HCS Score
Red Line Violations
These are absolute prohibitions in Islamic finance. If any red line is triggered, the asset is automatically classified as HARAM.
Riba Exposure
Not an interest-based lending or borrowing protocol
Gambling / Betting
No gambling or betting mechanism
Haram Industry
Not involved in haram industry
Based on Red Line Screening and HCS Scoring.
Haram / Non Compliant
This cryptocurrency is evaluated as Haram for investment and use because the asset demonstrates material Sharia compliance concerns within the CoinStudy HCS framework.
Explanation
This asset shows significant concerns related to Sharia compliance, financial structure, or speculative design.
Reviewed by
CoinStudy Shariah Board
The AI infrastructure boom has created a financing problem that few people outside the industry think about.
Building AI data centers requires enormous capital — servers, GPUs, networking equipment, cooling infrastructure. The companies building this infrastructure need financing. Traditional banks are slow and conservative. Venture capital is equity-based and not suited for hardware financing. The gap between AI infrastructure demand and available financing is real and significant.
USDai was built to bridge that gap — creating a protocol where depositors fund AI hardware loans and earn yield from the interest those loans generate. The concept is genuinely interesting. The target market is genuine. The institutional backing — Coinbase Ventures, DCG, Dragonfly, Framework, NVIDIA Inception — is serious.
But for Muslim investors, the question is never about how interesting the concept is or how prestigious the backers are. It's about the financial structure. And USDai's financial structure is one of the most explicitly interest-based in our analysis series.
We ran USDAI through the full CoinStudy Halal Crypto Standard (HCS) methodology. Here's the complete picture.
USDai fails the CoinStudy HCS Sharia red-line screening. Three red lines are triggered — Riba Exposure, Guaranteed Interest, and Synthetic Interest Products — resulting in an automatic Haram classification with no further scoring.
USDai is the most explicitly interest-based stablecoin in our analysis series. It doesn't hide the interest mechanism behind reserve management or stabilization fees. It advertises it directly — deposit capital, earn yield from AI hardware loans. That transparency about the mechanism is actually valuable for the compliance assessment. It makes the Riba identification immediate and unambiguous.
USDai is a yield-bearing synthetic dollar backed by loans against AI hardware, compute infrastructure, and DePIN assets. The protocol targets 15-25% APR for depositors — yield generated from interest paid by AI hardware borrowers.
The ecosystem includes USDai — the base synthetic dollar token — and sUSDai (staked USDai) which distributes the yield from hardware loan interest directly to holders. There's also CHIP — a governance and utility token — and sCHIP for staked governance participation.
The protocol's own description removes any ambiguity about what it is: "decentralized lending powered by real GPU hardware. Earn yield through collateralized pools." CoinMarketCap describes it as "a yield-bearing synthetic dollar backed by loans against AI hardware, compute, and DePIN assets. Targeting 15-25% APR, it functions like a high-yield bond index tied to income-generating infrastructure equipment."
A high-yield bond index. Income from loans. Targeted APR. This is a lending protocol. The interest income from those loans is the yield. That interest income is Riba.
USDai operates through a lending protocol where depositors provide capital that is then lent to AI hardware operators and DePIN projects needing financing for GPU servers, compute infrastructure, and related equipment.
Borrowers — AI companies needing hardware financing — pledge their physical GPU hardware and compute assets as collateral and receive loans funded by depositor capital. They pay interest on those loans at rates that generate the 7-25% APR that depositors receive.
The stablecoin USDai is issued against this lending pool. The sUSDai product accrues value over time as interest payments from hardware loans flow into the protocol and are distributed to stakers.
The entire economic cycle is: depositors provide capital → capital is lent to AI hardware operators → borrowers pay interest → interest flows back to depositors. This is a lending protocol. Start to finish. The AI hardware collateral makes it novel. The economic structure — lending for interest — makes it haram.
This requires direct address because USDai's marketing makes it sound like something different from conventional stablecoin lending protocols.
The argument goes: USDai is backed by real physical assets — GPUs and compute hardware — that generate real economic value. The yield comes from productive AI infrastructure, not from financial speculation or Treasury bills. Doesn't that make it more legitimate than conventional stablecoins?
