I would say, given a static audience of 1 million people, that user engagement goes down the more you advertise (if 1/4 of my feed is ads, that's 25% less actual content to interact with).

TikTok and Instagram have been able to grow larger and larger audiences despite the pressure of ads (and honestly I know when I tried TikTok last there weren't any ads yet, I wonder what portion of an hour is taken up by ads and how long is it til it reaches television levels of ~25%) - as long as audience growth outpaces users losing interest, you can keep introducing ads, but you can't do it forever.