Islamic finance industry have no access to perpetual futures markets as a result. Islamic institutions — sovereign wealth funds, takaful operators, Islamic banks — cannot participate. This is not a fringe issue. It is a structural exclusion of the world's largest faith-based financial community from the fastest-growing derivative market in history.
The problem extends far beyond perpetuals. Islamic finance lacks on-chain instruments for capital markets (sukuk bonds), insurance (takaful), and credit protection (CDS). Every conventional financial product that involves interest must be rebuilt from first principles to be permissible under Shariah law. Nobody has done this on-chain. Until now.
The Solution
Ackerer, Hugonnier & Jermann (2025, Mathematical Finance) proved mathematically that perpetual futures converge to spot price using only the premium term — no interest required. When ι = 0 and funding rates are symmetric, f_t = x_t exactly.
F = P + clamp(I − P, −0.05%, +0.05%) ← I = 0.01%/8h is ribaF = P = (mark_price − index_price) / index_priceAhmed, Bhuyan & Islam (2026) applies this proof to Islamic finance law, and then extends it further. Paper II proves that Ackerer's random stopping time θ_t is mathematically equivalent to a credit event — meaning the same κ-rate that prices perpetuals can price sukuk coupon streams, takaful premiums, and credit default swaps. One parameter. Four products. Zero riba.
This is what makes Baraka unique: it is not just a compliance wrapper around conventional DeFi. It is a theoretically new framework for Islamic finance — the first rigorous, on-chain, riba-free alternative to the entire conventional derivatives ecosystem.
The Full Product Stack
13 contracts across 4 layers — a complete Islamic financial system on-chain.
F = (mark−index)/index with ι=0. Symmetric ±75bps circuit breaker. No interest term.
5× leverage cap (immutable constant). AAOIFI asset whitelist. fatwaIPFS registry — links every approved token to its Pinata IPFS fatwa CID.
Dual Chainlink feeds (60/40 weighted), κ-convergence signal, 4-tier risk regime (NORMAL → ELEVATED → HIGH → CRITICAL), KappaAlert event.
Open/close isolated margin positions. BRKX hold-based fee tiers (2.5–5bps). ShariahGuard validates every open.
USDC/PAXG/XAUT custody. No rehypothecation. 24h cooldown. chargeFromFree() for fee collection.
2% maintenance margin. 1% liquidation penalty split 50/50 between InsuranceFund and liquidator.
Protocol solvency backstop. Receives 50% of liquidation penalties + 50% of BRKX trading fees. No yield on idle capital.
48h timelock. BRKX token voting. Shariah board veto cannot be overridden by DAO.
100M fixed supply. ERC20Votes+Permit. Hold-based fee tiers — no lock-up required. Governance rights.
Implements Ackerer (2024) Proposition 6 at ι=0: Π(x, K) = [K^{1−β} / (β₊ − β₋)] × x^β, where β = ½ ± √(¼ + 2κ/σ²). The κ-rate replaces r entirely. This is the actuarially fair pricing engine for all L2/L3/L4 instruments — sukuk profit rates, tabarru premiums, iCDS quarterly payments. 33/33 tests including 1000-run fuzz.
Ijarah-structure perpetual sukuk (Islamic bond). Fixed κ-priced profit rate (riba-free coupon equivalent) paid per block. Embedded everlasting call option at maturity — mudarabah upside sharing. First on-chain sukuk with κ-rate pricing. 16/16 tests.
On-chain takaful (Islamic mutual insurance). Participants donate tabarru contributions — not premiums. No guaranteed return — no riba. Coverage triggers if BTC spot falls below the $40k floor. Wakala 10% operator fee. κ-rate everlasting put option pricing for tabarru calculation. First on-chain Shariah-compliant insurance protocol. 16/16 tests.
Ta'awun (mutual cooperation) credit protection model. Seller deposits notional as collateral. Buyer pays quarterly κ-priced premiums. Credit event = verifiable on-chain oracle trigger (spot ≤ recovery floor) — eliminates gharar of ambiguous default definition. No speculation: buyer must have verifiable exposure. LGD settlement: payout = notional × (1 − recovery rate). First Islamic credit default swap ever deployed on any blockchain. 19/19 tests + 1000-run fuzz.
Why This Can Change the World
Financial inclusion at civilisational scale.
Muslims constitute 25% of the world's population. The Islamic finance prohibition on interest (riba) is not a technicality — it is a deeply held religious conviction that governs financial decision-making for over a billion people. Today, every perpetual futures platform, every on-chain interest-bearing protocol, every conventional DeFi application is off-limits. A devout Muslim in Kuala Lumpur, Jakarta, Karachi, Cairo, or Dubai cannot participate in the most liquid, fastest-growing derivative market in financial history. Baraka removes that barrier — permanently, by mathematical proof, not by waiver.
