Design and Development of Blockchain Smart Contracts for Multi-Level Marketing

Abstract

Trust has become a significant concern in today’s business world. Recent research highlights a decline in trust towards brands globally. Traditionally, trusted third parties played a role in ensuring trust in business transactions. However, with the advent of digitization, peer-to-peer networks, and cryptographic technologies, blockchain technology emerged as a trust layer embedded in the Internet’s protocol. It serves as the missing trust layer in the evolution of the Internet. Blockchain’s implications on marketing are profound. Customers are no longer just consumers; they can be value creators and brand ambassadors. Marketers must adapt to this evolving landscape, which includes rewarding participants through mechanisms like gamification. On the other hand, blockchain technology presents new challenges, with customer data becoming customer-owned. To succeed, brands must appeal to their audience with compelling stories and causes. Blockchain facilitates these concepts on a technological level. The blockchain has become a viable platform for creating decentralized applications that are ready for the market. Its features, such as consensus, provenance, immutability, and finality, make it ideal for creating apps for decentralized 56markets, primary markets, and trade forums for product sales, income sharing, salary distribution, and record-keeping. This chapter focuses on building blockchain smart contracts (SCs) for multi-level marketing (MLM), a revenue-generating model where non-salaried employees sell a company’s products and earn money through commissions. The design and development of MLM SCs have not been fully explored, but this chapter covers it by first discussing blockchain technology and SCs. Then, the MLM model is defined as a problem statement, followed by the methodical design and development of blockchain SCs to automate core MLM processes such as franchise, membership, and commission management. The SC is written in Solidity and works with the Ethereum blockchain.