Concept of Yield in Conventional and Islamic Finance
Yield is the profit or return from an investment over time. In conventional finance, yield often includes interest (riba) or capital gains. In Islamic finance, halal yield must stem from a real economic activity with risk-sharing, such as deferred sale or partnership.
When Is Yield Halal? Conditions of Islamic Finance
Yield is halal if generated from genuine trade or lease, without riba or gharar (excessive uncertainty). The seller must own the asset before sale, and the transaction must be fair with no pre-agreed increase for delayed payment. In Qist, yield comes from exercising the seller's right over the asset and returning any surplus.
When Is Yield Riba? Limits of Prohibition
Yield becomes riba when it is a loan with interest or an increase conditioned on deferment. Any guaranteed return without risk or real activity is riba. Allah says: 'Allah has permitted trade and forbidden riba.' In Qist, no riba exists because contracts are based on real asset sales, not lending.
Yield in Qist: An Islamic DeFi Model
Qist uses a 'deferred sale' model where the seller earns halal yield by selling an asset at a higher deferred price. If the buyer defaults after a 3-day grace period, the seller reclaims the asset. Yield is capped at a 2% fee, and any excess is refunded, ensuring fairness.
How Qist Implements That
On Qist, the seller lists an asset (e.g., NFT) at a cash price. The buyer purchases on credit by paying USDC, with a known deferred price and term. If the buyer defaults, a 3-day grace period applies, then the seller recovers the asset and refunds the buyer after deducting proportional profit. All records are on BaseScan.
Discover Qist: qist.info
Educational content only, not financial advice