There used to be a crypto blogging platform called Hyperspace that had only upvotes and no downvotes. It was so crudded up by people exploiting it that the token had no value and all users lost faith in it. Eventually, the team shut it down with no warning and anyone who still invested, lost their money. That's just a lack of balance.

When you rate a restaurant on Google you rate it higher or lower than whatever rating it had before yours. Your input moves its rating. If you rate it lower, you're demonetizing it through the loss of opportunity. But if you had a garbage experience there or got food poisoning, you want to make sure no one else eats there and they don't keep profiting off screwing others over. That type of rating system is the same as up and downvotes. We can easily take our votes here on a Hive frontend and present them as a 5-star rating, with 4 stars being an upvote and 1 star being a downvote. It's all the same in the end.

You're talking essentially not about downvotes but once again about the stigma and attitudes around them. That's the real problem here. You're right in saying that people see the downvote, figure they should stop engaging as to not get the downvoter on themselves, and stop curating as its unprofitable. If they also stop reading then that's a whole other problem which basically meant that they never cared for the content in the first place. I don't know how to change people's attitudes.

Anyx's paper is about governance (witness) voting but there are some crossover elements in regards to his points around incentives. It does become a personal question of ideology over profit. Most people are set when it comes to clear-cut topics like racism but when it's something like Covid where many see it as temporary and are on the fence already, it's very easy to abandon one side and cross the floor.

To actually answer your question, downvotes can be used to demonetize people on Hive who want to earn only through posting and have little support for their content or point of view to counter the force of the downvotes. The use used like that because Hive is a stake-based system where depending on your investment, you have more or less influence over reward distribution than someone else. This is technical functionality and you know this already. If you ask the downvoter they'll likely just say something along the lines of 'because I can'.