In a bold departure from the widely embraced “HODL” (Hold On for Dear Life) mantra of Bitcoin and Ethereum, the Sidrabank Development Team is introducing a concept in smart contracts designed to encourage the active circulation of funds. The team asserts that their new approach, inspired by the Islamic principle of Zakah, aims to penalize stagnant wealth and promote social welfare through targeted allocations.
Zakah, a fundamental tenet in Islamic finance, is often likened to a financial penalty for holding onto wealth without engaging in productive or charitable endeavors. Sidrabank’s innovative smart contract is set to enforce this principle by imposing a 2.5% fee on the total value stored for one year without movement or investment.
The concept of Zakah is like a penalty for those who store the money for one year without moving or investing it
The encourage circulation in supply more projects and employment
The amount is 2.5% of total stored value (amount not moved for 1 year)
The Zakah is spent for 8…
— SidraChain (@sidrabank) October 21, 2023
The collected Zakah, rather than lining the pockets of the platform, is allocated to eight distinct categories, each serving a specific societal need:
1. The Poor (Fuqara): Supporting those with insufficient means to sustain themselves.
2. The Needy (Masakeen): Aiding individuals facing challenging financial circumstances.
3. Zakah Administrators (Amilina Alayha): Supporting those involved in the collection and fair distribution of Zakah.
4. Sympathy Seekers (Muallafatu Quloobuhum): Reconciling hearts and fostering goodwill towards Islam.
5. Slaves and Captives (Fir-Riqab): Contributing to the liberation of slaves and captives.
6. Debtors (Gharimin): Assisting individuals burdened with debts.
7. In the Cause of Allah (Fi Sabilillah): Supporting various forms of struggle or work for the greater good.
8. The Wayfarer (Ibn as-Sabil): Aiding travelers in need.
Sidrabank envisions this innovative smart contract as a mechanism to challenge the traditional notion of HODLing, encouraging users to actively participate in circulating their wealth, thus fostering economic growth and supporting a range of charitable causes. As the cryptocurrency community grapples with questions of social responsibility, Sidrabank’s initiative stands out as a noteworthy step towards aligning blockchain technology with ethical and humanitarian values.
This revolutionary implementation of Zakah as a smart contract reflects Sidrabank’s commitment to infusing ethical considerations into the fabric of decentralized finance. The team’s motivation goes beyond the mere creation of a digital currency; it seeks to redefine the very nature of financial interactions within the blockchain space.
By penalizing stagnant wealth through the Zakah-based smart contract, Sidrabank aims to create a dynamic ecosystem where funds are continually in motion, fostering economic activity, and channeling resources towards socially responsible causes. This approach contrasts sharply with the HODL strategy, which advocates holding onto assets for the long term with minimal activity.
In an era where environmental concerns and social impact are increasingly crucial aspects of financial systems, Sidrabank’s Zakah-based smart contract introduces a unique blend of financial innovation and social responsibility. The eight categories earmarked for Zakah distribution demonstrate a nuanced understanding of the diverse needs within society, ranging from poverty alleviation to debt relief and support for those working towards the greater good.
As the cryptocurrency community closely watches this bold experiment unfold, questions arise about its potential influence on broader industry practices. Could this innovative approach become a model for other projects seeking to integrate ethical and charitable components into their tokenomics?
Sidrabank’s journey into Zakah-based smart contracts is not only a testament to the adaptability of blockchain technology but also an exploration of how financial innovation can be harnessed to address spocietal challenges. Only time will reveal the full impact of this paradigm shift, but for now, Sidrabank stands as a pioneer in reshaping the narrative of decentralized finance towards a more socially conscious and economically vibrant future. Read Similar Story
