Islamic Development Bank in KSA receives Blockchain patent

The Islamic Development Bank Institute (IsDBI) in KSA has been granted a new Blockchain consensus mechanism patent from the United States and TradeMark Office. The Blockchain consensus mechanism is designed to prioritize network participation over computing power or financial stake.

As per the announcement, in PoU-based networks, participants validate other users’ transactions in exchange for having their own transactions verified. The model ties validation authority to actual network usage, rather than to specialized mining hardware, as in Proof-of-Work (PoW), or token holdings, as in Proof-of-Stake (PoS).

ISDBI aims to solve several challenges with existing consensus mechanisms. First it is eliminating competitive mining, and energy intensive dynamics which are usually associated with Proof of Work systems.

It also seeks to mitigate wealth concentration risks seen in PoS environments by prioritizing activity and utility over capital ownership. Finally, the framework merges the roles of users and validators, aligning incentives across network participants.

From a development finance perspective, the reciprocity model is intended to reduce the influence of external speculators whose primary motivation is validation rewards rather than underlying transaction activity. This design could make PoU particularly relevant for use cases involving financial inclusion, cooperative ecosystems, and community-based digital infrastructure.

According to Sami Al Suwailem, Acting Director General of ISDBI, “The Proof-of-Use mechanism is an important component of the Institute’s innovation portfolio.” He also notes that the objective is to build a digital ecosystem to support inclusive growth and shared prosperity across member countries and communities.

He adds, “We are actively exploring strategic partnerships to capitalize on this innovative ecosystem, in line with the IsDB Group’s 10-Year Strategic Framework, which calls for enhancing Islamic digital financial services to ensure broader access to finance.”

In 2023, The Saudi Islamic Development Bank Institute (IsDBI) was working to patent a Blockchain system for smart stabilization for CBDCs and digital assets after receiving a positive evaluation for its Blockchain smart stabilization system patent.