Both your suggestion and mine are based on the fallacy that the eventual payout is a "fair value" that can be predicted. This is not the case due to the circularity, especially in the case of whale votes (since it is the votes that determine the eventual payout). There were some other issues with it but that is the key conceptual error that undermines the viability of it entirely.

Not 100% sure I know what you mean by circularity.

"since it is the votes that determine the eventual payout" - Isn't that exactly how markets work though? AFAIK they're the best tool we have at assessing value. Why would it fail here?

One counter-argument could be that content quality changes over time, while the supply of Steem used to pay content creation/curation remains constant. I still think that an incentivized downvote is better in those cases than upvotes only, even if it doesn't accurately find a fair value for all posts. That fair value is also likely platform dependent, but it would find some sort of equilibrium or "standard" over time.

Again, I might've misinterpreted/misunderstood your point, please let me know.

Also, some sort of superlinear payoff is needed otherwise the incentives favor voting for your own posts regardless of popularity or merit, either directly or via shill voting.

I agree. My feeling is that n^2 is too aggressive, but I don't have much to support that at the moment. Maybe we can address the self-voting effect by using a weaker form (n^1.2 ?) and not have the same blowout effect.

In thinking about this quite a bit over the past few months I've also come to believe that superlinear payoff is economically correct for a platform like Steemit, because only posts that are of interest to a large number of people benefit from being shared in this manner. If something is only of interest to a few people (dinner plans for example), it is better to share it privately via email (or private Steemit messages once that is implemented!) and not impose both the resource and clutter costs of sharing it with thousands or millions. So something of interest to 100 or 1000 is worth more than 10x or 100x something of interest to only 10; the latter probably has close to zero or possibly negative value (once costs are considered) on Steemit.

I agree, but I don't see why we couldn't have that and an incentivized downvote?

Also, we're not quite in that "Dinner plans" vs "President Obama AMA on Steemit" kind of situation when a post gets reposted and gets 1000x payout the second time around. Not quite your point, but when talking about non-optimal distribution of wealth, that's a prime example.

Thanks for taking the time to read this and for joining the conversation, I'm glad you got to see it and that it didn't get 100% lost in the abyss of Steemit.