diff --git a/functions/src/on-update-user.ts b/functions/src/on-update-user.ts
index 78be7ca7..b5861c41 100644
--- a/functions/src/on-update-user.ts
+++ b/functions/src/on-update-user.ts
@@ -8,8 +8,6 @@ import { ReferralTxn, Txn } from '../../common/txn'
 import { Contract } from '../../common/contract'
 const firestore = admin.firestore()
 
-export const ReferredUserDescriptionPrefix = 'Referred user id'
-
 export const onUpdateUser = functions.firestore
   .document('users/{userId}')
   .onUpdate(async (change, context) => {
@@ -17,84 +15,86 @@ export const onUpdateUser = functions.firestore
     const user = change.after.data() as User
     const { eventId } = context
 
-    if (prevUser.referredByUserId === user.referredByUserId) {
-      console.log("referredByUserId hasn't changed")
-      return // We only handle referrals right now.
+    // TODO: prevent a user from setting their referral if not the first time
+    if (prevUser.referredByUserId !== user.referredByUserId) {
+      await handleUserUpdatedReferral(user, eventId)
     }
-
-    // Only create a referral txn if the user has a referredByUserId
-    if (!user.referredByUserId) {
-      console.log(`Not set: referredByUserId ${user.referredByUserId}`)
-      return
-    }
-    const referredByUserId = user.referredByUserId
-
-    // get user that referred this user
-    const referredByUserDoc = firestore.doc(`users/${referredByUserId}`)
-    const referredByUserSnap = await referredByUserDoc.get()
-    if (!referredByUserSnap.exists) {
-      console.log(`User ${referredByUserId} not found`)
-      return
-    }
-    const referredByUser = referredByUserSnap.data() as User
-
-    let referredByContract: Contract | undefined = undefined
-    if (user.referredByContractId)
-      referredByContract = await getContract(user.referredByContractId)
-    console.log(`referredByContract: ${referredByContract}`)
-
-    const txnQuery = firestore
-      .collection('txns')
-      .where('toId', '==', referredByUserId)
-      .where('category', '==', 'REFERRAL')
-    const referralTxns = await getValues<Txn>(txnQuery).catch((err) => {
-      console.error('error getting txns:', err)
-      throw err
-    })
-    // If user has a referral txn contains 'referred by' the current username in the description, halt
-    if (referralTxns.map((txn) => txn.description).includes(referredByUserId)) {
-      console.log('found referral txn with the same details, aborting')
-      return
-    }
-    console.log('creating referral txns')
-    const fromId = HOUSE_LIQUIDITY_PROVIDER_ID
-
-    await firestore.runTransaction(async (transaction) => {
-      // if they're updating their referredId, create a txn for both
-      const txn: ReferralTxn = {
-        id: eventId,
-        createdTime: Date.now(),
-        fromId,
-        fromType: 'BANK',
-        toId: referredByUserId,
-        toType: 'USER',
-        amount: REFERRAL_AMOUNT,
-        token: 'M$',
-        category: 'REFERRAL',
-        description: `${ReferredUserDescriptionPrefix}: ${user.id} for ${REFERRAL_AMOUNT}`,
-      }
-
-      const txnDoc = await firestore.collection(`txns/`).doc(txn.id)
-      await transaction.set(txnDoc, txn)
-      console.log('created referral with txn id:', txn.id)
-      // We're currently not subtracting M$ from the house, not sure if we want to for accounting purposes.
-      transaction.update(referredByUserDoc, {
-        balance: referredByUser.balance + REFERRAL_AMOUNT,
-        totalDeposits: referredByUser.totalDeposits + REFERRAL_AMOUNT,
-      })
-
-      await createNotification(
-        user.id,
-        'user',
-        'updated',
-        user,
-        eventId,
-        txn.amount.toString(),
-        referredByContract,
-        'user',
-        referredByUser.id,
-        referredByContract?.slug,
-        referredByContract?.question
-      )
-    })
   })
+
+async function handleUserUpdatedReferral(user: User, eventId: string) {
+  // Only create a referral txn if the user has a referredByUserId
+  if (!user.referredByUserId) {
+    console.log(`Not set: referredByUserId ${user.referredByUserId}`)
+    return
+  }
+  const referredByUserId = user.referredByUserId
+
+  // get user that referred this user
+  const referredByUserDoc = firestore.doc(`users/${referredByUserId}`)
+  const referredByUserSnap = await referredByUserDoc.get()
+  if (!referredByUserSnap.exists) {
+    console.log(`User ${referredByUserId} not found`)
+    return
+  }
+  const referredByUser = referredByUserSnap.data() as User
+
+  let referredByContract: Contract | undefined = undefined
+  if (user.referredByContractId)
+    referredByContract = await getContract(user.referredByContractId)
+  console.log(`referredByContract: ${referredByContract}`)
+
+  const txnQuery = firestore
+    .collection('txns')
+    .where('toId', '==', referredByUserId)
+    .where('category', '==', 'REFERRAL')
+  const referralTxns = await getValues<Txn>(txnQuery).catch((err) => {
+    console.error('error getting txns:', err)
+    throw err
+  })
+  // If the referring user already has a referral txn due to referring this user, halt
+  if (referralTxns.map((txn) => txn.description).includes(user.id)) {
+    console.log('found referral txn with the same details, aborting')
+    return
+  }
+  console.log('creating referral txns')
+  const fromId = HOUSE_LIQUIDITY_PROVIDER_ID
+
+  await firestore.runTransaction(async (transaction) => {
+    // if they're updating their referredId, create a txn for both
+    const txn: ReferralTxn = {
+      id: eventId,
+      createdTime: Date.now(),
+      fromId,
+      fromType: 'BANK',
+      toId: referredByUserId,
+      toType: 'USER',
+      amount: REFERRAL_AMOUNT,
+      token: 'M$',
+      category: 'REFERRAL',
+      description: `Referred new user id: ${user.id} for ${REFERRAL_AMOUNT}`,
+    }
+
+    const txnDoc = await firestore.collection(`txns/`).doc(txn.id)
+    await transaction.set(txnDoc, txn)
+    console.log('created referral with txn id:', txn.id)
+    // We're currently not subtracting M$ from the house, not sure if we want to for accounting purposes.
+    transaction.update(referredByUserDoc, {
+      balance: referredByUser.balance + REFERRAL_AMOUNT,
+      totalDeposits: referredByUser.totalDeposits + REFERRAL_AMOUNT,
+    })
+
+    await createNotification(
+      user.id,
+      'user',
+      'updated',
+      user,
+      eventId,
+      txn.amount.toString(),
+      referredByContract,
+      'user',
+      referredByUser.id,
+      referredByContract?.slug,
+      referredByContract?.question
+    )
+  })
+}