Wakaf is the Arabic word for an endowment to a charitable cause contributed significantly to the global socioeconomic landscape in the past, especially in eradicating poverty.

In the past, waqf played an important role in the development of the socio-economic landscape of Muslims especially in the quest to eradicate poverty. But in modern times, the function of waqf seems to be increasing. There is mismanagement in terms of management so that the wakaf’s role does not efficiently translate into endowment, even though the global waqf assets are estimated at US$ 1 trillion.


Dr Farrukh Habib, Researcher at International Shari’ah Research Academy

According to Dr Farrukh Habib, researcher at International Shari’ah Research Academy for Islamic Finance said that wakaf has not had a compelling impact on improving the welfare of the people in modern times. Wakaf institutions face so many challenges which are :

  • The lack of data [on the value of these endowments]. Although there have been some efforts by organisations such as the Islamic Development Bank, it was only available on a country basis and not on a global level.
  • The problems with transparency and accountability. There are so many wakaf assets, but no one knows what is going on with all of them.
  • Many of these assets are run by individuals who do not have the knowledge, causing their leadership to have many inefficiencies. There are also regulatory and legal limitations in some nations, such as allowing people to set up a trust, but not a wakaf institution.


In an attempt to increase the potential of utilising wakaf contributions for the greater good, a Singapore-based financial technology company Finterra Pte Ltd has launched Endowment Chain, a wakaf solution in the form of blockchain .This digital solution will create smart contracts that are subject to a specific wakaf project.

Finterra CEO Hamid Rashid says the blockchain solution will create smart contracts that will be tied to specific wakaf projects in the hope of providing a more efficient way to raise funds as well as manage and transfer the ownership of wakaf contributions. “We aim to develop a platform that is socially, economically and morally viable for the global development of wakaf assets that also complies with government regulations,” he adds.

  • Blockchain is a digital ledger that holds almost any kind of information that can be stored in a digital format, be it transactions, contracts, assets or identities. Entries in the digital ledger are permanent, transparent and searchable.
  • It will also be incorruptible and unalterable. The copies of the ledger are then distributed to the community, also known as nodes. If the nodes do not agree on any of the changes, then they cannot be made. Additionally, as it is distributed, there is no one point of failure. If a hacker wants to manipulate the blockchain, he will have to attack all of the nodes at once

Finterra’s preferred blockchain option is the Ethereum platform called Endowment Chain. Ethereum is one of the leading digital (cryptocurrency) currencies and has a shariah-compliant nature. Endowment Chain emphasizes on the transparency and reliability of customer identity to prevent money laundering. Unlike bitcoin’s blockchain, which allows anonymity, every transaction on the Endowment Chain will require compliance with know-your-customer and anti-money laundering regulations. The public ledger follows a “51% rule”, which means that if more than 51% of the nodes do not agree with a transaction, it will be deleted.

How does Endowment Chain Work

The Endowment Chain allows participants to create project proposals to develop wakaf assets and get others to support the projects by contributing funds. If the project goals are met, the proposal is accepted and a certain number of wakaf tokens are created and distributed to the participating funders. These tokens can be the rights of stakeholders and revenue sharing or transfer or exchange within a large Finterra ecosystem.

  • Let’s say a wakaf administrator wants to build a project on a piece of wakaf land, be it an educational institution or a residential property, he will need to raise capital. But financial institutions usually take a very long time to provide funding while the grants given by the government are too meagre to develop anything real. So, here is where the Endowment Chain will help. What needs to be done is through a process called the Land Management Model of the International Organization for Standardization (ISO). This process determines the level of trust of the project. If successful, the blockchain will issue the tokens to donors to raise capital.

Finterra does not hold any license management funds, but has partnerships with financial institutions and other institutions such as Maybank Islamic Bhd, Bank Islam Malaysia Bhd and the Labuan International Wax Foundation. Once the required funds reach the target, the financial institution will manage with the cooperation of the recognized waqf or any other recognized local waqf. The tokens are distributed and the proceeds of the project will be automatically regulated in the system contract which includes questions, guarantees and token holders.

The tokens that are distributed and the proceeds of the project will be automatically regulated in a contract system that includes accounts, guarantees and token holders.


Finterra aims to make the wakaf blockchain much faster and more reliable than other blockchains, in addition to the lower transaction cost. Hamid said that the bitcoin network today can only process about seven to eight transactions per second. The ethereum network can process 100 to 150 transactions per second while the ripple network can process anywhere between 1,000 and 1,500 transactions per second. This is still very low when compared to the Visa and MasterCard network, which are able to process anywhere between 2,000 and 2,500 transactions a second. Finterra aims to process 100,000 transactions per second. Although the company is headquartered in Singapore, its software development hub is based in Malaysia. It also has a presence in Hong Kong, Switzerland, the UAE and the US, among others.


Hamid, who has more than 15 years of technology consulting experience with companies such as Hewlett-Packard and Petroliam Nasional Bhd, admits that blockchain is one of the most overhyped technologies in recent years. However, he points out that although blockchain technology itself is still not fully mature, there are real use cases for it that could disrupt the global financial industry.

Blockchain technology has been around for about nine years, but the real applications have only been around for the past four years, when the ethereum blockchain was introduced, says Hamid. Since then, many real use cases for blockchain technology have been developed, especially after the ripple blockchain was launched. “Standard Chartered Singapore and India-based Axis Bank, for example, launched a cross-border payments platform built on top of the technology developed by Ripple last year. This year, the Saudi Arabian Monetary Authority worked with Ripple to improve their banks’ payments infrastructure,” says Hamid.

Singapore Airlines recently announced that it would launch the world’s first blockchain-based airline loyalty digital wallet. As the technology matures, we will see hundreds and thousands more of these use cases. But so far, there have not been any significant blockchain projects in Islamic finance. Hopefully, finterra will be the first.

Related link : Standard Chartered Singapore

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