Definition ∞ A referral program is a marketing strategy where existing users are incentivized to introduce new users to a service or product. Participants typically receive rewards, such as discounts, bonuses, or cryptocurrency, for successful referrals that lead to new sign-ups or transactions. These programs leverage word-of-mouth marketing to expand user bases, particularly common in cryptocurrency exchanges, decentralized finance platforms, and non-fungible token marketplaces. While effective for growth, their structure can sometimes be scrutinized for potential pyramid scheme characteristics or unfair reward distributions.
Context ∞ Referral programs are frequently featured in crypto news as a common growth hack for new projects and platforms seeking rapid user acquisition. Debates often arise regarding the sustainability and fairness of certain reward structures, especially during speculative market conditions. Regulators are increasingly examining these programs to ensure compliance with consumer protection and anti-pyramid scheme laws.
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