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This document solely constitutes a description of the Attrace platform and the functionality of the Attrace tokens. This document does not constitute a prospectus of any kind. It is not a solicitation for investment and does not in any way pertain to an offering of securities in any country.

ALSO PLEASE NOTE

The Attrace tokens described in this white paper refer to the Attrace tokens on a launched blockchain that adopts the Attrace software. They do not refer to the ERC-20 compatible tokens being distributed on the Ethereum blockchain in connection with the Attrace token distribution. Now that the Attrace blockchain is live with its own token mechanism, the ERC-20 compatible tokens have been exchanged for the Attrace tokens (ATTR) 1-to-1.

Due to general regulatory uncertainty surrounding crypto tokens, China and the United States residents are excluded from exchanging tokens with us during the crowdsale.

LIVE - PLATFORM

Live: https://www.attrace.com

Token: Attrace

Token abbreviation: ATTR

DISCLAIMER

This Attrace White Paper is for information purposes only. Attrace does not guarantee the accuracy of or the conclusions reached in this white paper; this white paper is provided “as is”. Attrace does not make and expressly disclaims all representations and warranties, express, implied, statutory or other- wise, whatsoever, including, but not limited to: (i) warranties of merchantability, fitness for a particular purpose, suitability, usage, title or no- infringement; (ii) that the contents of this white paper are free from error; and (iii) that such contents will not infringe third-party rights. Attrace and its affiliates shall have no liability for damages of any kind arising out of the use, reference to, or reliance on this white paper or any of the content contained herein, even if advised of the possibility of such damages. In no event will Attrace or its affiliates be liable to any person or entity for any damages, losses, liabilities, costs or expenses of any kind, whether direct or indirect, consequential, compensatory, incidental, actual, exemplary, punitive or special for the use of, reference to, or reliance on this white paper or any of the content contained herein, including, without limitation, any loss of business, revenues, profits, data, use, goodwill or other intangible losses. No rights or obligations can be derived from this white paper. The exchange agreement that a person participating in the crowdsale will enter into, is the only document setting out mutual rights and obligations, and that agreement supersedes and prevails over this white paper.

INTRODUCTION

Over the last decade, online advertising has dramatically increased its share in advertising budgets. Audiences have moved to online and online advertisement has the ability to charge per view, click, or lead, resulting in much better alignment and control compared to mass media based campaigns. The logical endpoint of this is Affiliate Marketing (AM), where payment is usually based on actual sales achieved. For now, at around 5% market share, Affiliate Marketing remains a small part of the total online advertising market due to technical and trust issues between the various parties involved.

The Attrace solution is based on the following principles::

  • The issues surrounding Affiliate Marketing can only be solved by using the key features of blockchain technology (decentralised smart contracts and independent validation).
  • A complete solution needs a system that tracks and attributes every single click/referral of a prospect, including those that in the end will not convert into a sale.
  • The only way to track every click/referral is to build a fully dedicated blockchain from scratch.

While the Attrace blockchain solution can be applied to various user cases and markets, the focus will be solely on one thing and one thing only: Making the Affiliate Network - the middleman - fully obso- lete in Affiliate Marketing. This innovation will totally change a market currently worth $13 Billion a year, and will increase its share in online marketing as a whole which is currently worth $260 Billion a year.

Attrace and the Attrace token (ATTR) will have a number of compelling advantages:

  • While there are a number of other projects that aim to revolutionise part of Affiliate Marketing, Attrace is the only system that tracks and attributes every single click/lead/referral of a prospect, including those that in the end will not convert into a sale.
  • The Attrace blockchain is also the only Affiliate Marketing project with a blockchain fully built from scratch, it is not a fork of anything. Extensive research has resulted in the conclusion that none of the existing blockchain networks would be suitable to excel in the specific demands of an Affiliate Marketing platform.
  • Coin destruction mechanism related to the usage of the platform.
  • ATTR coins can generate a reward helping to protect the network’s quality by allocating votes to an elected Witness that forges blocks.
  • ATTR coins have a vote on network parameters.
  • Attrace is based in the Netherlands and subject to strict EU privacy and data protection laws.
  • Attrace has a Beta version about to go live which will address fully all Affiliate Marketing problems and immediately generate revenue in one of the most developed online marketing economies in the world.

Attrace was founded mid 2017 by a group of Publishers (website owners) and Merchants that decided to solve once and for all the problems with the current Affiliate Marketing ecosystem. These seasoned online marketing professionals are the core of the Attrace team, supplemented by finance and block- chain experts.

We are looking forward to you joining us on our journey to revolutionise the online marketing industry! Thank you for your time,

The Attrace Team

ABSTRACT

Affiliate Marketing (AM) is the only true “pay for performance” model of Online Marketing: Whereas Search Engine or Display Advertisements rewards clicks, views or referrals, Affiliate Marketing rewards actual sales achieved. Therefore, Affiliate Marketing should arguably have one of the largest shares in Online Marketing, which is not the case as the current system has significant problems. This white paper outlines how Attrace intends to reinvent Affiliate Marketing and how its proposition differs from other solutions.

Attrace re-invents Affiliate Marketing: The Attrace blockchain solution makes the middleman in Affiliate Marketing (the Affiliate Network) obsolete by establishing a direct connection between Merchants (companies trying to sell products or services) and Publishers (websites etc. promoting those products or services). This means that the mission of Attrace is to:

  1. reduce the very high Affiliate Network fees paid by Merchants and Publishers by up to 95%;
  2. remove all attribution and tracking analysis issues related to income earned;
  3. remove all fraud detection challenges given full attribution of any click;
  4. assures instant payment of fees earned instead of months waiting time;
  5. enable real value payments based on true value of individual sales generated;
  6. facilitate direct communication between Merchants and Publishers;
  7. remove restrictions for smaller and Emerging Markets Merchants; and
  8. restrain Publishers from engaging in spamming activities.

