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What is Quant Network and QNT token?
Launched in 2018, Quant is a blockchain network addressing the interoperability challenge problems existing across the blockchain ecosystem. It aims to bridge the gap between various different blockchains using a plug-and-play solution.
Quant’s main product is “Overledger”. Overledger is a universal API[1] connector that ensures secure interoperability between traditional financial systems and blockchain networks. It connects digital money, assets, existing payment rails, banking infrastructures, financial applications, and the blockchain ecosystem. The platform’s developer-friendly APIs allow to efficiently integrate blockchain capabilities into banks’ and corporates’ applications.
The technology allows businesses to create “multi-DLT smart contracts,” or MApps. These are essentially smart contracts that exist across multiple distributed ledgers, thereby allowing DApps to leverage the data and capabilities of multiple platforms to provide functionality that was not possible before.
A derived product is Quant Flow, which is a ready-to-deploy, API-driven programmable digital money platform built with Overledger technology. It enables banks, fintechs and PSPs to innovate and transform their current infrastructure with account automation and payment programmability.
The network primarily serves the financial sector, with a focus on banks and central banks, with footprints in supply chain, healthcare and government uses. Quant’s Overledger technology can be easily integrated into financial infrastructure and the network’s APIs allow banks to integrate blockchain without needing blockchain expertise.
The QNT token is a utility token that serves as the driving force for the Overledger operating system. QNT token serves different functions in the Quant ecosystem, including licensing, transactions and rewards.
Quant’s market cap currently stands at USD 1.6 billion, ranked no. 69 on Coingecko.
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How does Quant work?
Quant itself does not have its own native consensus but instead connects existing blockchains through its Overledger, which acts as a messaging layer above these chains, leveraging their underlying consensus mechanisms to validate transactions.
As is the norm in blockchains, Overledger does not rely on a single server or node but on a network of validators, all of which are running Overledger software and independently verify blockchain states. On their turn, Mapps, which are decentralized applications built on Overledger that can interact with multiple blockchains at once, send transaction requests through Overledger APIs.
While Overledger coordinates multi-step processes (e.g., token swaps, cross-chain payments), developers can create multi-chain smart contracts and workflows that run across chains, with Overledger coordinating execution.
As an example, assume a cross-chain asset transfer workflow. The user locks tokens on Chain A. Overledger verifies the lock event via Chain A’s consensus mechanism, then it generates a cryptographic proof and sends a validated message to Chain B. Chain B, after verifying the proof, releases corresponding tokens to the recipient. Both chains maintain finality through their own consensus mechanisms and Overledger ensures the coordination and validation in between.
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Quant Use Cases
Key use cases of Quant include the following:
- Finance
This is by far the primary use case of Quant. It includes:
- Central Bank Digital Currencies (CBDCs)
- Cross-border payments
- Asset tokenization – including bonds, carbon credits and securities
- Banking infrastructure modernization – connecting legacy infrastructure to blockchain
- Smart contract application in finance – automating contracts, e.g., syndicated loans, payments, etc.
- Cash Flow Management
- Liquidity Management
- Smart Money Accounts
- Tax Optimization
- Supply Chain
Examples include provenance tracking, carbon credits and compliance.
- Healthcare
Quant is used by healthcare providers to create secure, decentralized solutions for the exchange of patient data
- Government
Used for public sector identity and data sharing across institutions.
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Use Cases of QNT token
- Paying for the license to use the Overledger APIs
- Paying for API consumption
- Rewarding developers for building multi-chain apps
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Shariah Screening
In this section, we analyze the Quant ecosystem and the QNT token from a Shariah perspective and subsequently attempt to draw Shariah’s opinion about the exchange and use of QNT token.
QNT’s Shariah compliance will depend on assessing the following elements:
- The project
- The legitimacy
- Is QNT token a currency from a Shariah perspective?
