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GLOSSARY.md

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Sunna Protocol — Glossary

Author: Abdulwahed Mansour

A

ADS (Asymmetric Deficit Socialization) A vulnerability class in DeFi protocols where fee recipients extract value during periods of unrealized loss, socializing the deficit onto depositors. Discovered by Abdulwahed Mansour. Estimated $98.6M+ exposure across major protocols.

B

Burned M-Effort When a Mudaraba project fails (net loss), the manager's accumulated JHD (effort units) for that project are permanently burned. This is the on-chain enforcement of the manager bearing effort loss under Ghunm bil-Ghurm. See BURNED_M_EFFORT.md.

Burn Ratio The proportion of a manager's lifetime effort that has been burned due to failed projects. Calculated as Burned_JHD / Lifetime_JHD. A high ratio signals higher risk to potential investors.

C

Constitutional Guard An immutable smart contract layer (ConstitutionalGuard.sol) that protects the protocol's six core invariants (SE-1 through DFB-1). Cannot be overridden by governance votes or admin actions. This is the "supreme court" of Sunna Protocol.

D

DeFi (Decentralized Finance) Financial services built on blockchain technology, operating without centralized intermediaries. Sunna Protocol is a mathematically-verified DeFi framework.

E

Efficiency Ratio A performance metric measuring profit generated per unit of effort. Calculated as (Net_Profit × 100) / Total_JHD. Used to compare manager performance across projects and displayed via the traffic-light system (Green > 10, Yellow 3–10, Red < 3). See EFFICIENCY_RATIO.md.

F

FeeController The smart contract (FeeController.sol) that enforces PY-1: no fee extraction when unrealized losses exist. All fee calculations pass through this controller before any treasury distribution.

G

Gharar Excessive uncertainty or ambiguity in contract terms, prohibited in Islamic finance. Sunna Protocol prevents gharar by making all parameters transparent and immutable, and by validating oracle data for freshness via OracleValidator.

Ghunm bil-Ghurm An Arabic principle meaning "gain comes with risk" or "whoever gains must bear the loss." A foundational principle of Islamic finance enforced by MudarabaEngine. The investor risks capital; the manager risks effort.

H

Halal Permissible under Islamic law. In Sunna Protocol, assets and protocols must be on the halal whitelist (maintained by ShariaGuard) to interact with the system.

Haram Forbidden under Islamic law. Includes interest (Riba), gambling (Maysir), and excessive uncertainty (Gharar). The protocol's design prevents haram activities by construction.

HELAL ($HELAL) The governance token of Sunna Protocol. The name combines Hilal (هلال — crescent/upward trajectory) and Halal (حلال — pure money). Token holders vote on protocol parameters but CANNOT override constitutional invariants. See HELALToken.sol.

I

Invariant A mathematical property that must hold true at all times during protocol operation. Sunna Protocol enforces six invariants: SE-1, PY-1, SD-1, CLA-1, CHC-1, and DFB-1. See INVARIANTS.md.

J

JHD (Juhd) From Arabic "Juhd" meaning effort. The on-chain unit measuring verified human effort in Sunna Protocol. 1 JHD = 1 verified unit of effort. Non-transferable and soulbound. JHD is the world's first on-chain effort measurement system. See JHD_SPECIFICATION.md.

M

Maysir Gambling or speculation, prohibited in Islamic finance. Sunna Protocol ensures all returns are tied to real economic activity and verified effort, never to chance.

Mudaraba An Islamic finance partnership where one party provides capital (Rabb al-Mal) and the other provides effort and management (Mudarib). Profits are shared per agreement; losses are borne by the capital provider (financially) and the manager (effort).

MudarabaEngine The core profit-loss sharing smart contract (MudarabaEngine.sol). Enforces Ghunm bil-Ghurm by distributing profit based on agreed ratios and recording Burned M-Effort on loss. Uses multiply-before-divide to prevent precision loss.

O

OracleValidator The smart contract (OracleValidator.sol) that validates price feed data from external oracles (Chainlink, Pyth). Rejects stale data by checking answeredInRound >= roundId and updatedAt freshness. Prevents phantom yield from outdated valuations.

P

PY-1 (Phantom Yield Prevention) Invariant that ensures no fees are extracted when unrealized losses exist. ΔTreasury ≡ 0 IF ΔLoss > 0. Enforced by FeeController.

R

Rabb al-Mal The capital provider (investor/funder) in a Mudaraba partnership. Bears financial loss in case of project failure.

Riba Arabic term for interest or usury, strictly prohibited in Islamic finance. Sunna Protocol generates returns exclusively through profit-sharing, never through interest.

S

SE-1 (Solvency Equilibrium) The primary solvency invariant: ∀t: totalAssets(t) ≥ totalLiabilities(t). Enforced by SolvencyGuard on every state-changing transaction.

Sharia Islamic law derived from the Quran and Sunnah. Governs all aspects of Muslim life, including financial transactions. Sunna Protocol is designed for full Sharia compliance.

ShariaGuard The smart contract (ShariaGuard.sol) that acts as a "living Sharia document" — scholars review the code directly rather than paper promises. Maintains the halal asset whitelist and enforces no-fee-on-loss, no-gharar, and no-capital-guarantee invariants.

Sunna (Sunnah) The teachings and practices of Prophet Muhammad (peace be upon him). The protocol is named after this concept, reflecting its commitment to ethical principles and the correct path in finance.

SunnaLedger The smart contract (SunnaLedger.sol) that records, measures, and permanently stores human effort (JHD units) on-chain. The world's first on-chain effort measurement system. Tracks activity, burned effort, and calculates efficiency ratios.

SunnaShares ERC-20 investment share tokens (SunnaShares.sol) representing proportional ownership in a Mudaraba project. Share value fluctuates based on actual investment performance — never fixed, reflecting true risk-sharing.

SunnaShield The adapter layer smart contract (SunnaShield.sol) built on ERC-4626. Wraps existing DeFi protocols and forces Sunna invariants onto them retroactively — without requiring the wrapped protocol's cooperation or code changes.

SunnaVault The capital custody contract (SunnaVault.sol). Receives and secures funder deposits (USDT/USDC). Applies multiply-before-divide for precision and uses >= comparisons to prevent off-by-one withdrawal blocks.

T

Takaful Islamic cooperative insurance. In Sunna Protocol, TakafulBuffer acts as a cooperative fee escrow, holding fees until solvency is confirmed before distribution. In crisis, $HELAL holders can stake tokens into the buffer to protect depositors.

Traffic-Light System The visual efficiency rating system on the Sunna Dashboard. Green (Efficiency > 10): strong invest signal. Yellow (3–10): moderate confidence. Red (< 3 or Burned): caution required.

Last updated: 2026-02-22