The global Islamic finance industry manages over $3 trillion in assets across 80+ countries. It is growing at 15–20% annually. Sovereign wealth funds in Saudi Arabia, Malaysia, and the UAE. Islamic banks across Southeast Asia, the Middle East, and North Africa. Takaful operators serving hundreds of millions of policyholders. None of them can participate in DeFi because no DeFi protocol is compliant. We are building the bridge.
Most "Islamic" financial products are retrofitted versions of conventional instruments — legal structures designed to achieve the same economic outcome while technically avoiding riba. Scholars criticise them as "form over substance." Baraka is different. We derived the mathematics from first principles: Ackerer (2025, Mathematical Finance) proved ι=0 is not a setting but a structural necessity for spot convergence. Ahmed, Bhuyan & Islam (2026) then showed that this same κ-parameter prices every Islamic financial instrument — sukuk, takaful, iCDS — without reference to any interest rate. The protocol does not avoid riba. It is structurally incapable of creating riba.
Paper III proposes κ as the first rigorous, observable, riba-free alternative to the conventional interest rate r. Where conventional finance uses the risk-free rate as its pricing anchor — causing every derivative to embed riba — Islamic finance has had no equivalent. The κ-rate is derived directly from on-chain perpetual contract convergence. It is verifiable, real-time, and contains no interest by construction. The κ-yield curve κ(T) = 1/T is the Islamic analog of the conventional yield curve. This is not just a product — it is the foundation of an alternative monetary framework.
Note to Investors
Why we believe this is one of the most asymmetric opportunities in Islamic finance and DeFi.
Islamic finance compliance is codified in AAOIFI standards — a recognised international framework unlike the ambiguous SEC/CFTC crypto landscape. A compliant protocol has legal clarity in 80+ jurisdictions from day one.
6 SSRN working papers + Ackerer (2025, Mathematical Finance) foundation + Dr. Rafiq Bhuyan (80+ publications, Fulbright Scholar, Monarch Business School). The proof of compliance is in the academic literature — not a marketing claim.
No Shariah-certified perpetual futures protocol exists anywhere. We have been building since early 2025 — 13 contracts, 6 published papers, and a live testnet before any competitor has a whitepaper. The mathematical proof, the academic record, and the first-mover network effects compound over time.
Assumes 3bps average fee, 10× annual turnover. Does not include takaful, sukuk, or iCDS revenue streams. Islamic finance AUM projected to reach $6.7T by 2030 (IFSB 2023).
Computational finance. Designed and built all 13 contracts, 177 tests, 6 SSRN papers, the entire simulation framework, and the full-stack application. Arcus Quant Fund founder.
PhD Economics (Concordia). Adjunct Prof at Monarch Business School Switzerland. 80+ peer-reviewed publications. Fulbright Scholar. Former Purcell Chair Prof. Islamic finance expertise + institutional network.
Built on Published Research
Baraka is the implementation layer of published academic research. The theoretical foundation — spot convergence at ι=0 — is from Ackerer, Hugonnier & Jermann (2025) in Mathematical Finance. Our own research programme has produced six SSRN working papers validating the protocol from complementary angles.
First taxonomy of all existing perpetual funding formulas under riba / gharar / maysir. Proves ι=0 is the unique compliant parameterisation. Mathematical proof that premium-only funding satisfies all three Islamic prohibitions.
Shows Ackerer's random stopping time θ_t is mathematically equivalent to a credit event τ, replacing r with κ (no-riba convergence intensity). Foundation for sukuk coupon pricing, takaful premium calculation, and iCDS premium mechanics — all without interest.
Proposes κ as the first rigorous, observable, riba-free alternative to the conventional interest rate. Constructs the κ-yield curve κ(T) = 1/T — the Islamic analog of CIR. Stochastic κ dynamics, closed-form bond pricing via Riccati ODEs. Applications: sukuk benchmark rate, Islamic monetary policy signalling.
κ-priced tabarru contributions for on-chain mutual insurance. Proves the takaful premium formula tabarru = quotePut × coverage / WAD eliminates riba from insurance. 16-scenario simulation of pool stability under BTC volatility.
First rigorous derivation of Islamic CDS pricing at ι=0. Proves s* = κ(1−δ) is the unique compliant CDS spread. Full iCDS contract implementation analysis, riba premium formula, 6-jurisdiction legal analysis, on-chain credit event mechanics.
cadCAD + Reinforcement Learning + Game Theory + Mechanism Design — 4-layer closed-loop IES framework. Theorem: ι=0 is the unique Shariah-compliant Nash Equilibrium. 5 episodes × 720 steps, 0/5 insolvency, MD converged to Pareto-optimal parameters.
Six papers. Three validation layers. Proof → simulation → product. All papers linked from baraka.arcusquantfund.com ↗
Roadmap
What's done, what's next, and how far we still have to go.
