# Referral and Engagement Mechanisms

## **How does the referral system work for bringing new users to the network?**

The referral system is designed to incentivize block producers and existing users to bring new users onto the Toto Chain by offering **POTENTIAL** rewards. Here’s how it works:

* **Block producers and users can refer new users** by transferring a portion of their **POTENTIAL** to the new account.
* The **referred user gets a share of the referrer’s POTENTIAL** automatically.
* **Referrals are tracked in a tree structure**, meaning users referred by someone become part of their referral network.
* **Block producers set a "share parameter"** that determines how much of their POTENTIAL earnings are distributed among their referral network.

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## **What is the “share parameter,” and how does it affect my rewards?**

The **share parameter** is a percentage set by a **block producer** that determines how much of their POTENTIAL earnings are distributed to their referred users.

* The **default share parameter is 80%**, meaning **80% of the POTENTIAL** a block producer earns is distributed among their referral network.
* If a referred user later becomes a block producer themselves, they **stop receiving referral POTENTIAL** and instead earn directly from their own block production.
* This parameter **creates an incentive for block producers to build and maintain a strong referral network**​.

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## **How can a block producer change the "share parameter"?**

* A block producer **can modify their share parameter** at any time to adjust how much POTENTIAL they distribute to referrals.
* The **new share percentage applies to all new users referred moving forward** but does not retroactively affect users already referred.
* Changing the share parameter affects **how attractive a block producer’s referral offer is**, so setting it too low may discourage users from joining through their link.

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## **Are there limitations on the number of users I can refer daily?**

Yes. The system limits referrals based on **POTENTIAL balance and decay mechanics**:

* A user can refer **up to 28 new users per day**.
* The amount of POTENTIAL transferred per referral is based on **1/28th of the referrer’s current balance**.
* This limitation prevents abuse while ensuring **steady and sustainable onboarding of new users**​.

***

## **How does the system ensure the authenticity of new users joining through referrals?**

The Toto Chain is implementing several mechanisms to **ensure the authenticity of referred users**:

1. **DID Attestation Requirement:**
   * New users need a **minimum number of attestations** from existing users before they start receiving referral rewards.
   * For example, a **new user may need 5 attestations** before they start earning POTENTIAL.
2. **KYC-Based Identity System (Upcoming Feature):**
   * A **KYC system is being developed** to verify referrals and prevent fake accounts.
   * This will ensure **real individuals** are joining the network​.
3. **Referral Tree Mapping:**
   * If a block producer is **disabled or removed**, their referred users are automatically **reassigned** to their referrer’s referrer.
   * This ensures continuity in the network and prevents abandoned accounts from becoming bottlenecks.


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