The prize is big: By enabling dramatically reduced costs and restoring total trust in the sales numbers registered, Attrace would be a game changer in an industry which is worth an estimated $13 Billion in 2018 with expected 12% annual growth.1 More broadly, the Attrace platform solves all problems which constrain this industry from claiming a larger share in the total online advertising market, an industry which is currently worth an estimated $260 Billion in 2018 with expected 10% annual growth.2

Attrace is unique: Contrary to other online marketing solutions using the blockchain, Attrace is not a solution solely focussed on the tracking of actual sales achieved only, or on the payments between Merchants and Publishers. The Attrace solution is unique as it tracks every individual click/referral/lead generated by a prospect clicking on an ad - not just de resulting sales - from an Affiliate Marketing advertisement, and allocates this via a smart contract to the right Publisher.

The proposition and solution:

  1. A blockchain solution built from scratch in Golang (created by Google) optimized at all layers for the Affiliate Marketing business user case; Attrace is not a fork of anything and has not been built on top of an existing blockchain like, for example, Ethereum.
  2. Fully modified implementation of delegated Proof-of-Stake principle, with coin holders guarding the quality of the network by supporting certain Witnesses, in return for which the coin holders get a reward.
  3. Publishers and Merchants will not notice any changes bar the advantages of the Attrace network. The Attrace user interface will be similar to any existing Affiliate Network user interface and commissions paid between the two parties will still be in fiat currency (Euro/USD).
  4. Commissions between Merchant and Publishers will initially still be paid in fiat currency. At a later stage, once critical mass has been achieved, there will be a push towards making ATTR the dominant payment option for commissions.
  5. The limited Attrace Network Fees will be paid by the Publishers and Merchants in Attrace coin (ATTR).
  6. Alpha version of Attrace is already running in a test environment with large volumes of (data) transactions per second (500-2000 per sec initially).

The team:

  1. The team behind Attrace will immediately contribute strategic traffic to the project by contributing the deal flow of a successful existing Affiliate Marketing business. This business is currently active in two of the most developed affiliate markets in the world (the Netherlands and Germany, with other countries following). This will ensure both instant market share for Attrace - as well as an immediate liquid market for Attrace tokens driven by actual users of the platform.
  2. The Attrace team has very extensive international roots in the Affiliate Marketing industry, both from the Merchants’ as well as the Publishers’ perspective, has extensive start-up experience, extensive blockchain experience and a solid background in blue-chip financial companies.
  3. Attrace is based in the Netherlands and subject to strict EU privacy and data protection laws.

Given the proposition, fully tailor made blockchain framework, clear and substantial benefits, execution team and go to market plan, we are very confident that Attrace is going become the final answer to the problems that constrain Affiliate Marketing from reaching its full potential.


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1 https://www.awin.com/gb/market-insights/the-awin-report

2 https://www.statista.com/statistics/237974/online-advertising-spending-worldwide/ www.emarketer.com https://www.salesforce.com/blog/2017/03/advertising-trends-2017.html for US: https://www.iab.com/wp content/uploads/2016/04/IAB_Internet_Advertising_Revenue_Report_FY_2016.pdf

Business case

Currently the Affiliate Marketing industry sector is malfunctioning given the widespread problems around tracking/attribution of leads and sales generated. This results in very significant financial implications: Merchants and Publishers pulling out of the market out due to lack of trust and Publishers being paid the incorrect amounts, paid late or not at all.

Given the sheer size of the current affiliate advertising and online advertising market globally, a solu- tion to these problems would have a (positively) disrupting impact on the online advertising industry as a whole.3

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3 www.statistica.com / www.emarketer.com

Current AM ecosystem

The current online Affiliate Advertising market: How does it work?

Affiliate Marketing (AM) is basically a performance based model where 3rd parties are driving sales for Brand / Retailers. The key players are:

  1. Merchant: Brand / Retailer / Advertiser trying to sell a product or service.
  2. Affiliate Network: Basically a marketplace / middle-man connecting Merchants and Publishers, listing the offers from Merchant for the Publishers to choose from, tracking clicks/referrals and sales achieved and managing all payments.
  3. Publisher: The website advertising for the products and services of the Merchant.
  4. Customer: Website visitor clicking on the advertisement and buying from the Merchant.

  1. The Affiliate Network registers and lists all the advertisement offers from the Merchants. Publishers can choose advertisements from these lists to promote on their websites.
  2. The Affiliate Network puts a tracking link under a certain button or banner from a Merchant (e.g. ‘buy now’) which will be placed on a website of a Publisher.
  3. When a visitor visits a Publisher website and clicks on the link (http://AffiliateNetwork.com/ Merchant_HASH), the Affiliate Network registers the click in its database, sets a cookie tracking which Publisher referred this specific visitor/buyer to the Merchant website and then redirects the visitor to the Merchant site.
  4. When going through the whole sales funnel, immediately or anytime within the lifetime of the cookie, the visitor/buyer will end up on the “thank you” page of the Merchant page. On this page, there is a tracker from the Affiliate Network, checking this visitor’s cookie, confirming that a lead has been generated and by which Publisher. After this the lead will be connected to the Publishers’ affiliate account.
  5. With some products / services the sale is now closed. With some other products / services the sale still needs to be approved by the Merchant, in which case this lead now has the status “open”. Now the Merchant should check, within a certain time window, the lead and change the status to “approved” or “rejected”. If approved, the Merchant will pay out commission to the Affiliate Network sometime in the future, after which the status of this lead changes to “confirmed”. Once a lead is confirmed the Affiliate Network will allocate the commission achieved to the Publisher connected to this lead.
  6. In general Publishers will be able to cash out the commissions achieved - minus the Affiliate Network fees - in monthly batches, with the Affiliate Network taking roughly 10-25% network/management fee which in some cases increases to 45%. It is standard practice for Affiliate Networks to take a month if not more before paying out commissions earned by a Publisher.

In order to become a Publisher for a Merchant, the Publisher has to apply within the Affiliate Network system. Once the Merchant approves it as a traffic source (via the Affiliate Network), the Publisher can start promoting the Merchant’s offering.

Commission earned can be on a fixed or escalating basis - in other words, the more one sells the higher the pay-out ratio. Also there might be special deals where the Merchant agrees to pay out more than the standard commission, for instance in case of a special position or promotion.

