Aptos

1.      What is Aptos?

Aptos platform was launched in October 2022, as a Layer-1 blockchain infrastructure designed to host decentralized applications (DApps). It focuses on scalability, security, and efficient performance to support a wide range of blockchain use cases, including financial services, gaming, NFTs, and more. Aptos vision is “to deliver a blockchain that can bring mainstream adoption to Web3 and empower an ecosystem of decentralized applications to solve real-world user problems”.

Aptos platform has its own token APT, the native cryptocurrency of the blockchain. It is a utility token, used within the platform for:

• Transactions: facilitate various payment transactions
• Staking: Helps maintain the Proof-of-Stake (PoS) mechanism by allowing token holders to stake and participate in consensus
• Governance: Empower holders to vote on platform proposals and decisions.

Total APTs are 1 billion tokens.

2.       Types of DApps Aptos Supports:

Aptos supports many types of Apps:

• DeFi
• Gaming
• NFT Tooling [1]
• Tooling [2]
• Stablecoins [3]
• Security
• Marketplace
• Launchpads [4]
• Infra [5]
• Explorers [6]
• Bridges [7]
• Social [8]
• Wallets
• Education
• AI
• Hardware

3.       How does Aptos Operate?

Aptos operates through a modular and flexible blockchain architecture designed to enhance performance, scalability, and user experience. Aptos process can be broken down into the following steps:

1. Transaction Submission: Users submit transactions to the Aptos network. Each transaction is assigned a gas unit price, which helps validators prioritize transactions based on their value.
2. Transaction Dissemination: Transactions are then disseminated across the network. Validators hence receive the transactions on time, which is crucial for maintaining consensus.
3. Consensus and Metadata Ordering: After dissemination, the transactions undergo a consensus process where metadata [9] is ordered. This step is essential for ensuring that all validators agree on the state of the blockchain before executing transactions.
4. Batch Storage and Ledger Certification: Once transactions are executed, they are stored in batches. The ledger is then certified, ensuring that the transactions are valid and immutable. This process enhances the efficiency of storage and retrieval operations.
5. Feedback and Notifications: Clients can receive notifications about the status of their transactions, such as when they have been included in a batch. This feature improves user experience by providing real-time updates.
6. On-Chain Governance: The Aptos network incorporates a governance model where the community can vote on protocol upgrades and other important decisions using the native Aptos token. This ensures that the network evolves according to the needs and preferences of its users.

4.       Proof-of-stake consensus

Aptos’s consensus occurs through a Delegated Proof-of-Stake (DPoS) consensus mechanism. Here is an overview of how this is implemented in Aptos:

Validator Selection: In a PoS system, validators are chosen based on the amount of tokens they have staked. Token holders can lock up (stake) their Aptos tokens with a validator of their choice. The more tokens a validator has staked, the higher their chances of being selected to propose and validate new blocks. This creates an incentive for validators to act honestly, as their financial stake is at risk.

Consensus Voting Weight: Each validator’s voting power in the consensus process is proportional to the amount of stake they hold. The voting weight is crucial for determining the majority needed to reach an agreement on the state of the blockchain.

Proposal and Voting Process: When a new block is proposed, the selected leader validator (chosen based on their stake) creates a block containing transaction metadata and proofs. Other validators then vote on this proposal.

Proof of Availability (PoAv): During the voting process, validators also check for a Proof of Availability (PoAv), which ensures that the proposed transactions are available and have been stored by a sufficient number of honest validators.

Finalization: Once a block receives the required votes, it is finalized and added to the blockchain. The consensus mechanism ensures that all honest validators agree on the state of the blockchain, maintaining its integrity and security.

Rewards Distribution: After the consensus process, validators and their respective stakers receive rewards based on their participation in the validation process. The distribution of rewards is determined by the agreement between validators and their stakers regarding the reward split.

Dynamic Adjustments: The Aptos PoS mechanism can dynamically adjust to the performance of validators. If a validator consistently performs poorly, they may be deemed inactive, affecting their ability to participate in consensus and earn rewards.

5.    Shariah Screening

In this section, we will highlight Shariah’s stance on some activities of the Aptos ecosystem and subsequently draw Shariah’s opinion about the exchange of Aptos. This screening is based on information and data published in:

• Aptos whitepaper 1.0 [10]
• Aptos Tokenomics Overview [11]

To decide whether Aptos is Shariah compliant or not will be taken upon evaluating the following elements:

• The project: Purposes of Aptos
• Is APT accepted to be an asset?
• Relationship between Aptos partners
• Uses of Aptos

5.1 The project: Purpose of Aptos blockchain

Apto’s purpose as stated in its vision and mission are:

 Scalability: Aptos aims to achieve high throughput and low latency to support a large number of transactions per second (TPS), which is essential for mainstream adoption.
Security: The platform incorporates advanced security features to ensure robust protection against common blockchain vulnerabilities.
Reliability: Aptos focuses on consistent performance and resilience to handle real-world demands without sacrificing decentralization.

Those purposes alliances with the Islamic Sharia objectives “مقاصد الشريعة الإسلامية”, which aims at preserving wealth in by the mean of:

• • Creating an asset
  • Maximizing its value
  • Protecting assets from being deflated

Achieving these objectives needs facilitating asset trading securely and reliably.

Therefore, Aptos basic project aligns with Shariah.

