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Written by Dr Farrukh Habib

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iAUSD is a protocol-native, stable-value digital token issued by InshAllah Network to provide liquidity against staked SOL. It is designed to function as a stable medium of exchange within the ecosystem, while also unlocking utility-based features for users who participate in staking through the platform.

1. What is iAUSD?

iAUSD is technically a utility-based token that maintains a stable value pegged to 1 US Dollar. It is issued by InshAllah Network when a user stakes their SOL tokens through the platform and requests liquidity in the form of an interest-free loan (Qard).

2. How iAUSD Works: The Process

The creation and use of iAUSD follow a simple and transparent on-chain process:

  1. User Stakes SOL: A user deposits their SOL tokens on the platform. These tokens are staked using a Shariah-compliant investment model (Mudharabah).
  2. SOL Is Converted to iASOL: The staked SOL is represented by a yield-bearing token called iASOL. iASOL reflects the user’s share in the staking pool and continuously accumulates rewards.
  3. User Requests Liquidity (Separate Process): The user may participate in the Mudarabah purely for yield, without requesting any loan. However, if the user later wishes to access liquidity, they must bring their iASOL tokens to a separate part of the platform designed for this purpose. There, the iASOL tokens are locked as collateral, and the platform issues a newly minted digital asset, iAUSD, as an interest-free loan (Qardh). iAUSD is not a pre-existing token—it is created on demand and backed by the user’s collateral.
  4. Collateral Management: The user’s iASOL is locked as collateral for the interest-free loan in the form of iAUSD. The iAUSD issued is over-collateralized (by at least 150% of the loaned value) to maintain system solvency. It means the minimum collateral ratio before becoming insolvent is 150% meaning for every iAUSD borrowed there must be iAUSD 1.50 worth of collateral. Once the user receives iAUSD, he remains responsible for maintaining sufficient collateral to avoid liquidation. To release the collateral (iASOL), he must repay the iAUSD loan. Thus, the mechanism preserves a clear Qardh-Rahn structure that is Shariah-compliant.
  5. Redemption and Repayment: Only the original borrower (the wallet that staked and minted iAUSD) can repay the loan by returning iAUSD to the platform. The borrower only has to pay the amount (value of the loan) he borrowed, without paying anything extra or over the value of the loan. Meaning that the borrower pays back the exact amount of iAUSD that he borrowed. Upon repayment, the platform releases the corresponding portion of the user's iASOL (staked SOL). If the borrower does not return iAUSD, the protocol may liquidate part of the collateral to maintain peg stability.

3. Key Features of iAUSD

Feature Description
Interest-Free iAUSD is issued as a result of a Qardh (interest-free loan) request, aligned with Islamic principles
Stable Value Pegged to 1 USD through algorithmic mechanisms
On-Chain Liquidity Can be used as a medium of exchange and traded in the ecosystem
Utility Embedded May carry rights to participate in protocol rewards and other DeFi products (future plans)
Over-Collateralized Backed by real assets (iASOL), ensuring stability and solvency
Redemption Control Only the original minter can redeem iAUSD to reclaim their collateral
Shariah-Based Structure Built on Islamic investment models such as Mudarabah and interest-free Qardh

4. Utility of iAUSD