One of the biggest bombshells in Germany over the past 20 years is the Stasi Files. Millions of pages have been recovered or reconstructed from the Stasi archives and Germans can actually request their files. One of the people mentioned in that article was denounced by his teacher; another was effectively blacklisted when he refused to provide identification on request. The end of the movie The Lives of Others also deals with the political and social fallout of the public release of the Stasi's archives on German society.

Basically if you look through the files many of the informants were not paid but rather volunteered the information for a wide variety of reasons. Some may have been paid, others may have used an anonymous denunciation to eliminate a political or social rival while some informants could have done so to enact some kind of revenge.

How could such a high number of informants be sustainable?

The vast majority of these informants were known as "IM's" or Informelle Mitarbeiter and /or Inoffizeller Mitarbeiter. In English this translates to 'unofficial collaborator'.

Thus, the IM's were not formally employed by the MfS (Ministry of State Security, the Stasi). Once working as an IM, the IM would get a 'name' (Deckname in German) and this name would be used in the corresponding case.

How did this effect people's progression in East German society?

By playing along, one could obtain certain favors for themselves or for their families in GDR society. Or better yet, they could stay out of trouble if they got into some type of trouble. The Stasi could work wonders.

Did informants generally expect to receive cash or other perks?

Sometimes cash was used as a reward for 'helping' out. There were many other perks as well. In the GDR, most things worked through 'connections' (Beziehungen in German).

https://www.youtube.com/watch?v=2wIkbPQVao8 <- is a Stasi Instructional video with an explanation in English.