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Regarding regular users, I really like the idea of something approaching complete discretion, and that may apply to a member's decision to never, ever, ever spend his/her smerits - but even within that context of nearly complete discretion about how or whether to use merits it seems likely that theymos has tools that he could use to incentivize the spending of individual smerits without ever really needing to employ decay... because in my thinking decay seems a step too far, and maybe even might be something that is considered after several other available tools are employed (including the tool of threatening smerit decay... hahahahhahaha, which he has already employed at least once).
I concur that sMerit decay and eventual loss many not resolve the issue of a numerous amount of users still withholding large amounts of sMerit and not joining in the game of awarding often enough to guarantee the overall system goal (cut down on spam and abusers, whilst not strangling the legit users that try to rank-up).
Taking a leap, many fidelity programs apply some sort of points decay system overtime, if the accumulated amount is not redeemed. Fidelity programs nevertheless have the incentive of points being usable for our personal gain, so spending them is in our favour and thus does not need too much of a shift.
Here though, the incentive to use sMerit is down to believe or morality, with nothing tangible directly being gained from awarding sMerit (yes, there are those that benefit in fraudulent ways, and yes there is an overall benefit if spam is reduced and reasoning is stepped-up three steps).
If sMerit did eventually decay, it would be like a constant token burn, thus making sMerit more valuable to those that believe in it or require it to rank-up.
Even though it is decentralized by nature of usage, there does have to be an overall aggregate look upon the amount of sMerit potentially awardable forum wide, to avoid the above.
Perhaps instead of decay it should be transferred to merit “sub-sources” (to be defined how to designate them, how much sMerit they get to award, etc.), so that total overall forum potential sMerit does not fall below a certain threshold.