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3 www.statistica.com / www.emarketer.com

Problems with AM

The current Affiliate Marketing ecosystem has significant problems that are undermining its use and effectiveness:

1. Affiliate Network fees

Currently, Affiliate Networks charge on average around 10-25% on total commissions generated; in some cases this can even go up to 45%. On a market size of $13 Billion this adds up to between $1.30 - 3.25 Billion of revenue that is paid out to the Affiliate Network.

2. Tracking and attribution problems

Many achieved clicks/referrals will never be allocated to the right Publisher due to imperfect software that is unable to handle all situations (e.g. buyer uses different devices). This is exacerbated by the numerous technical issues that Affiliate Networks always seem to be dealing with.

3. Fraud problems (underreporting sales)

In the current market, Publishers are always faced with the question if traffic/sales numbers are real or manipulated. Merchants or Affiliate Networks could claim the traffic did not land or result in a sale, keeping the commission for themselves. There is little transparency provided by the Affiliate Networks and there are no means of validating or auditing actual traffic/sales achieved.

4. Slow and complicated payments

Currently it is standard practice for Publishers to only be paid by the Merchants weeks if not months after a sale has been closed. These delays are the result of slow payments from the Merchant to the Affiliate Network, followed by slow payments of the Affiliate Network to the Publisher.

5. No real value payments

In Affiliate Marketing the fee payments rarely differentiate between different leads. This means fees are detached from their real value instead of being subject to factors like time of day, geolocation, demographics, visitor behaviour or lifetime value (LTV).4 Another challenge is how to arrange commis- sions in situations where more than one Publisher was to some extent responsible for a click/referral that converted into a sale.5

6. No direct communication between Publisher and Merchants

Even if a Publisher is generating millions worth of sales for a Merchant and the Publisher is the most important sales channel for a Merchant, the Affiliate Network is always in-between. Direct communication would help both Merchants improve the lay-out of their advertisements and Publishers optimise ad placement, resulting in improved overall conversion.

7. Restrictions to becoming a Merchant

Because of economies of scale, Affiliate Networks focus on products or services that can deliver large commission payouts.6 This means they do not generally accommodate for small Merchants with a revenue below US$5,000 a month or merchants from unfamiliar markets. This leaves those Merchants with options like Search Engine or Display Advertisement, both of which need to be paid by click or view instead of by sales achieved.

8. Cookie spamming by Publishers

Some unscrupulous Publishers have used spam, false advertising, forced clicks7, adware8, search engine spam and other methods to engage in ‘cookie spamming’, and drive or claim traffic to their Merchants. This means Merchants could pay for organically achieved sales because there happens to be a spam cookie attached. Cookie spamming also has the potential to overwrite other affiliates' cookies, essentially stealing their legitimately earned commissions.

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4 Lifetime-value, e.g. phone contracts: A customer staying on for ten years has more Merchant value than someone switching every year. 5 E.g. one party generated the first clicks and sells this intel to a re-target company to push the ads once more before it lands with the

Merchant. The current ecosystem cannot accommodate that situation

6 Merchants need to pay on average 500 Euro/USD a month to an Affiliate Network, which they can earn back via their network fees.

In practice Merchants with less than 5000 Euro/USD revenue a month will not be accepted in the Affiliate Network. 7 To get tracking cookies set on users' computers.

8 Overwriting cookies as last cookie counts, essentially stealing legitimately earned commissions.

The Attrace AM solution

The Attrace proposition applies blockchain technology to Affiliate Marketing with the aim to make the Affiliate Network obsolete by connecting Publishers and Merchants directly.

This technology will use the fact that large numbers of subcontracts can be generated via the blockchain’s smart contracts. By linking a subcontract to every single individual click on the referral link on a Publisher website, each click is guaranteed to be individually tracked.

Attrace methodology

Attrace solves all AM problems

1. Dramatically reduced fees

The 10-25% feel level on commissions generated will be dramatically reduced to an expected range of 0-3%. A real game changer in itself.

2. No more tracking and attribution problems

Via the Attrace Network, each individual click/referral will have a unique ID, whether it is a sale or not does not matter, allowing both the Publisher and Merchant to have full transparency and reliable tracking and attribution of the campaign’s performance. When a visitor clicks on the referral link via the Attrace network, a smart contract is created with (a) the unique ID of this visitor, (b) a timestamp and (c) its activity. This ensures the authenticity of each individual impression at all times. Furthermore, with Attrace the Affiliate Marketing attribution analysis is also significantly enhanced. For example, via Attrace a Merchant can decide to check a specific advertisement with all its subcontracts for any irregular behaviour (executing a deep data audit analysis).

3. No more fraud problems

In the current Affiliate Marketing ecosystem, the Affiliate Networks are the sole central storage of all leads/sales information; they provide very little transparency and Publishers and Merchants have no leverage over them. This leaves Merchants and Publishers with no means of validating or auditing the traffic/sales achieved. By contrast, the Attrace referral link information outlined in 2 above cannot be manipulated and is available through the blockchain ledger for both the Publisher and Merchant to see. This means committing fraud will be technically impossible. In addition, the Attrace network gener- ates traffic/sales/conversion data, which will provide valuable reputation statistics about Merchants and Publishers.

4. No more delayed and complicated payments

The Attrace network avoids Publishers having to wait for their payments by facilitating instantaneous commission payout. In case approval of the sale by the Merchant is needed (e.g. insurance products), Attrace will implement an incentive for the Merchants to review a sale as soon as possible (discounts subject to approval and payment period). Via Attrace the payment process will not only be faster but also less complicated because of the full automation enabled by the blockchain (fixed rules coded into the sub contracts). Not having to wait for months on commissions earned will be another game changer for Publishers as it will avoid cash flow issues. Furthermore, as Publishers are big advertisers themselves, this cash flow improvement should stimulate the entire online marketing ecosystem.10

5. Enabling real value payments

The sales commission generated by Publishers should ideally be based on real value factors like time of day, geolocation, demographics, visitor behaviour or LTV. However this is not a real option due to the rather static technical setup of the current ecosystem. Via Attrace, the smart contracts attached to each individual click/referral can fully facilitate very precise definitions and dynamic pricing. Moreover this principle also covers the concept of shared payments, meaning the Attrace smart contracts would allow for registration and allocation of the commissions earned between multiple Publishers in case they were to some extent responsible for a click/referral that converted into a sale.11

6. Enabling direct communication between Publisher and Merchants

Communication between Publishers and Merchants will be possible for the first time by incorporating an advanced messaging board and email function into the Attrace Merchant and Publisher user interface12. Expectations are that direct communication will help Merchants improve the lay-out of their advertisements, aligning them more closely with the Publisher’s website and in that way improve conversion. This would result in a more competitive Publisher platform and further optimise the industry as a whole.

