Deenar, the first gold-backed token in the Cosmos ecosystem, went live on HAQQ Network, an ethics-focused blockchain designed for the global Muslim community. This brings physical gold on-chain, opening new liquidity solutions for Cosmos users — and allowing millions of Muslims to invest in this stable asset while complying with Islam’s ethical standards.
What’s the Deal with Gold-Backed Stablecoins?
Cryptocurrency is synonymous with volatility. It has allowed millions to build fortunes while leaving many investors with considerable losses.
For those seeking stability in investment, traditional asset classes like precious metals or real estate have always seemed most attractive. Since ancient times, people have used gold as a store of value and means of exchange — and over the past 100 years, it has proven to be an exemplary investment asset that consistently shows good returns and does not fall victim to macroeconomic cycles.
Image: Deenar
The problem with yellow metal is that it remains inaccessible to most people: it is quite challenging to buy physical gold and then find a proper place to store it. Additionally, the asset suffers from liquidity issues — selling gold can be time-consuming and often incurs high transaction costs.
Gold-backed stablecoins address this problem, merging the stability of gold with the efficiency of blockchain. These stablecoins are backed by physical gold stored in vaults by authorized custodians — owning such digital assets means owning the real precious metal. It’s as simple to buy, sell, and trade gold-backed stablecoins as any other cryptocurrency.
Such a robust use case sparked the creation of several gold stablecoins in 2024. Tether has created aUSDT — a stablecoin backed by XAUt, Tether’s gold token. More recently, Deenar went live on HAQQ Network, becoming the first gold-backed stablecoin in the Cosmos ecosystem.
What is Deenar?
Deenar is the first gold-backed stablecoin on Cosmos, released as HAQQ Network aims to bring the utility of real-world assets (RWA) to this thriving ecosystem. The token is backed by gold in a 1:1 ratio, meaning anyone owning 1 DEEN owns 1 gram of the yellow metal. This literally puts gold on-chain, adding value and new investment opportunities to users and projects on Cosmos.
More broadly, Deenar gives 2 billion Muslims worldwide the opportunity to invest in compliance with Islamic ethical principles. “Deen” denotes the Muslims’ way of life, encompassing beliefs, ethics, and conduct, while “dinar” historically refers to the gold coins used as a store of value in Arabic countries. Merged into Deenar, these concepts represent the philosophy of a stablecoin as a Shariah-compliant halal asset.
Over 800 million Muslims worldwide remain unbanked. In many Asian and African countries, banks often do not follow Shariah, the Islamic canonical law — for example, they allow the earning of interest, which is considered unethical in Islam. As a result, many Muslims avoid traditional financial institutions. In many developing countries, access to banking is also hindered by poor infrastructure, people’s low income, and regulatory issues.
In such conditions, Deenar offers millions of Muslims a safe alternative, allowing them to invest easily and in a Shariah-compliant manner — Deenar has secured a fatwa approval from the Shariah scholars.
How Deenar Works
Deenar is minted by Fiduciary Standard, a licensed stablecoin issuer headquartered in Switzerland. The total supply of DEEN is 12,000 tokens. Each token represents 1 gram of physical 999.9 gold stored in the vaults of Brinks, a global valuables management firm in Dubai.
Anyone who wants to get Deenar needs to create a HAQQ Wallet, connect it to the Sushi decentralized exchange, and then buy DEEN or swap USDT or ISLM for the token. As HAQQ Network was built with scalability in mind, the transaction will settle in seconds, while the gas fee won’t exceed a penny.
Deenar was developed in the ERC-20 standard on the HAQQ Network blockchain, so it is compatible with all HAQQ and Ethereum wallets that support ERC-20 tokens. Additionally, as HAQQ Network is part of the Cosmos ecosystem, DEEN is represented as a Cosmos IBC token — users can transfer it via IBC to any other Cosmos-based blockchain.
Every on-chain address holding DEEN token is associated with a specific gold bar in vaults, and Deenar owners can retrieve its serial number on the project’s website. Moreover, users can redeem their tokens for physical gold in case their amount covers the available bullion. Those who want to claim their gold bar need to email the Deenar team to get the delivery quote and undergo a KYC check.
All DEEN transactions run on the HAQQ blockchain according to smart contract rules, eliminating human error and ensuring transparency and security.
Benefits of Physical Gold On Chain
As the first gold-backed token in the Cosmos ecosystem, Deenar opens various opportunities for industry players.
For developers and users, it is a new DeFi instrument that brings the value of a renowned physical asset on the blockchain. For investors, Deenar represents an opportunity to invest in gold, bypassing the hassle typically associated with its purchase and storage. Moreover, it utilizes the advantage the blockchain offers such that $DEEN can be fractionalized i.e up to six decimal places (i.e., increments as small as 0.000001 gram). This fractionalization makes gold investment more accessible, enabling even small-scale investors to participate and benefit from the stability of gold without needing to purchase a full gram. For Muslims, DEEN opens access to decentralized financial services that are compliant with Islamic ethical principles.
From long-term investment to daily use, Deenar Gold allows a wide range of market participants to benefit from the easy transferability, liquidity, and transparency of gold on-chain.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: https://cryptodaily.co.uk/2024/08/deenar-the-first-gold-backed-token-on-cosmos-goes-live-on-haqq-network