The productive nature of the underlying asset doesn't transform a lending-for-interest relationship into a permissible one.
Islamic finance has tools for financing productive assets that don't involve interest. Musharaka — equity partnership where both parties share in profits and losses. Murabaha — cost-plus financing where the financer purchases the asset and sells it to the borrower at a disclosed markup. Ijara — leasing arrangements where the financer owns the asset and charges rent for its use.
What USDai does is none of these. It makes conventional interest-bearing loans against AI hardware collateral. The collateral is hardware. The transaction is a loan with interest. The yield to depositors is interest income from those loans.
Lending to productive enterprises at interest is still Riba. Islamic finance has always distinguished between the productive purpose of a loan — which can be entirely legitimate — and the interest charged on that loan — which is prohibited regardless of how productive the underlying activity is.
USDai explicitly advertises targeted APR rates to depositors — 15-25% according to CoinMarketCap, currently showing 7.10% with an expected 12.34% on the live website.
This is the most direct and explicit guaranteed interest offering we've encountered in our analysis series. Unlike some protocols where the interest-like nature requires explanation, USDai's own marketing makes the financial relationship explicit — deposit capital, receive targeted percentage returns from AI hardware loan interest.
A targeted APR on deposited capital funded by lending activity is guaranteed interest income. This triggers the Guaranteed Interest red line independently of the Riba Exposure failure — two distinct red line violations from the same core mechanism.
USDai's own website says: "Earn yield through collateralized pools." CoinMarketCap describes it as functioning "like a high-yield bond index" targeting "15-25% APR." The protocol is described as "decentralized lending powered by real GPU hardware."
Lending. Yield. APR. These are the financial relationships Islamic finance identifies as Riba. The protocol is not ambiguous about what it is — it's a lending protocol where depositors earn interest income from hardware loans.
This is the clearest and most direct Riba exposure in our stablecoin analysis series. Conventional stablecoins like USDT are haram because their reserves sit in interest-bearing instruments — the interest is indirect. GHO is haram because its creation mechanism involves interest-bearing debt positions — the interest is one step removed. USDai's depositors directly earn interest income from loans. There is no distance between the depositor and the Riba.
Targeting 15-25% APR for depositors is an explicit guaranteed interest product. The percentage is advertised. The source — AI hardware loan interest — is documented. The mechanism — distributing loan interest to depositors — is the core product.
This is not an incidental yield that happens to resemble interest. It is a yield product that is explicitly designed, marketed, and structured as interest income from lending.
The sUSDai product — staked USDai that accrues value over time as interest income flows from hardware loans — is a synthetic interest-bearing financial instrument. You hold sUSDai, your balance grows as loan interest accrues. That growth is interest income represented as a synthetic dollar token.
sUSDai is the most direct synthetic interest product we've encountered — more explicit than aTokens in Aave, more explicit than Compound's cTokens, more explicit than most yield-bearing DeFi instruments. The protocol makes no pretense about what it is.
USDAI fails three red lines. Under the CoinStudy HCS framework a single failure results in automatic Haram classification. Three failures makes this result definitive.
Riba Exposure — ❌ Failed. The protocol is explicitly a lending system where depositors earn interest income from AI hardware loans. This is the definition of interest-based lending — the core mechanism of the prohibited financial relationship.
Guaranteed Interest — ❌ Failed. The protocol explicitly targets and advertises specific APR ranges for depositors — predetermined percentage returns on deposited capital from lending activity. This constitutes guaranteed interest income under Islamic finance principles.
Synthetic Interest Products — ❌ Failed. USDai and sUSDai are synthetic financial instruments whose yield-bearing nature is funded entirely by interest income from hardware loans. They function as synthetic interest-bearing products.
Gambling and Betting — ✅ Passed.
Haram Industry — ✅ Passed.
Three red lines failed. Layer 2 scoring is skipped entirely.
Overall Result: Haram — Red Line Violations
Muslim investors will ask this — because the AI hardware backing genuinely differentiates USDai from conventional stablecoins and creates an intuitive appeal.
The backing doesn't change the compliance outcome. Here's why.