- ·13 contracts deployed + verified on Arbitrum Sepolia — 9 core protocol + 4 product stack (EverlastingOption, TakafulPool, PerpetualSukuk, iCDS)
- ·177/177 tests passing — unit + integration + fuzz (1000 runs each) · Slither: 0 HIGH, 0 MEDIUM
- ·Fatwa on-chain: ShariahGuard.fatwaIPFS[USDC] registered on Pinata IPFS (Feb 28 2026)
- ·Full 8-route frontend: baraka.arcusquantfund.com (Trade, Markets, Sukuk, Takaful, Credit, Dashboard, Transparency, Home)
- ·The Graph subgraph v0.0.2 — all 7 data sources indexed, L2/L3/L4 events tracked
- ·Integrated 4-layer simulation: cadCAD + RL + Game Theory + Mechanism Design · 0/5 insolvency across all runs
- ·6 SSRN papers: ι=0 perpetuals · κ-rate credit equivalence · riba-free monetary framework · tabarru pricing · Islamic CDS · integrated simulation framework
- ·κ-convergence risk signal: 4-tier regime (Normal → Critical), on-chain KappaAlert events
- ·Governance token: 100M fixed supply, hold-based fee tiers (5.0 → 2.5 bps), ERC20Votes+Permit
- ·Codebase under private development — available to auditors and institutional partners on request
- ·Submit full protocol to AAOIFI-affiliated Shariah board for formal written fatwa
- ·Replace testnet placeholder IPFS document with signed scholar PDF
- ·External smart contract audit — Certik or OpenZeppelin (code frozen post-audit)
- ·Public testnet campaign: bring 1000 wallets to testnet, collect feedback
- ·Deploy to Arbitrum One: ETH-USDC, PAXG-USDC (gold), XAUT-USDC (gold) markets
- ·Issue first PerpetualSukuk tranche — BTC/USDC, target $500k par value
- ·Open TakafulPool for gold price protection — first on-chain Shariah insurance product
- ·Open first iCDS protection pairs — institutional credit hedging
- ·Bug bounty programme · Institutional Islamic finance outreach
- ·Integration with Islamic neo-banks and neobrokers (target: Malaysia, UAE, Indonesia)
- ·Target $10M TVL and apply for SC Malaysia recognition
- ·Halal equity index markets: DJIM perpetuals, tokenised RWA
- ·Begin Cosmos SDK sovereign chain development — Baraka as a sovereign appchain
- ·On-chain κ-yield curve as Islamic benchmark rate — alternative to LIBOR/SOFR for Islamic institutions
- ·Publish empirical follow-up papers on live protocol performance
- ·Series A fundraise targeting Islamic sovereign wealth funds and Islamic fintech VCs
Economic Simulation Framework
Before deploying a single contract, we built a full economic simulation system to verify protocol safety across thousands of price scenarios. No changes can be made post-deploy — so we tested everything first.
Full state machine simulation of the protocol over 30 days. Every funding payment, liquidation, and collateral move tracked across 20 parallel Monte Carlo runs.
Proves ι=0 is the unique Shariah-compliant Nash Equilibrium. With any ι > 0, longs face a systematic positive transfer to the protocol — textbook riba. With ι=0, net transfer ≈ zero.
A Proximal Policy Optimisation agent learns to trade within Baraka's constraints. Trained agents converge to sub-maximal leverage (2.72× long / 3.28× short) well inside the 5× Shariah cap.
Flash crash (−40%), 48h max funding spiral, oracle attack (+20% mark), 60-day bear market, cascade liquidation. Insurance fund survives all. ι=0 never violated in any scenario.
All four layers running simultaneously: cadCAD state machine feeds RL agent every step, Game Theory solves Nash every 50 steps, Mechanism Design re-optimises parameters at episode boundary. ι=0 net transfer ≈ $0 across all 3,600 simulation steps.
Using scipy.optimize.differential_evolution, we searched the full parameter space for Pareto-optimal protocol settings. Result: Baraka's current parameters sit inside the Pareto-optimal region for solvency + fairness.
Live on Arbitrum Sepolia — 13 Contracts
Deployed Feb 2026 · Product stack deployed Feb 28 2026 · All verified on Arbiscan
Dual-Track Governance
Token holder DAO vote (BRKX) with 48-hour timelock. Controls protocol upgrades, fee parameters, and technical changes. BRKX holders earn reduced trading fees (2.5–5bps) and governance rights.
3-of-5 AAOIFI-certified scholar multisig. Controls asset listing, leverage limits, and compliance parameters. Cannot be overridden by token holders. Annual re-certification required. Every approved asset linked to its fatwa document on-chain via ShariahGuard.fatwaIPFS.
The World's First Islamic Financial System On-Chain
13 contracts. 177 tests. 3 papers. Perpetuals, sukuk, takaful, and credit derivatives — all priced without interest, all on-chain, all live.
Try the testnet. Read the proof. Talk to us if you're interested in the opportunity.