7. No more restrictions to become a Merchant

In the Attrace network, the business prospects of a Merchant will be based purely on reputation and nothing else. Removing the Merchant participation limitations will enable Long Tail and Emerging Markets Merchants to advertise via Affiliate Marketing for the first time, paying for sales achieved instead of clicks or views.

8. No more cookie spamming by Publisher

Cookie spamming means Merchants paying the wrong Publishers or having to pay for sales that are arguably not achieved by Publishers. Within Attrace, this practice will be constrained by two network principles:

  1. As Publishers will need to pay a very small fee for each subcontract placed (for each click tracked), pushing out millions of cookies will start to become costly, something that used to be for free. This motivates Publishers to focus on valuable traffic instead.
  2. The reputation statistics of the Publishers will be available for any Merchant, quickly filtering out the Publishers that focus on spamming as they will not be selected by the Merchants anymore because their poor conversion will serve as a warning sign.

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10 This principle will also already work during transition period when only commission is paid in ATTR and actual fees are still being paid in fiat currency (please check chapter “Economic model and Attrace adoption in practice”)

11 For example when one Publisher generated the first clicks and sells this intel to a re-target company to push the ads once more before it lands with the Merchant.

12 This will be added into the user interface of both Publisher and Merchant via direct connection, not needed to work via blockchain.

The AM industry

Affiliate Marketing13 is worth an estimated $13 Billion in 20184 with total Online Marketing worth an estimated $260 Billion..15 Affiliate Marketing is the only variation of Online Marketing that rewards actual sales achieved, it is the only true “pay for performance” model, whereas Search Engine or Display Advertisements rewards clicks, views or referrals. Arguably Affiliate Marketing should therefore have one of the largest market shares in Online Marketing. However, Affiliate Marketing’s share remains around 5% because the current system has significant problems as discussed above.

Note there is a difference between Affiliate Marketing expenditures and revenue/orders generated. Per sources of Business Insider, in the US approximately 16% of all e-commerce revenue/orders now comes from affiliate marketing, matching email advertising and surpassing social commerce and display advertising.16

The Affiliate Marketing industry has developed and grown dramatically and become very complicated, resulting in the emergence of new types of players:

  • Affiliate management agencies
  • Super affiliates
  • Specialised third party vendors
  • Specialised parties focussed on Affiliate Marketing for Mobile and Apps

And given that affiliates often use more regular advertising methods, Affiliate Marketing overlaps to some extend with other aspects of internet marketing:

  • SEO
  • Search engine marketing
  • Email marketing
  • Content marketing
  • Display advertising
  • Blogging
  • Interactive online communities
  • Less orthodox techniques e.g. publishing reviews of products or services offered by partner

The most active sectors for Affiliate Marketing include:

  • Retail Finance and insurance products
  • Mobile phones, Telecom and Broadband
  • Travel
  • Retail industries
  • File-sharing services
  • Gambling and Gaming

Regarding hardware platforms the focus has shifted from Desktop only to Desktop, Tablets and Mobile, and in emerging countries exclusively Mobile. That being said, currently in Affiliate Marketing tablets and phones are predominantly important for the initial steps of the sales process with most actual sales still closed via the Desktop.

Compensation methods are as follows:

  • 80% Revenue sharing or pay per sale
  • 19% Cost per action (e.g. filling in a ‘contact me’ form)
  • 1% Cost per click (in case it is all about traffic only)17

As cannot be emphasised enough: In most cases Merchants favour Affiliate Marketing because it uses a "pay for performance" model, meaning that they do not incur a marketing expense unless results are achieved (excluding any initial setup cost).

It is also worth mentioning that most versions of Affiliate Advertising are not restrained by ad-blockers as they are part of the Publisher’s websites.

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13 https://www.amnavigator.com/blog/2016/04/27/20-affiliate-marketing-stats-will-blow-mind/

14 https://www.awin.com/gb/market-insights/the-awin-report

15 https://www.statista.com/statistics/237974/online-advertising-spending-worldwide/ www.emarketer.com

http://www.dentsuaegisnetwork.com/danadspend2017 https://www.salesforce.com/blog/2017/03/advertising-trends-2017.html

for US: https://www.magnaglobal.com/wp-content/uploads/2016/12/MAGNA-December-Global-Forecast-Update-Press-Release.pdf 16 http://www.businessinsider.com/the-affiliate-marketing-report-how-mainstream-publishers-are-turning-performance-based-marketing-into-a-fine-art-2015-11 Confirmed by expert Eugeni Prussakov: Affiliate programs generate between 15% of all online sales for Merchants https://www.amnavigator.com/blog/2011/05/27/affiliate-marketing-program-percentage-sales-yield-stats-conclusions/

17 CPC is heavily used in display advertising and paid search and has significant fraud issues, with Google being targeted by bots etc.

Competitive landscape

The main feature that distinguishes Attrace from any other blockchain marketing solutions currently in development is that Attrace is the only project to attach a smart contract to every single click/lead/re- ferral created at the Publisher domain, sale or no-sale. Other projects store e.g. just the sales resulting from clicks/referrals, the converting leads and/or the approvals.

Attrace will track every single click/lead/referral in Affiliate Marketing, regardless whether this results in a sale or not. For this we calculated that the Attrace blockchain needs to be able to run between 500 and 15000 transcations per second.

All alternative blockchain-based Affiliate Marketing projects are based on Ethereum and none of them tracks each individual click/referral because of the resulting performance and cost issues. As per April 2018, 2000 transactions per second on the ETH network would be a factor 30,000 - 120,000 more expensive vs Attrace and economically not viable. (Please check next chapter for futher details.) Attrace is the only blockchain online marketing solution that will deploy a fully new tailor made high-performance blockchain developed from scratch.18

This is arguably a more difficult feat but it is without a doubt the only way to truly solve all the issues, especially related to tracking and trust(!), that are constraining Affiliate Marketing from having a larger share in the total online advertising market as a whole.

