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COTI

COTI (COTI)

AI Assisted Shariah Verdict
Last Update: 7/30/2026
Doubtful

SUMMARY

COTI V2 operates as a privacy-preserving Layer 2 on Ethereum with permissible core utilities like gas and native staking. However, the protocol's Treasury includes an opt-in interest-bearing lending feature, and the exact proportion of protocol revenue derived from this non-compliant source is unknown, resulting in a Doubtful verdict.

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Verdict by Activity

How you can hold and use COTI

Buy & Hold

Doubtful

While the core Layer 2 network is permissible, the protocol operates an interest-bearing lending feature within its Treasury, and the exact share of revenue derived from this activity is unknown.

Native Network Staking

Optional
Halal

Users run nodes or delegate to secure the L2 network and earn a share of transaction fees and emissions, which is a permissible payment for validation services.

COTI Treasury (Standard)

Optional
Halal

Depositors mint tCOTI to earn a share of ecosystem fees and liquidation bounties, which are permissible revenue sources.

Treasury Lending

Optional
Haram

The Treasury allows depositors to lend COTI to other users to earn interest rates, which constitutes Riba.

Shariah Component Breakdown

Shariah Analysis

Infrastructure — where it runs

Passed

COTI V2 operates as a Layer 2 on Ethereum, which is a neutral, general-purpose network.

Application — what it does

Caution

The core business is a privacy-preserving Layer 2 network, but the protocol also operates an interest-bearing lending product within its Treasury.

Asset — what you own

Passed

The primary utility is paying for gas and native PoS network-security staking, which are permissible; the interest-bearing lending feature is an opt-in secondary mechanism.

Property Status (Māl)

Passed

The token is a native protocol position with confirmed lawful utility (gas, staking), ascertainable supply, and established adoption.

Revenue Purity

Caution

The protocol generates permissible revenue from gas and standard treasury fees, but also earns interest from Treasury lending; the exact share of this non-compliant revenue is unknown.

Legitimacy & Security

social presence

Caution

Not covered by research.

project audits

Passed

Audit and security information was found for the project.

whitepaper

Passed

Official whitepapers and tokenomics documentation are available and confirm the V2 architecture and Treasury mechanics.

Team & Ecosystem

team background

Caution

Not covered by research.

Detailed Shariah Report

Overview

COTI V2 is a privacy-preserving Layer 2 network built on Ethereum that enables confidential smart contracts and transactions. The native COTI token is used to pay for transaction gas fees, stake in decentralized nodes to secure the network, and participate in the protocol's Treasury for governance and rewards.

Why This Verdict

The Shariah compliance of a crypto asset is evaluated across three layers: the underlying infrastructure, the application itself, and the asset's qualification as recognized property. COTI passes the infrastructure layer as it operates on Ethereum, a neutral, general-purpose network. It also qualifies as recognized digital property (Mal) because it is a native protocol position with a confirmed lawful utility, an ascertainable supply, and established adoption. However, the application layer presents significant compliance issues, resulting in a Doubtful verdict for simply buying and holding the token. While the core Layer 2 network generates permissible revenue from gas fees, the protocol also operates an interest-bearing lending feature within its Treasury. Because the exact proportion of protocol revenue derived from this non-compliant lending activity is unknown, holding the token is classified as Doubtful. Beyond holding, the protocol offers several opt-in mechanisms with distinct rulings. Native network staking and standard COTI Treasury deposits (minting tCOTI) are Halal, as they compensate users for securing the network or provide a share of permissible ecosystem and liquidation fees. Conversely, the Treasury Lending feature is strictly Haram, as it allows users to lend COTI to earn interest, which constitutes Riba.

Permissible Aspects

  • The core utility of the COTI token for paying network transaction (gas) fees.
  • Native network staking, where users run nodes or delegate tokens to secure the Layer 2 network in exchange for a share of transaction fees and emissions.
  • Standard deposits into the COTI Treasury to mint tCOTI, which earns a share of permissible ecosystem fees and liquidation bounties.
  • The underlying infrastructure, as the protocol operates on Ethereum, a neutral and general-purpose blockchain.

Points of Caution

  • !The protocol operates an opt-in Treasury Lending feature where depositors lend COTI to earn interest, which is a direct violation of Shariah principles against Riba.
  • !The exact breakdown of protocol revenue between permissible sources (gas and standard treasury fees) and non-compliant sources (lending interest) is not publicly detailed, making it impossible to verify if the Haram revenue falls below acceptable thresholds.
  • !The composition and banking arrangements of the project's off-chain treasury are not publicly disclosed, meaning there is potential exposure to conventional interest-bearing accounts.

Purification Note

Because the exact share of the protocol's revenue derived from the Haram Treasury lending feature is unknown, a precise purification calculation for holding the token cannot be determined. If an investor chooses to hold the token despite the Doubtful verdict, they must exercise extreme caution and independently estimate a purification rate for any ecosystem rewards received. Investors must strictly avoid opting into the Treasury Lending feature, as any interest earned from it is Riba and must be entirely donated to charity without expectation of spiritual reward.

BOTTOM LINE

COTI V2 offers a legitimate privacy-preserving Layer 2 network with permissible core utilities like gas payments and network staking. However, the protocol's Treasury includes an interest-bearing lending feature, and the exact amount of revenue the protocol derives from this Riba-based activity is unknown. Consequently, holding the token is considered Doubtful, and investors should consult a qualified Shariah scholar before proceeding.

How this verdict was reached

This is not an opinion issued by ShariaQuant. It is the output of a documented screening methodology applied to researched facts about COTI (COTI), and every row above states the specific evidence that drove it — so the reasoning can be examined rather than taken on trust.

The framework screens three layers — the infrastructure an asset runs on, the application it serves, and the asset itself — and separately tests whether the token qualifies as recognised property (māl): that it presently exists, has an ascertainable supply, can be held and transferred, and carries a genuine lawful use. A failure at any single layer fails the asset.

Revenue-purity thresholds follow the AAOIFI screening standard: non-compliant income below 5% of revenue is tolerated and purified, while 5% or above fails the screen.

AAOIFI has not reviewed, approved or endorsed this report or ShariaQuant, and no scholar named in our methodology has reviewed this individual verdict. This is analysis, not a fatwa — final religious authority rests with a qualified scholar.