Vitalik Buterin Calls for Sustainable Incentives in Crypto

Sustainable project growth depends on real utility, with incentives aligned to genuine risk and long-term value.

Vitalik Buterin has joined a growing debate over how crypto projects attract users. In a recent online discussion, an Ethereum co-founder said financial incentives can drive adoption, but only under strict conditions. He argued that broad payments to users often create short-term activity without long-term value.

Buterin Warns Against “Pay Users or Fail” Growth Strategy

Discussion started after a post online claimed crypto apps cannot gain real traction without airdrops or token rewards. Commenters argued that financial payouts remain central to the formation of network effects.

Responding on X, Vitalik Buterin agreed that incentives reflect current market conditions. However, he warned against turning adoption into a simple “pay users or fail” strategy.

Buterin then drew a distinction between sustainable and unsustainable rewards. According to him, paying certain users from revenue collected from others creates a sound economic loop. In those cases, token flows mirror traditional business models where income funds growth.

The CEO believes that paying users in the early stages can be reasonable. Liquidity providers face the possibility of hacks or project failure as new protocols carry technical and security risks. So, rewards in these cases act as compensation for taking on that added risk.

Once these projects improve audits and build trust in the sector, risk levels fall. At that point, high rewards are no longer necessary. Buterin said this approach is different from paying users just to create activity or generate traffic.

He said paying all users during early growth can create long-term problems. Buterin added that teams should not assume future profits will cover heavy early spending. Once rewards end, activity often drops because many users joined only for the payouts and have little reason to stay.

Aggressive Reward Campaigns Risk Weakening Crypto Communities

Projects that pay users to post promotional content often get the wrong outcome. Creators focus on earning rewards instead of producing quality content. As soon as payments stop, activity usually declines because there is no longer any incentive to use the platform.

Even if some users stay, the community can weaken without genuine engagement. In DeFi, capital functions the same regardless of who provides it. However, on social platforms, quality and active users matter more than size.

Buterin added that committed community members do not require ongoing payments to support a platform. He said high-quality participants often build tools, write documentation, and answer questions in forums without expecting rewards. Their contributions tend to strengthen a project over time.

In his view, an effective incentive offsets temporary weaknesses of an early-stage product. Once those weaknesses fade, rewards should also decline. Aggressive campaigns that pay users simply to inflate numbers can create the appearance of adoption while failing to build a strong community.

“The bulk of the effort should be on making an actually-useful app. This was historically ignored, because it’s not necessary for narrative engineering to create a speculative bubble. But now it is necessary.” 

Vitalik Buterin wrote.

He argued that crypto is gradually shifting toward models driven by real utility not reward-led growth. Strong incentives are those that compensate for early disadvantages and naturally phase out as maturity increases.

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