diff --git a/web_app/api/referal.py b/web_app/api/referal.py
new file mode 100644
index 00000000..4d090063
--- /dev/null
+++ b/web_app/api/referal.py
@@ -0,0 +1,88 @@
+"""
+FastAPI app for generating referral links based on wallet IDs.
+
+Endpoint:
+- GET /api/create_referal_link: Creates a referral link with a random code for a user.
+
+Dependencies:
+- SQLAlchemy: For user lookup in the database.
+- FastAPI: For handling API requests.
+- random and string: For generating referral codes.
+
+Errors:
+- 404: If the user with the provided wallet ID does not exist.
+"""
+
+import random
+import string
+
+from fastapi import APIRouter, Depends, FastAPI, HTTPException, Query
+from sqlalchemy.orm import Session
+
+from web_app.db.database import Base, get_database
+from web_app.db.crud import UserDBConnector
+from pydantic import BaseModel
+
+app = FastAPI()
+router = APIRouter(
+    prefix="/api",
+    tags=["referral"],
+    responses={404: {"description": "Not found"}},
+)
+
+
+class ReferralResponse(BaseModel):
+    """ 
+    Response model
+    """
+    
+    wallet_id: str
+    referral_code: str
+
+
+def generate_random_string(length=16):
+    """
+    Generate a random string of letters and digits with the given length.
+
+    Args:
+        length (int): Length of the string (default is 16).
+
+    Returns:
+        str: Randomly generated string.
+    """
+
+    return "".join(random.choices(string.ascii_letters + string.digits, k=length))
+
+
+@router.get("/create_referal_link")
+async def create_referal_link(
+    wallet_id: str = Query(..., description="Wallet ID of the user"),
+    db: Session = Depends(get_database),
+):
+    """
+    Create a referral link for a user.
+
+    Args:
+        wallet_id (str): The wallet ID of the user
+
+    Returns:
+        dict: Wallet ID and the generated referral code
+
+    Raises:
+        HTTPException: If the user is not found in the database
+    """
+    
+    if not wallet_id:
+        raise HTTPException(status_code=400, detail="Wallet ID cannot be empty")
+
+    user = UserDBConnector.get_user_by_wallet_id(db, wallet_id)
+    if not user:
+        raise HTTPException(
+            status_code=404, detail="User with the provided wallet_id does not exist"
+        )
+
+    referral_code = generate_random_string()
+    return ReferralResponse(wallet_id=wallet_id, referral_code=referral_code)
+
+
+app.include_router(router)
diff --git a/web_app/tests/test_create_referal_link.py b/web_app/tests/test_create_referal_link.py
new file mode 100644
index 00000000..b64b3f65
--- /dev/null
+++ b/web_app/tests/test_create_referal_link.py
@@ -0,0 +1,90 @@
+"""
+Unit tests for the FastAPI referral link creation endpoint.
+
+Tests include:
+- Successful creation of a referral link with a valid wallet ID.
+- Missing wallet ID in the request.
+- User not found in the database.
+
+Uses pytest, unittest.mock for mocking, and FastAPI's TestClient for testing the API.
+"""
+
+import pytest
+from fastapi.testclient import TestClient
+
+from web_app.db.crud import UserDBConnector
+from web_app.api.referal import app
+
+
+@pytest.fixture
+def client():
+    """
+    Returns a TestClient for the FastAPI app.
+    """
+    return TestClient(app)
+
+
+@pytest.fixture
+def mock_get_user_by_wallet_id(mocker):
+    """
+    Mocks the UserDBConnector's method for fetching a user by wallet_id.
+    """
+    return mocker.patch.object(UserDBConnector, "get_user_by_wallet_id")
+
+
+def test_create_referral_link_for_existing_user(client, mock_get_user_by_wallet_id):
+    """Positive Test Case: Test referral link creation for an existing user"""
+    mock_get_user_by_wallet_id.return_value = {"wallet_id": "valid_wallet_id"}
+    response = client.get("/api/create_referal_link?wallet_id=valid_wallet_id")
+
+    assert response.status_code == 200
+    assert "wallet_id" in response.json()
+    assert "referral_code" in response.json()
+    assert len(response.json()["referral_code"]) == 16
+
+
+def test_create_referral_link_for_non_existent_user(client, mock_get_user_by_wallet_id):
+    """Negative Test Case: Test referral link creation for a non-existent user"""
+    mock_get_user_by_wallet_id.return_value = None
+    response = client.get("/api/create_referal_link?wallet_id=non_existent_wallet_id")
+
+    assert response.status_code == 404
+    assert response.json() == {
+        "detail": "User with the provided wallet_id does not exist"
+    }
+
+
+def test_create_referral_link_with_empty_wallet_id(client):
+    """Negative Test Case: Test referral link creation with an empty wallet ID"""
+    response = client.get("/api/create_referal_link?wallet_id=")
+
+    assert response.status_code == 400
+    assert response.json() == {"detail": "Wallet ID cannot be empty"}
+
+
+def test_create_referral_link_with_malformed_wallet_id(
+    client, mock_get_user_by_wallet_id
+):
+    """Test referral link creation with malformed wallet ID"""
+    mock_get_user_by_wallet_id.return_value = None
+    response = client.get("/api/create_referal_link?wallet_id=@@!invalidwallet")
+
+    assert response.status_code == 404
+    assert response.json() == {
+        "detail": "User with the provided wallet_id does not exist"
+    }
+
+
+def test_create_referral_link_for_multiple_users(client, mock_get_user_by_wallet_id):
+    """Test referral link creation with a random referral code for multiple users"""
+    mock_get_user_by_wallet_id.return_value = {"wallet_id": "valid_wallet_id"}
+    response1 = client.get("/api/create_referal_link?wallet_id=valid_wallet_id")
+    referral_code1 = response1.json()["referral_code"]
+    response2 = client.get("/api/create_referal_link?wallet_id=valid_wallet_id")
+    referral_code2 = response2.json()["referral_code"]
+
+    assert response1.status_code == 200
+    assert response2.status_code == 200
+    assert referral_code1 != referral_code2
+
+