- Underlying Relationships
- Use cases of Quant
- The project
Quant aims at solving the problems of interoperability between blockchains, which enhances efficiency in the blockchain ecosystem. This purpose does not conflict with Shariah.
- The legitimacy
The network was founded by Gilbert Verdian, Colin Paterson and Paolo Tasca. All of whom are distinguished in the blockchain and online technology spaces but the latter two are no longer with the company.
Quant website and documentation do not provide full information about the network’s governance system and the underlying processes and mechanisms.
In addition, Certik Skynet gives the platform, as of date, a modest security score of 77.6, with a BBB rating. The main reason is the significantly low score assigned to the Code Security Pillar (56.8) as well as a modest Fundamental Pillar score (72.5).
Despite internal audits, there’s no record of external audits on Quant’s foundational code.
These considerations make the network at modest levels of legitimacy.
- Underlying relationships
- Relationship between Quant and Users
Users submit their transactions on the Quant network, where these transactions are verified and coordinated across blockchains using Overledger, in return for fees. This relationship is an Ijara إجارة contract between the network and the user, where a service is provided in exchange for a pre-determined fee. This contractual relationship is valid from a Shariah perspective, provided that the transaction is not conducted for a prohibited use case, such as interest-based lending.
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- Relationship between Quant and Validators
As Overledger does not rely on a single server or node but on a variable and expanding network of validators, the relationship between Quant and its validators nodes aligns with the Shariah contract of Ju’ala (جعالة), where both the service and the fees are pre-determined, and the work is not assigned to a specific validator but distributed based on consensus and performance. This arrangement is permissible from a Shariah perspective, subject to the same condition outlined in the previous section regarding the underlying application’s compliance with Shariah.
- Is QNT token a currency from a Shariah perspective?
QNT token is accepted as a medium of exchange on the Quant ecosystem to pay fees and rewards. This gives the token the features of a currency within the Quant network. This relation is based on the force of Particular Custom العرف الخاص in Shariah. This means that the custom within that network made QNT an acceptable currency that is subject to the rules of currencies in Shariah, the most important of which is spot delivery in case of exchange with another currency.
- Quant and QNT Token Use Cases
As outlined in section 3, Quant network has a heavy usage weight in finance, including CBDCs, banking infrastructure modernization, financial assets tokenization and inter-bank process automation through smart contracts. These uses are likely to constitute, presently or in the near future, a majority of the network’s use cases, based on intuitive and qualitative assessment. All over its website, the network markets itself as a financial services optimizer, providing various blockchain-based solutions for financial services to banks and corporates. Therefore, there are high probabilities that the majority of the ecosystem’s uses are Shariah non-compliant.
As the QNT token is the utility token driving the network, its usage and exchange will follow the ruling on the network’s use cases, as the token indirectly empowers those use cases. Besides, the network has modest legitimacy and security levels, suggesting there is a considerable risk in trading the token.
As a result, we deem that exchanging QNT is generally Shariah non-compliant. An exception would be if the token is exchanged by parties who are willing to use it for a specific halal use case. This ruling is based on the Shariah rule of the highest likelihood قاعدة الظن الغالب and the rule of blocking the means to the Haram قاعدة سد الذرائع.
Conclusion of Shariah Opinion
This report has analyzed the QNT token based on the Quant ecosystem purpose, legitimacy, structure and use cases. The QNT token is the Quant’s network native utility token, used for fees payment and rewards.
The report deems exchanging the QNT token Shariah non-compliant. Quant, focusing on conventional financial services, appears to have a majority of prohibited use cases.
Added to this is the modest legitimacy and high risk of the network.
An exception is when the token is exchanged by parties who are willing to use it for a specific halal use case.
QNT is considered as a currency, and thus, whenever exchanged, it must be bound by currency trading rules in Shariah.
[1] A Blockchain API allows applications to interact with and utilize data from a blockchain network. An API acts as an intermediary, enabling communication between two different software systems. It defines a set of rules and protocols that allow applications to request and receive data from a blockchain in a structured manner.
