Is Relai, app the Herbalife of the bitcoin space?
The social MLM dynamics of Relai app
Relai app, is a Bitcoin savings app, has gained popularity for its user-friendly interface and convenient features.
However, its referral system, reminiscent of multi-level marketing (MLM), has raised some red flags and general concerns about potential user exploitation and negative impact on the bitcoin space in general.
In this piece, I’ll go over the reasons why.
First of all, the Relai's Referral system works as follows:
Relai's referral system is designed to incentivize users to bring in new members.
The more users a person refers, the lower their own transaction fees become. This structure creates a tiered system where early adopters can significantly reduce their fees by recruiting a large network. In its core, they let users save or buy a scarce asset like hard money bitcoin, by incentivizing the marketing of the Relay app itself.
Most traditional MLM schemes offer products that are nearly worthless. While Bitcoin itself is far from worthless—being considered "hard money"—Relai’s service is essentially just a way to access Bitcoin. However, Bitcoin can also be purchased through various other channels, not just Relai. They’ve put themselves, and their social scheme between the potential buyers and bitcoin, with a social incentive.
Unlike some MLM companies that exclusively sell their own branded products, Relai’s "product" is its marketing and app, which facilitate buying Bitcoin through their platform. In reality, you can easily buy Bitcoin through exchanges, peer-to-peer transactions, or other direct sellers, bypassing the need for Relai altogether.
MLMs leverage a social proof principle, where they encourage people to join based on the decisions of their peers. This tactic exploits people’s natural tendency to follow what others do, creating a false sense of consensus around the scheme's effectiveness. Obviously this a counter-incentive to everything where bitcoin stands for.
The company itself is different from their “marketing” squad of course, however, even there they seem to recruit their next employees from this pool of Relai Squad members. For many, a bitcoin job in itself is a goal in life. So this incentive, to maybe be the chosen one to work at their company, is an extra social dynamic to take into account. If you behave well enough, you just might get picked.
The Drawbacks of Relai's MLM-like Approach are plenty.
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Time & Effort investment. Users are required to actively promote the app to friends and family, which can lead to strained relationships. Constant recruitment efforts often result in friction and, in some cases, lasting damage to personal connections.
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Over time, users come to trust the Relai app to set their transaction fees, even when cheaper and more convenient alternatives are available. This creates an environment of irrational groupthink, where many members continue to guide newly onboarded users into the MLM scheme without questioning its value or impact.
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Disproportionate Rewards: The rewards are concentrated at the top of the referral pyramid, leaving the majority of users with minimal benefits, clamoring for better fees by promoting their referral codes.
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The so-called “Relai Squad” members primarily focus on disseminating their referral links to obtain kickbacks on transaction fees. Their engagement often lacks the depth of knowledge and philosophical alignment with Bitcoin principles required for meaningful onboarding. Instead, their efforts are predominantly motivated by the short-term incentive of reduced fees. In essence, making them the bitcoin-users level alternative of someone selling sets of “Amway” Beauty and Personal Care products.
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Undermining Bitcoin's Ethos: Bitcoin is designed to empower individuals, but Relai's system creates a dependency on the platform and its fee structure.
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Psychological Manipulation: Users may feel pressured to recruit others to avoid higher fees, leading to feelings of inadequacy or exclusion. While also feeling the pressure to belong to their local Relai Squad groups, where people in similar situations and mindsets flock together in order to get rewards.
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Participation in the Relai scheme (Squad members) often puts strain on personal relationships, as individuals may become overly eager to recruit new users to secure lower transaction fees for themselves. This can lead to forming less desirable social connections solely to spread referral links. Participants may feel socially pressured to promote Relai's products and bring others into the scheme, which can ultimately result in social isolation and the erosion of their natural support network.
Broader implications for the Bitcoin space:
Specifically, the Relai app approach highlights a trend of businesses adopting Amway and Tupperware like models to advance their marketing reach.
This can have significant consequences:
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Reinforcing Negative Perceptions: Such practices reinforce negative stereotypes about Bitcoin as a space filled with scams and Ponzi schemes.
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Gatekeeping is also a key part of this scheme, turning access to “cheaper” transfer fees into a privilege that's mostly reserved for those willing to navigate through their network of local referral-link promoters.
Ethical innovation
To ensure the long-term health of the Bitcoin ecosystem, it's crucial for businesses to adopt ethical business models. An MLM scheme is not the way to go for this, certainly with the negative social impact of referral links chilling.
Transparent fee structures, fair reward systems and a user-centric approach are essential to foster trust and encourage wider adoption.
Conclusion
Relai's MLM-like referral system raises serious concerns about user exploitation on a social level and undermines the core principles of Bitcoin of consensus and getting rid of middlemen.
As Bitcoin continues to evolve and continues its reach, it's imperative that the community prioritizes practices that don’t promote middleman products in a “fiat way”.
In my opinion, a centralized company using MLM tactics has no place here. Their real-life impact on local communities is harmful, driven by the pursuit of dopamine hits from promoting referral links—no different from shitcoiners shilling kickback links for shady exchanges.
When it comes to Relai, those who willingly participate in this MLM scheme seem either uninformed or focused solely on short-term gains, missing the broader principles of Bitcoin. We can and should do better.
In short, in my opinion Relai app, and certainly their marketing tactics, makes them little different from Bitcoin-versions of Amway, Tupperware or Herbalife.
Deadeyes
For AVB