18 Full competitor analysis available upon request

Attrace adoption in practice

No Attrace adoption problems for end users

There are no significant adoption problems anticipated because:

  1. The Attrace user interface for both the Publisher and Merchant will not materially differ from current Affiliate Network user interfaces, including API availability.
  2. The actual commission payments between Merchants and Publishers will initially still be in the same fiat currency (e.g. Euro or USD).

In practice, Attrace works as follows for Publishers and Merchants:

  1. The Publisher logs into the Attrace user interface for Publishers and sees all available advertising programs from Merchants. The Publisher selects one it wants to apply for (this can also work vice versa). (a) Publisher needs to own a certain amount of ATTR (Attrace coin) to open and maintain an account (it does not cost any ATTR). (b) Publisher can check reputation statistics of the Merchants.
  2. Merchant logs into the Attrace Merchant user interface and has to approve the Publisher via signed transaction. (a) Merchant needs to own a certain amount of ATTR to open and maintain an account (it does not cost any ATTR). (b) Merchant can check reputation statistics of the Publisher.
  3. Privacy sensitive Merchants and Publishers have the possibility to make their reputation statistics available only after a request by another party.
  4. A contract between Publisher and Merchant is digitally signed and filed in blockchain after which the Publisher starts advertising products or services (on websites, blogs, social media channels etc.) from the Merchant. The Merchant and Publisher can communicate directly via secure messaging board and email in case there are questions.
  5. Publisher pays a minimal Attrace network fee ($0.0005 - $0.001) for each individual click/referral generated (via website, blog, social media channel etc.) as each individual click/referral requires a smart contract. 100% of this ATTR goes to the Witnesses maintaining the blockchain.
  6. Once the sale has been closed Merchant will pay Publisher automatically (e.g. via Adyen) triggered by the blockchain. Note: The commission payment itself will still be in fiat currency and not go through the Attrace blockchain. At a later stage, once critical mass has been achieved, there will be a push towards making ATTR the dominant payment method for commissions as well.19
  7. Merchant will automatically pay an expected 0~3% percent of the value of the commission paid to Publisher in ATTR. (a) 20% of that ATTR goes to the project (running / overhead costs etc.). (b) 80% of that ATTR will be destroyed.

The actual registration of the sale itself (including any approval or rejection filings) will also need to be registered into the blockchain and will also be paid for by the Publisher at same rate as click/referral registration.20

The Attrace blockchain facilitates a self-regulating ecosystem:

  1. Publishers will refrain from spamming as that will become costly and hurt reputation.
  2. Merchants will not adapt their true sale approval rates as that will hurt reputation and increase the fees they will have to pay future Publishers. Attrace also includes a unique system for Publishers to check if a Merchant might be underreporting sales (further discussed below in the section on Click Fraud Prevention).

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19 Please check chapter “Go to market strategy” for further clarification

20 Please read “Merchant commission and Attrace fee” next page

Fees & payments

Publisher fee per smart contract

Publishers pay a small fee per click/referral smart contract made. This fee is paid in ATTR (Attrace coin) to the Witnesses21 that create new blocks in the Attrace blockchain and ensure there is only one valid record of all transactions. The Publishers can determine what amount of ATTR they want to pay per click/referral/smart contract. The individual Witnesses22 will be able to determine what transactions they accept in their blocks so if the fee gets too low the relevant smart contracts will not be added to the chain. This mechanism will ensure competitive pricing for the Publishers while leaving a decent profit for the Witnesses. We anticipate a maximum fee of $1 - in ATTR (Attrace coin) - for every 1000 smart contracts.

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21 Please check chapter “Network quality assurance” in the below for further explanation about Witnesses

22 Creating new blocks involves adding transactions to the existing ledger of transactions distributed among all users of a blockchain. Witness nodes create new blocks by hashing a block of transactions that cannot be easily forged, protecting the integrity of the entire blockchain without the need for a central system. Running a witness is typically done on a dedicated server with good hardware and good network. The main incentive for running a witness is that users who choose to do to so and are elected are rewarded for doing so.

Merchant fees

When the Merchant makes a sale, the blockchain will automatically trigger the payment of the agreed commission (in fiat currency via Adyen) to the publisher. Payment reputation will be a big factor in ensuring Merchants pay amounts due quickly and fairly. In cases where reputation is not sufficient and a Publisher and Merchant are not yet familiar with each other, Attrace will offer an escrow facility.23

Every time a Merchant has to pay commission to the Publisher, it pays a small fee to the Attrace network of which 20% will be used for project expense and 80% will be destroyed. This fee is paid in ATTR (Attrace coin) and will be zero for the first 6 months and thereafter it will be set by the community. The fee percentage is expected to remain between 0% and 3% at all times.

For the Merchants new transactions also need to be created in the Attrace blockchain. Examples are the approval (or rejection) of a sale or the sale commission payments, which all need to be registered in the Attrace blockchain. The processing of all these blocks (by the Witnesses) will also be paid for by the Publisher. This will incentivise the Publisher to only drive good clicks/leads to the Merchant, improving the overall ecosystem. It will also make the Merchant pay only when an actual sale has been closed, which works better commercially. In practice very likely 1% or less of transactions in blocks processed will be used to register sales.

The ATTR that needs to be paid depends on the ATTR exchange rate when the commission is paid. These exchange rates will be daily averages which will be decided by an Oracle. This is an interim solution until it is practical to use the real time spot price of ATTR on a minimum of three external sources. With this interim solution it will be possible to go live this year.

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23 A Merchant’s funds are put in a deposit under the direct control of the smart contract describing the agreement between the Merchant and the Publisher.

Tech / Basics yellow paper

Copyright

After the anticipated launch of the Attrace network (August 1st 2018), the code will be released under standard open source license on the Attrace Gitlab account https://gitlab.com/attrace/docs/tree/develop/docs#attrace-developer-docs

Technical specifications

Analysis

The Attrace network aims to make every single click/referral an autonomous transaction that needs to be processed with the additional smart contract features as discussed at a minimal cost and all this in a short time window below 1 minute (current tests show ~15 sec).

