the major flaw seems to be forcing every user to "tip" proportional to their stake. If "gifting" was voluntary rewards would be kept in line with the actual value of the content and the value of steem wouldn't be inflated away to the benefit of those manipulating the system.
that is, if steem were striped of all its bells and whistles and was simply a generic crypto currency it would work much better.
RE: Let's just admit Steemit...