If everyone gets a prize, doesn’t that devalue the top prize and foster mediocrity?

In contest, events, etc. where all the participants get a prize, doesn’t that take away from getting the top prize? One could say getting the top prize was a matter of luck, or that the skill needed to achieve it was not that important. With knowing you will get a prize basically for just showing up, how does that not foster mediocrity, where is the incentive to do better, or do your very best?