After architecture and implementation test runs, the Attrace IT team decided at an early stage that existing networks like Ethereum or NEO cannot meet the high-performance requirements of the Attrace network. It has therefore been decided to build the Attrace blockchain from scratch to assure an optimal design fully focussed on the Affiliate Marketing user case.

Custom blockchain

Three main reasons to build the Attrace blockchain from scratch:

  • Costs: Existing networks will not allow the same functionality or the anticipated very high volumes of peak (data) transactions per second (500-2000 per sec initially) in a cost-efficient way. Other projects choose to track/register the basic click/referral data outside the blockchain.
  • Stability: Attrace does not want to accept any third party operational risk, regardless of network size or proposition. It will therefore avoid any risk of network decisions that are against the interests of the Attrace users or significantly increased costs which it cannot influence, yet can break the network operations.
  • Customizability: Given the specific user cases of Affiliate Marketing and the required privacy settings of all parties interacting with the network, there is a need for blockchain functionalities which are not available on general and shared blockchain platforms.

The performance and scalability optimizations of Attrace can be found on all levels: The data structures in the blockchain, the network protocol, the functionality, the network parameters and the transaction data that will be stored.

The core network layers (storage, network communication and smart contract types) use multiple low-level optimizations and will be developed with the evolution of the community protocol in mind. This includes -but is not limited to- the use of:

  • efficient binary storage and advanced compression;
  • batching at multiple layers of the protocol;
  • changing the core network parameters through voting weighted by stake (to minimize
  • hard-forks for natural evolving changes);
  • scalability through sharding with consensus at the shard and network level24;
  • use of cryptographic algorithms to optimize the data models;
  • encrypted short-term volatile streaming data feeds for private data;
  • allow for (eventually) converging transactions with affiliate business logic; and
  • client nodes which are affiliate-business aware and expose developer friendly API’s.

Implementation

Since the Attrace proposition is a fully secure, trusted decentralized platform, it requires an efficient low-level language. Therefore the initial Attrace implementation is built in Golang25, as this is a reliable, fast in development speed, open source, statically typed, compiled, very testable and performant language.

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24 https://en.wikipedia.org/wiki/Shard(databasearchitecture)

25 https://golang.org/

Blockchain parameters

  • NAME: Attrace
  • TOKEN ABBREVIATION: ATTR
  • BLOCKCHAIN CONSENSUS and NR. OF WITNESS NODES : Delegated Proof of Stake 13
  • LANGUAGE: Golang (developed by Google)
  • BLOCK SIZE: Relative to transaction volume (1MB holds ~3000-5000 tx)
  • BLOCK TIME: 750 ms – 1 second
  • TRANSACTIONS PER SECOND: ~15,000 (transfer of ATTR or clicks/leads – ON CHAIN)
  • ATTRACE ADDED TECH: Account nodes facilitating direct encrypted information exchange between end-users (direct private channels), in that way solving data privacy issues
  • NETWORK CONSENSUS TIME: 30 seconds – 60 seconds
  • TOTAL AMOUNT OF ATTR: 1,000,000,000

Attrace is a custom made blockchain developed from scratch in Golang with two main pillars:

  1. Public nodes (public blockchain) that stores unidentifiable verification hashes to track all clicks and sales; combined with
  2. Account nodes (private channels) used for direct encrypted GDPR data / information exchange between end-users (Publishers and Advertisers).

Network quality assurance

Network quality assurance is the process by which token holders reach consensus on certain important network parameters. Attrace recognizes that the important role the ATTR token holders can play in this. The Attrace blockchain has a network quality assurance process that efficiently directs the contribu- tions of the ATTR token holders.

Witness selection and the block forging pool

The block pool consists of Witnesses which can have one of the following roles: Standby or Elected.

Standby Witnesses

In order to become an elected Witness, an interested party needs to:

  • deposit and lock 100 USD equivalent in ATTR, and
  • broadcast an election request on the network.

From this moment on the Witness is up for election and needs to remain online, i.e. this is a Standby Witness.

Elected Witnesses

Elected Witnesses forge blocks in block-rounds. For work delivered, elected Witnesses earn the mining fees of transactions (the Publisher fees).

A Witness becomes ‘elected’ when it gets a minimum number of votes from token holders equal to 0.2% of the tokens issued. After being elected the Witness is allowed to join the elected Witnesses block pool and start forging blocks. Elected Witnesses are allocated a percentage of blocks that is a function of their number of votes. Initially Attrace will start with 31 elected Witnesses and this will be the minimum number of Witnesses required going forward. If the number of Witnesses falls below 31 the Publishers will have to increase their transaction fees in order to attract more Witnesses.

Election procedure

The votes to elect Witnesses are a continuous endorsement rather than a one-time vote, meaning that a vote allocated to a miner stays with that miner until revoked or allocated to another. The Witnesses will offer a percentage of their revenue to their supporting token holders as a reward.

The project also has a mechanism to eject corrupt Witnesses. This is done by making it possible for token holders to oppose a Witness that is deemed to be untrustworthy; if a Witness has more negative than positive votes, they are removed from the pool.

Witness Quality Regulation

When a Witness is selected to forge blocks but has a very slow server or connection, it could delay the network with a few seconds on their turn.

The network monitor will periodically test every Witness by validating blocks, generate schedules, throughput performance, block generation/validation of performance, schedule generation/validation, location, latency etc. This will help community to assess if the Witness would be a good choice from a technical / capacity point of view. The Attrace network monitor will publicly display the real time performance of all Standby and Active Witnesses.

Because a low-quality Witness could offer a relatively large percentage of its revenue in order to attract votes, an additional fine on delivering a low-quality service can be activated (and determined) by the community. In this case an elected Witness that fails to forge a block or fails to do it fast enough will have a lower probability to get assigned additional blocks for a period of time.

Block forging process

The block round is filed within a network wide available so-called schedule. This schedule holds the following information for the next upcoming forging rounds:

  • n random slots to forge a new block, and
  • the list of elected Witnesses and their (vote determined) forging probabilities.