Islamic finance already has mechanisms for financing productive physical assets — hardware, real estate, equipment, machinery — without interest. Murabaha allows Islamic financial institutions to purchase hardware and sell it to the borrower at a markup. Ijara allows them to lease hardware to operators and earn rental income. These are genuinely halal financing structures for real productive assets.
What makes them halal is not the productive asset — it's the financial relationship. In Murabaha, the financer owns the asset and sells it at a known profit. In Ijara, the financer owns the asset and earns rent from its use. In both cases, the financer participates in real economic ownership and risk rather than simply lending money and charging interest.
USDai's borrowers pay interest on loans against hardware collateral. The depositors never own the hardware. They never share in any operational risk. They simply lend capital and receive interest. That financial relationship is Riba regardless of what the borrowers do with the money.
USDai's marketing emphasizes that "independent experts vet every borrower and asset" — a decentralized underwriting process designed to ensure high-quality hardware backs the protocol.
This is a genuine operational safeguard that reduces credit risk. It makes USDai a more professionally managed lending protocol than many DeFi alternatives.
It doesn't change the Islamic finance classification. Careful underwriting of interest-bearing loans is prudent conventional finance. It doesn't transform the interest relationship into something permissible. A well-underwritten interest-bearing loan is still an interest-bearing loan.
USDai represents a genuinely novel stablecoin model — different from every other stablecoin we've analyzed. It's worth mapping where it fits in the broader picture.
Conventional reserve-backed stablecoins (USDT, USDC, PYUSD) — Haram because reserves sit in interest-bearing Treasury securities.
Debt-based stablecoins (DAI, GHO) — Haram because creation mechanism involves interest-bearing collateralized debt positions.
Algorithmic stablecoins (USDD) — Haram because yield generation depends on financial engineering and synthetic interest mechanisms.
USDai — Haram because it is explicitly a lending protocol where depositors earn interest income from AI hardware loans. This is the most direct and explicit interest-bearing stablecoin model in our series.
Different mechanisms. Same prohibited outcome. Every path to maintaining a dollar peg while generating yield has, so far, led through interest-based financial structures.
Before using or investing in any yield-bearing stablecoin, ask yourself:
Does this stablecoin generate yield — and where does that yield come from? If the yield comes from lending activity with interest charges on borrowers — that's Riba regardless of how productive the borrowers' activities are. Does the protocol advertise specific APR targets to depositors? Does holding this token mean you're receiving interest income from lending? Would the financial relationships in this protocol be recognized as Riba by a qualified Islamic scholar — even if the underlying assets are genuinely productive?
For USDai — the protocol's own marketing makes these questions easy to answer.
USDai (USDAI) is classified as Haram / Non-Compliant under the CoinStudy Halal Crypto Standard.
Three Sharia red lines are triggered — Riba Exposure, Guaranteed Interest, and Synthetic Interest Products — resulting in automatic Haram classification. USDai is a yield-bearing synthetic dollar explicitly backed by AI hardware loans. Depositors earn interest income from those loans. The protocol advertises targeted APR returns on deposited capital. The sUSDai product distributes that interest income as an accruing synthetic instrument.
This is the most explicitly interest-based stablecoin model we've analyzed. The concept is innovative. The target market — AI infrastructure financing — is real and important. The institutional backing is serious. None of these factors change the financial relationship at the core of the protocol.
Lending capital to AI hardware operators at interest is Riba — regardless of how productive the hardware is, regardless of how carefully the loans are underwritten, and regardless of how the yield is packaged and presented to depositors.
For Muslim investors — USDai is not a permissible stablecoin alternative. The AI narrative is compelling. The underlying financial structure is the same interest-based lending that Islamic finance prohibits in every other context.
Disclaimer: This analysis is provided for educational and research purposes only. This analysis is based on guidance from CoinStudy's HCS Shariah Board members. CoinStudy does not issue personal fatwas or financial advice. Please consult a qualified Islamic scholar for individual guidance.
Guaranteed Interest
No guaranteed interest obligations
Synthetic Interest Products
No synthetic interest instruments
3 Red Lines Failed
This asset is automatically classified as HARAM.
