How Better Incentive Models Can Protect Retail Investors

• Market cycles since 2017 have consistently followed a pattern of retail excitement followed by catastrophic drawdowns, leading to a recurring erosion of investor trust.
• Existing crypto incentives favor high-risk speculation, evidenced by derivatives trading volume reaching a record $85.7 trillion in 2025.
• A proposed savings layer focusing on capital preservation and prize-linked incentives could offer retail investors a safer way to participate in the market.

The Trap of Speculative Incentives

According to Ilya Tarutov, founder of Tramplin, the recurring failures in the crypto market are not due to flawed technology but rather poorly designed incentive structures. Since 2017, every cycle has moved from optimism to overconfidence, eventually ending in panic. This environment pushes everyday users toward high-risk behaviors because traditional, safer options like staking—which currently has a market exceeding $245 billion—often yield only 2% to 10% APY. For retail investors with small balances, these returns often amount to less than $100 annually, making speculation seem like the only path to meaningful gains.

The Rise of High-Risk Trading

While safe participation through native staking exists, the industry has pivoted heavily toward high-leverage instruments. In 2025, derivatives platforms saw a record-breaking $85.7 trillion in volume. These platforms encourage trading driven by FOMO (fear of missing out) and complex strategies that often leave retail investors as exit liquidity for more sophisticated market participants. The current system is optimized for turnover rather than the long-term financial health of its users.

A New Model for Retail Savings

To protect retail participants, Tarutov suggests the creation of a crypto savings layer built on capital preservation and full transparency. This model would reward consistency and discipline rather than speed or speculation. The goal is to create a system that works effectively for both a 10 USDT balance and a 100,000 USDT balance.

This approach takes inspiration from traditional finance models like the United Kingdom’s Premium Bonds, which prioritize safety while offering prize incentives. In 2025, the Premium Bonds program demonstrated significant success:

• 71,722,056 prizes were distributed to participants.
• Total prize payouts reached £4.95 billion ($6.6 billion).
• Total eligible holdings grew to £134.6 billion, with over 470,000 new accounts opened.

Future Outlook and Transparency

The survival of the next crypto cycle may depend on shifting the industry's focus toward loss reduction and long-term participation. A successful savings layer must have mechanics simple enough to explain in a few sentences, ensuring users understand exactly where their rewards come from. By prioritizing the protection of everyday users over short-term turnover, the industry can break the cycle of hype and collapse, fostering a more sustainable ecosystem.