5.2 Is APT accepted to be an asset?

An asset in Sharia “is everything of value whose damager is obliged to guarantee or compensate for” [12]. This definition can be applied to APT. Therefore, APT doesn’t violate this first element. It is also seen as currency “نقد” and shall be treated as such and takes into account the provisions of Islamic Shariah for currencies.

5.3 Relationship between Aptos partners

In this section, we need to screen two elements:

1. 1. Relationship between users and validators
   2. Relationship between Validators and Delegators and Staking process

1.    Relationship Between Users and Validators

Users submit their transactions to validators on the Aptos blockchain for processing and approval, following the protocol’s standards. Validators perform this service in return for transaction fees that are previously agreed upon, typically paid in the platform’s native token. This setup can be seen as an Ijara (إجارة) contract, where the fees and services are mutually agreed upon [13], this type of relationship is realized and accepted in Shariah, with the condition that the transactions being processed do not support a prohibited application such interest-based financing, gambling or prohibited entertainment.

2.    Relationship Between Validators and Delegators and Staking Process

By delegating their tokens to validators, APT owners contribute to the validator’s total stake.

Validators’ rewards are then shared with their delegators based on a pre-agreed reward split. If a validator fails to perform well or engages in malicious behavior, it reduces the rewards of the validator and potentially for the delegator. It also can lead to penalties, including slashing (loss of staked tokens) from the validator.

Validators often provide updates on their performance, network status, and any changes in reward structures. Delegators have the flexibility to change their chosen validators at any time, allowing them to respond to changes in performance or trustworthiness. Both delegators and validators share the risks associated with the network, including market volatility and potential penalties for poor performance.

We believe that this relationship is a Paid Wakala (Agency) for doing work وكالة بأجر في العمل, whereby the validator acts as an agent for the token owner, and the agent’s reward is an agreed upon as a percentage of work’s return. This percentage is set by each validator and varies as they compete for delegators. This is valid as per AAOIFI Shariah Standard no. 23.

In this relationship, the tokens staked by the delegator as a collateral are to ensure the trustworthiness of the validator to be given work. They are given the Shariah status of Wadi’a. The Wadi’a is used here as a kind of guarantee for the trustworthiness of the agent (the validator). There is no concern about this idea, except that there should not be rewards just for the locking of tokens. Rewards should be exclusively associated with work performed. As per our review, all rewards in this process are, as of the date of review, associated with the work performed.

5.4. Use cases of APT

APT is used for different purposes, but key usages include gas fees payment on Aptos platform, staking and payment on DApps supported by Aptos. The Shariah compliance of these activities tokens on the APT platform depends significantly on the nature of the applications for which transactions are processed. If a specific application is known to be prohibited under Shariah—such as those involving gambling or interest-based financial activities—then all related transactions, validation, and staking activities would also be considered non-compliant.

When individual applications cannot be evaluated, the general trend and majority of applications on the platform should be reviewed. Currently, there is not enough detailed information available about the types of applications developed on APT. While there is evidence of some prohibited applications, there is no indication that they represent the majority. Therefore, in cases where the nature of applications is unknown, the principle “the default situation in things is allowance (الأصل في الأشياء الإباحة)” is applied, meaning that these applications are considered permissible unless proven otherwise. Future updates to this Shariah assessment may include new evidence and more comprehensive data to clarify the situation.

6. Conclusion

We approve the use of the native token on the Aptos platform, as well as its exchange for platform-related purposes, based on the information provided in the platform’s white paper and tokenomics paper. This is subject to avoiding using it within or for supporting prohibited DApps. Validating prohibited transactions is not allowed. Using APT for delegation staking is allowed but using it for liquidity staking is not allowed. This conclusion is subject to regular reviews, especially concerning the platform’s use cases and applications.

[1] NFT tooling refers to a suite of tools, platforms, and software designed to support the creation, management, and utilization of non-fungible tokens (NFTs). These tools facilitate different aspects of the NFT ecosystem, making it easier for creators, developers, and businesses to engage with NFTs.
[2] Tooling refers to the software tools, frameworks, and utilities that developers and users leverage to build, manage, interact with, and optimize blockchain applications and networks
[3] Stablecoins are a type of cryptocurrency designed to minimize price volatility by pegging their value to a stable asset, often a fiat currency like the U.S. dollar or a commodity such as gold.
[4] Launchpads in the context of cryptocurrencies and blockchain refer to platforms that help new blockchain projects, including NFTs and decentralized applications (DApps), launch their tokens or projects by facilitating their initial funding and exposure. These platforms are commonly known as crypto launchpads or IDO (Initial DEX Offering) platforms.
[5] “Infra” refers to the infrastructure that supports the operation and functionality of the blockchain. This can include a range of backend services and foundational components necessary for the blockchain network to run efficiently and securely.
[6] Explorers are web-based tools or applications that allow users to view and search through blockchain data. These tools provide a user-friendly interface for interacting with and analyzing the blockchain’s public ledger.
[7] Bridges are protocols or applications that enable the transfer of assets and data between different blockchain networks. Bridges play a crucial role in facilitating interoperability.
[8] Social refers to applications and platforms that leverage blockchain technology to create decentralized social networks and community-driven interactions.
[9] Metadata refers to additional information that describes and provides context about the transactions and blocks within the blockchain.
[10] https://aptosfoundation.org/whitepaper/aptos-whitepaper_en.pdf
[11] https://aptosfoundation.org/currents/aptos-tokenomics-overview
[12] Islamic Jurisprudence and Its Proofs, Dr. Wahba El-Zohaily (4 /2877)
[13] Aptos White paper 1.0 p 16