To my mind, it encourages more reports because that way you're more likely to have some of them slip through and get approved, meaning your future reports are worth more.
Does it, though? It discourages humans from putting in effort because their time will not be rewarded. But the slop reports were not the result of time nor effort. I'd rather expect changing a payout from $1k to $250 doesn't meaningfully move the needle on someone spending two minutes prompting their OpenClaw to spam bug bounties. Especially since the reports you actually want to filter out are the sub-50-IQ reports that were always going to get $0 either way.