Each forged block is verified and validated by the network before being appended to the blockchain. The schedule is generated by the latest Witness of the previous round, validated by a quorum of Witnesses, and it contains various mechanism in order to guarantee network performance and redundancy.

Voting on network parameters and network events

A selection of the network parameters will be voted on by ATTR token holders. All tokens can vote for their preferred value and the voting result will be the median value out of all votes. Like with the elec- tion of Witnesses, a continuous endorsement system will be deployed when voting on these network parameters. This means that a coin holder votes for a certain network parameter setting and that choice remains in force until it is changed. This system ensures that everybody's opinion is counted and the community does not have to organise many one-time votes.

Some examples of network parameters that can be voted on in this way:

  • Sales fee level (on fiat and ATTR commissions).
  • Block forge probability reduction for low quality Witnesses.

One time network event voting

There will also be one time votes related to specific network events, for example votes on the sales fee distribution or the introduction of a completely new fine for late payments.

These votes would be one time votes on a yes/no basis. A motion would need support of 3% of the coins for a vote to take place and at least 30% of all coins would have to vote in order for the result to be valid (quorum of 30%). The motion that gets the most votes wins.

Sales fee distribution

On a daily basis, the network will calculate and pay out 20% of sales fees to the Project26 and burn the other 80%. This parameter is controllable by the coin holders through (one time) voting, so in case 20% proves to be an inefficient value for network operation, ATTR (Attrace coin) holders can call for a vote to change this.27

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26 Costs to run the project, e.g. overhead, marketing, IT.

27 A change will be manually implemented by the Attrace IT team.

Scalability and sharding

Sharding is a technique that can be deployed to scale up the network. Initially there will be no sharding on the Attrace network, because without sharding Attrace will already be able to process around 500-2000 (data) transactions (and possibly even more) per second.

Sharding should allow the network to scale up to very high throughput rates without sacrificing security. Sharding will involve consensus at the shard and global level.28 Communication between shards is possible, while not required for affiliate functionality.

Sharding would happen at the lowest level: The lead/click contract and its related transactions would go on the same shard. This would be most fair towards Witnesses and guarantees the best distribution of fees.

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28 Although we do not anticipate this to ever be needed: There is the option to scale up the network via multiple shards (individual block forging pools managing individual sub-chains). In order to validate all these blocks a new blockchain will be implemented on top, tracking all hashing info of all the individual shards.

End user private data feeds

It is important to ensure that end-user data and activities are not exposed on the public network. On the other hand, the system still needs to provide the Merchants and Publishers with the required user-data to run and optimize campaigns. To achieve this, a new system for security will be implement- ed where private user-data is volatile and lives encrypted in the short-term memory of the network. Parties can consume feeds that hold only the data related to their transactions. Every Publisher and Merchant will get a fair amount of data retention volume, directly correlated to their reputation and traffic generated.

UI/UX, portals and API feeds

Besides the Attrace user interfaces for Publishers and Merchants there will be an open API available for various platforms and devices. The API will provide core services as a toolkit to build multiple products and services. Third part development of portals, new markets and new products will be supported. At a later stage the API feeds will also be delivered as dockerized containers with DDoS protection / throttling.

Developers that contribute code to the project which is released, will receive rewards in ATTR.

There will be space for service providers and consultants who take over the whole account management as well.

Developer-friendly intigration

Client API

The client API has the functionality to interact with the Attrace network to manage views, leads and sales. It will be provided as an easy-install/easy-to-use docker image that can be launched with a single command. Using this system, any party (Publisher, Merchant) using the network can launch an API with a single command.

Public API (provided by Attrace)

Next to the decentralized client API, the Attrace network will also run a managed cluster of API’s acces- sible through api.attrace.com. This will allow Publishers and Merchants that don’t have the infrastructure to run a client API themselves to interact with the network. The public API will consist of normal client API’s, deployed via autoscaling to assure low latency access.

User verification

New user verification will be based on reputation metrics and new users will have to deposit some ATTR.

New users can also be nominated by existing Merchants or Publishers (with a sufficient reputation).

Reporting

Aggregated statistics used for calculating Merchant and Publisher reputation are stored in the Ledger.

Initial statistics:

  1. Publisher: Amount of traffic generated and general conversion of traffic generated.
  2. Merchant: General conversion rates and approval rates of sales generated.

An API feed will also be available with all metrics.

Click-fraud prevention

Since Publishers pay a small fee for adding clicks to the network and since performance is used in calculating reputation, they will be refrained from cookie spamming.

However the network should still guard against bad actors like competitive click-farms and botnets (tough the majority of that behaviour will be captured via the reputation statistics).

P1: Basic spam filtering

Filtering of bad actors will be built into the network at the client and block validation layer.

  • At the client layer, the network will gossip (monitor) features which share & identify traffic on the network. When applied, this functionality will be the first line of defence against bad clicks before they are added to the network. To achieve this we will use techniques like probabilistic data structures on multiple features (bloom filters, hyperloglog), over windows of traffic with decay.
  • At the block validation layer, Witnesses (which have full access to recent click history) will be able to apply more simplistic click-spam filtering techniques.

P2: Click-fraud prevention using Machine Learning and AI

After Attrace is live and driving volume, the network will be extended with features to deliver real-time (training) data and functionalitiy for detecting and preventing click-fraud. This data feed will be used to apply Machine Learning to train algorithms and build models to detect and classify click-fraud or bad-actor behaviour. Over time these algorithms can become self-learning.

Applying Machine Learning algorithms on a self-regulating blockchain based distributed network is a key part of the Attrace future innovation plans.

P3: Preventing Merchants not registering sales

In case a product sold by the Merchant requires an approval or rejection29 the Merchant could poten- tially lower the approval rates to lower the fees that need to be paid to the Publisher. However, once Attrace is live and driving volume, the network will implement an innovative policy to check the accura- cy of sale approvals registered by Merchants. As part of every deal, the Publisher can designate a certain amount of ATTR to check the sales of the Merchant.

This is done by paying customers (the ones buying the products or services from the Merchants) to report on actual sales. The customers will be approached by showing a random sample of them (e.g. sample of 5%) a page with a “transaction reporting for cash back” message after the customer leaves the sales funnel.

