> For the complete documentation index, see [llms.txt](https://altodex.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://altodex.gitbook.io/docs/additional-resources/compliance-shariah-ethical-mode.md).

# Compliance / Shariah / Ethical Mode

Alto is committed to developing a strong, open, and usable perpetual trading platform for communities worldwide. A crucial element of this vision is Ethical Mode, a Shariah-compliant trading option designed to meet the needs of Muslim investors and traders as well as anyone else seeking a more ethical approach to finance.

This mode is entirely optional and can be turned on or off by users based on their preferences. Once activated, all trading, liquidity provision, and fee structures are modified to adhere to the principles of Islamic finance and broader ethical standards.

***

#### Core Principles of Ethical Mode

* **No Riba (No Interest)**
  * Traditional funding mechanisms in perps resemble interest (riba), which is not permissible in Islamic finance.
  * In Ethical Mode, funding rates are removed entirely and replaced with **flat, transparent service fees** for holding positions.
  * This ensures there are no percentage-based, compounding charges that mimic interest.
* **No Gharar (No Excessive Uncertainty)**
  * All risk parameters are clearly disclosed upfront, including margin requirements, liquidation thresholds, and fee schedules.
  * There are no hidden mechanics, opaque algorithms, or “black box” systems.
  * By minimizing uncertainty, trades are structured, predictable, and fully transparent.
* **Asset-Backed Trading**
  * Only verified and approved assets are available in Ethical Mode.
  * This excludes highly speculative tokens or assets without tangible backing.
  * Over time, the listing will expand to include Shariah-screened real-world assets (e.g., tokenized gold, sukuk, and commodities).
* **Oversight by Shariah Advisory Council**
  * Alto will consult with qualified Shariah scholars and financial experts to review its design and certify compliance.
  * This ensures Ethical Mode meets global Islamic finance standards while maintaining competitive usability.
* **Optional Toggle for Traders & LPs**
  * Both traders and liquidity providers can enable Ethical Mode at the account level.
  * Traders in Ethical Mode only see compliant markets and pay flat fees.
  * LPs in Ethical Mode only deposit into Shariah-compliant vaults, with returns structured via fee-sharing rather than interest-like mechanisms.

***

### Benefits of Ethical Mode

* **Inclusivity**: Opens Alto to a global audience of over 2 billion Muslims, many of whom are underserved in crypto due to compliance concerns.
* **Transparency**: By removing hidden funding mechanics and replacing them with flat fees, all users benefit from clearer economics.
* **Differentiation**: Ethical Mode makes Alto the **first-ever Shariah-compliant perpetual DEX**, creating a unique positioning in the market.
* **Dual Flexibility**: Users who prefer traditional trading mechanics can continue using Standard Mode, while others can opt into Ethical Mode seamlessly.

***

### Example of Fee Structure in Ethical Mode

* **Standard Mode**:
  * Trader opens a $10,000 ETH long position → pays a 0.05% open fee → subject to variable funding payments depending on market imbalance.
* **Ethical Mode**:
  * Trader opens a $10,000 ETH long position → pays a flat service fee (e.g., 5 USDC) to open, plus a fixed daily holding fee (e.g., 2 USDC per day).
  * No compounding interest, no fluctuating funding rates.
  * All costs are known in advance.

This structure aligns with Shariah finance principles while keeping the trading experience intuitive and competitive.


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