A trustless referral solution for an online social media world

Disclaimer: The paper below does not form part of the Konkrete retail investment offer and is only a technology proposal. Matters related to compliance remain uncertain and any investor considering investment in the Konkrete offer should solely rely on the Offer Information Statement.

Blockchain solutions have been very effective in establishing the veracity of transactions where two parties do not necessarily know each other directly and there is no trusted central party to arbitrate disputes.

However the big challenge most sellers, whether they are selling investments or some other product offering is sourcing the buyer or counter party. For this they will often resort to paid marketing or word of mouth referrals. But referral systems are often complex, open to being gamed by the central party and are also limited in what they can deliver.

An ideal solution would allow a potential referred to generate a code or unique link which he or she can share on their network such as FB, twitter etc. Any one who goes to this link should be able to create their own unique link and share with their network and so on. Eventually when a buyer is sourced from this network, everyone who was part of the chain should be rewarded.

Such a chain should prevent the buyer or any member on the chain to bypass any other member on the referral chain. And the members on the chain should not be able to see who is on their referral chain (apart from their direct parent) so that the system avoids any biases.

While the solution listed below can be implemented on any online platform we lay down the example with the Konkrete platform in mind and employ the techniques familiar in blockchain for this.

Anyone who wants to refer a particular investment opportunity listed on the platform will be provided a button called REFER FRIENDS AND EARN KONKRETE

Clicking on this button will create a url which is a hash of the project page and the referring users id.

HASH(Project URL + User A id)

Looking at this hash url alone would not allow anyone who sees it to decipher the actual project page or figure out who is the person referring it.

Once someone visits this url their details are captured as a viewer so that there is a clear audit trail of who has viewed the opportunity.

If someone who looks at this opportunity decides to share it to their network they will go through the same process. They will generate a hash url which is a hash of the original hash url and their id.


HASH(Project URL + User A id)

+ User B id


Similarly anyone who sees this url on the chain will continue to create a hash chain without knowing who the participants are. They will however be notified before sharing what percentage or absolute amount of fees they can expect if someone from their immediate networks invest.



HASH(Project URL + User A id)

+ User B id


+ User C id


And so on

Once an investor does end up investing through this chain the participants along the chain are paid the referral fees in KONKRETE through equal division.

Note that all of this will be encoded in a smart contract.

Given the fact that the urls are hashed, none of the participants know who are the other parties on the chain and have no mechanism to tweak the url so as to remove any person from the chain. Also once they access the opportunity their details are automatically recorded so as to prevent any conflict around where they first saw the opportunity.

We will use this system to turn everyday people in to potential promoters of the network. Every person on such a chain would get a cut from the introduction fee.

In Australia and most jurisdictions across the world you do not need a specific authorization or license to promote an investment offering if you are not getting paid a % of funds raised fee. Operating as an introducer who gets a flat fee per introduction of investor requires no additional licensing. Each of the people on the chain that leads to the investor will get a portion of the flat introduction fee paid in KKT.

This reward for finding an investor comes from the cap raising fees that the issuer pays for attracting capital on the platform.

Secondary market transactions

Once the IPO process is complete, those who own the security tokens will be able to trade them with others on the network. The transaction fees will be payable in KKT. The issuer can either prepay for the transaction fees by buying KKT off the exchange and attaching them to the security tokens in advance or having those engaged in the transaction pay for it.

With every transaction, a portion of the fees get burnt and the rest flows back to the foundation company.


Note that every wallet that holds the security tokens needs to have completed its KYC.

One of the key challenges for any marketplace platform is to achieve enough distribution. This is especially true in a secondary market transaction where a person who owns the security tokens wants to sell the tokens to someone else.

The odds of achieving a successful sale are linked with how many potential buyers are there on the market place. If there are only a few participants (which would be the case early on) sourcing a potential buyer would be hard.

This is a challenge we solve using the same mechanism that has been described above for the multiple level referral system.

The seller would set a bounty of KKT tokens for the referral network to source a buyer similar to what the issuer does as part of the IPO as described previously.

Those who are interested in the bounty would promote the sell offer to their network and a chain of promoters will be formed till a potential buyer is found.

The seller may increase or decrease the bounty depending on the potential demand for his offer. This would be analogous to the transaction fees someone has to pay to miners in the Bitcoin of similar networks.

Once the buyer is sourced and a transaction is complete the bounty would be shared between those on the chain.



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