In case the Merchants do not report the same sales numbers, the customer will provide payment details as evidence after which a willfully underreporting Merchant can get a fine and reputation punishment. This is especially interesting to check Merchants that do not have reputation statistics yet or in case conversion is dropping.

P4: Reduced surface attacks

Accounts used to receive and send payments for ads on blockchain will be linked to domains. This repository of cryptographic keys can be leveraged to authenticate events generated during ad request and delivery. This principle will substantially reduce surface attacks

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29 FMCG products sales can immediately be closed, however the sale of a financial product (e.g. insurance or credit card) requires KYC checks which takes time and also might result in cancellation of the sale because of legit reasons

Data protection laws

The team is very familiar with the European General Data Protection Regulation (GDPR) requirements and aware of the huge changes to the existing Data Protection Act (DPA) that will come into effect on May 25th 2018.30

As no personal data is stored on the chain, Merchants and Publishers can be assured that Attrace is compliant to these strict EU privacy and data protection laws.

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30 More info https://www.eugdpr.org/ and for final version regulation http://data.consilium. europa.eu/doc/document/ST-5419-2016-INIT/en/pdf

Token parameters

The total number of issued tokens will be 1,000,000,000 ATTR. No new tokens will be issued and all unsold tokens will be distributed over the other holders (including the Company and the Team).

General Parameters:

Token: ATTR

Total supply: 1,000,000,000 ATTR

ATTR base unit

The smallest denomination (base unit) of ATTR is called Ace, which equals 0.000,000,000,000,000,001 ATTR; or put differently 1 ATTR = 1e18 Aces.

Ace is only a superficial naming to make transaction calculations more user-friendly

Registration, KYC, Purchaser Eligibility & Security (in case of a token sale)

To ensure eligibility and security, all parties participating in the token exchange must complete a registration process with Attrace. Registration requirements can be found on the Attrace website at the following link: https://attrace.com/registration/ .

Anyone wanting to participate in Attrace’s token exchange must adhere to and be approved by Attrace’s KYI proce- dures, which are built upon industry standard secure identity best practises. Token purchase, ownership, receipt, and/or possession of ATTR tokens carries no rights, expressed or implied, other than the right to use such tokens as a means to participate, interact or transact in the Attrace network if successfully implemented. More specifically, ATTR tokens do not represent or confer any ownership right or stake, share, security, or equivalent rights, or any right to receive future revenue shares, intellectual property rights or any other form of participation in or relating to Attrace and its corpo- rate affiliates, other than any rights relating to the provision and receipt of services from Attrace.

The tokens are not being offered or distributed to, as well as cannot be resold or otherwise alienated by their holders to citizens of, natural and legal persons, having their habitual residence, location or their seat of incorporation in the country or territory where transactions with digital tokens are prohibited or in any manner restricted by applicable laws or regulations, or will become so prohibited or restricted at any time after this Agreement becomes effective ("Restricted Persons"). China and US residents are Restricted Persons.

We do not accept participation from the Restricted Persons and reserve the right to refuse or cancel the ATTR token purchase requests at any time at our sole discretion when the information provided by the purchasers within the KYC procedure is not sufficient, inaccurate or misleading, or the purchaser is deemed to be a Restricted Person. Moreover, we reserve the right to refuse to enter into or complete a transaction if we suspect money laundering or if the person entering requesting the transaction is listed on any applicable sanction list.

APPENDIX 1: Possible project for Attrace Consultant

Display advertising market

Being able to audit the true number of views of a display advertisement is another very substantial problem in the current online advertising market.32 The basics of the Attrace blockchain can also be used to provide insights on analytics around clicks/views of Publisher websites (e.g. Google Analytics). Given that this data is proprietary this should be arranged via private data feeds between Merchants and Publishers. However, the connection / market place between the Publishers and Merchants to set up this private data feed can be arranged via Attrace. In this setting it is then also possible to broad- cast the real-time views off-chain, which would provide the Merchant a real-time event analytics stream of all views and it would be the absolute truth. This would be a very strong proposition in combination with the actual clicks - as a result of Display ads - that would go on-chain via the normal Attrace ecosystem.

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32 https://venturebeat.com/2015/12/10/33-of-all-programmatic-ad-impressions-on-mobile-could-be-fake/

APPENDIX3 : Types of affiliate websites to target

Affiliate websites are often categorized by merchants (Merchants) and Affiliate Networks. There are currently no industry-wide standards for the categorization. The following types of websites are generic, yet are commonly understood and used by affiliate marketers:

  • Search affiliates that utilize pay per click search engines to promote the Merchants' offers (i.e., search arbitrage);
  • Price comparison service websites and directories;
  • Loyalty websites, typically characterized by providing a reward or incentive system for purchases via points, miles, cash back;
  • Cause Related Marketing sites that offer charitable donations;
  • Coupon and rebate websites that focus on sales promotions;
  • Content and niche market websites, including product review sites;
  • Personal websites;
  • Weblogs and websites syndication feeds;
  • E-mail marketing list affiliates (i.e., owners of large opt-in -mail lists that typically employ e-mail drip marketing) and newsletter list affiliates, which are typically more content-heavy; Registration path or co-registration affiliates who include offers from other merchants during the registration process on their own website;
  • Shopping directories that list merchants by categories without providing coupons, price comparisons, or other features based on information that changes frequently, thus requiring continual updates;
  • Cost per action networks (i.e., top-tier affiliates) that expose offers from the Merchant with which they are affiliated to their own network of affiliates;
  • Websites using adbars (e.g. AdSense) to display context-sensitive advertising for products on the site;
  • File-Sharing: Web sites that host directories of music, movies, games and other software. Users upload content to file-hosting sites, and then post descriptions of the material and their download links on directory sites. Uploaders are paid by the file-hosting sites based on the number of times their files are downloaded. The file-hosting sites sell premium download access to the files to the general public. The web sites that host the directory services sell advertising and do not host the files themselves; and
  • Video sharing websites: YouTube videos are often utilized by affiliates to do Affiliate Marketing. A person would create a video and place a link to the affiliate product they are promoting in the video itself and within the description.