# Full Concept Note

**1. Introduction**&#x20;

This product is a decentralized finance (DeFi) solution developed by Qist that aims to generate halal income through market-making of stablecoin liquidity pools on the Solana blockchain. The model is designed to avoid Riba (interest), Gharar (excessive uncertainty), and other prohibited elements, while maintaining full onchain transparency and operational efficiency.&#x20;

All Shariah-related aspects of the product — including structuring, certification, compliance monitoring, and ongoing review — are under the exclusive oversight of a dedicated Shariah advisor, Dr Farrukh Habib.&#x20;

**2. Investment Structure**&#x20;

Wakalah bil Istithmar (Islamic Investment Agency) – WBI.&#x20;

Investors will enter into a Wakalah bil Istithmar agreement, whereby:&#x20;

* Qist acts as an investment agent (Wakeel) on behalf of investors.&#x20;
* The mandate will specify permissible asset classes, protocols, and the nature of returns (i.e., trading fees, profit sharing, and/or performance incentive).&#x20;
* The Wakeel is entitled to a fee (fixed amount or percentage) for managing the investments.&#x20;
* Any losses are borne by the investors, except in cases of negligence or misconduct by the Wakeel.&#x20;

This contract enables Shariah compliant pooling and deployment of funds while protecting both investor rights and Shariah boundaries.&#x20;

**3. Investment Allocation Strategy**&#x20;

Lulo-Inspired Optimization Mechanism&#x20;

Qist will employ a smart, dynamic allocation model — drawing on the approach of platforms like Lulo — to:&#x20;

* Efficiently distribute funds across selected DEX liquidity pools (e.g., Orca, Raydium, Meteora),&#x20;
* Continuously monitor market depth, trading volume, and fee income potential,&#x20;
* Auto-adjust positions to optimize yield within halal parameters (no lending, no interest-bearing protocols),&#x20;
* Ensure flexibility in scaling and integrating additional halal DEXs or pools as needed.&#x20;

This approach improves capital efficiency and scalability while preserving Shariah compliance.&#x20;

**4. Profit Generation Model**&#x20;

Market-Making via DEX Liquidity Pools&#x20;

Qist will earn halal returns through market-making (liquidity provisioning) on the following Solana-based protocols:&#x20;

* Orca&#x20;
* Raydium&#x20;
* Meteora&#x20;
* Kamino (liquidity section only, excluding interest-based modules)&#x20;

Income is derived exclusively from trading fees generated when other users exchange stablecoins through the pools where Qist provides liquidity.&#x20;

Shariah Justification:&#x20;

* No interest-based returns or lending exposure,&#x20;
* Earnings are from real exchange transactions, representing a fee for liquidity provision,&#x20;
* Contracts are transparent, permissionless, and verifiable onchain.&#x20;

**5. Approved Stablecoins for Deployment**&#x20;

Approved for Use:&#x20;

* USDC (Circle)&#x20;
* USDT (Tether)&#x20;
* PYUSD (PayPal USD)&#x20;
* FDUSD (First Digital USD)&#x20;
* USDG (Global Dollar)&#x20;

These stablecoins have been reviewed and deemed permissible for use based on their structure, reserves, transparency, and intended use in liquidity pools.&#x20;

The approved list may be periodically revised based on structural changes or new information.&#x20;

**6. Profit Equalization Reserve (PER) \[edit: not implemented yet]**

Qist will introduce a Profit Equalization Reserve (PER) — an established mechanism in the traditional Islamic banking industry — to stabilize and smooth out investor returns:&#x20;

* A portion of the profit generated is set aside in the PER before profit distribution.&#x20;
* During periods of lower-than-expected returns, the PER may be partially or fully utilized to enhance payouts and maintain competitiveness.&#x20;
* The creation, utilization, and disclosure of PER will be fully transparent and governed by clear policies.&#x20;

This approach helps manage investor expectations and enhances sustainability without compromising Shariah integrity.&#x20;

**7. Transaction Flow**&#x20;

The end-to-end transaction flow of Qist can be summarized in the following sequential steps:&#x20;

1. Investors deposit funds into the investment pool (smart contract) under WBI.&#x20;
2. The deposited funds are converted into approved halal stablecoins (e.g., USDC, USDT, PYUSD, FDUSD, USDG), depending on the liquidity requirements and strategic allocation targets.&#x20;
3. Qist, acting as the Wakeel (investment agent), allocates the stablecoins into selected halal liquidity pools across decentralized exchanges (DEXs) such as Orca, Raydium, Meteora, Kamino (liquidity section only), and other Shariah approved pools.&#x20;
4. By providing liquidity to these pools, HalalUSD earns fee-based profits (gross profit) through the DEXs' native market-making mechanisms.&#x20;
5. The gross profit generated is then processed in the following structured manner: **\[edit: Qist currently takes no fees]**

* A predefined percentage or fixed portion of the gross profit is allocated to the Profit Equalization Reserve (PER).&#x20;
* Qist deducts its management fee (Wakalah fee), which may be fixed or profit or performance-based, in accordance with the WBI contract.&#x20;
* The remaining profit (net of PER allocation and Wakalah fee) is then distributed to the investors as their halal return on investment.&#x20;

6. In case the actual profit for any given period is lower than market expectations, Qist may choose to partially or fully utilize the PER to enhance the investor payout.&#x20;

**8. Shariah Oversight & Compliance Monitoring**&#x20;

All Shariah matters related to Qist are overseen solely by Dr. Farrukh Habib, who will:&#x20;

* Structure and certify the product based on authentic Shariah standards,&#x20;
* Approve stablecoin assets and DEX protocols for use,&#x20;
* Monitor compliance through ongoing review of updates and integrations,&#x20;
* Maintain certification and documentation for internal and external use.&#x20;

A full Shariah board or committee may not be required under this model.&#x20;

**9. Conclusion**&#x20;

Qist offers a transparent, scalable, and Shariah-compliant DeFi product built around real exchange-based income. By combining:&#x20;

* A Wakalah-based investment model,&#x20;
* Liquidity provisioning of approved stablecoins on selected DEXs,&#x20;
* A Profit Equalization Reserve to support stable returns,&#x20;
* And continuous Shariah supervision,&#x20;

Qist aims to be a credible and sustainable alternative to interest-based yield products — paving the way for ethical DeFi innovation.&#x20;
