TechFlow news: On February 12, Vitalik Buterin, co-founder of Ethereum, published a detailed post on social media outlining his views on user incentive mechanisms for crypto projects. Vitalik argued that incentive mechanisms should distinguish between two scenarios: compensating for temporary costs incurred during a project’s early, immature phase is beneficial, whereas attracting users who will not use the project once it matures is harmful.
Vitalik noted that many decentralized finance (DeFi) liquidity rewards are justified, as they compensate users for risks such as hacks or team fraud targeting new projects. In contrast, paying users to post attention-grabbing tweets is misguided; such incentives may lead users to sacrifice content quality in pursuit of maximum rewards.
He emphasized that ideal incentive mechanisms should precisely compensate for a protocol’s temporary shortcomings—flaws that naturally disappear as the protocol matures—while avoiding the attraction of users unlikely to remain engaged long-term. Vitalik concluded by stating that successful applications should focus their primary efforts on developing real utility, rather than indiscriminately expanding their user base by paying users.
