The important thing to point out here is that it is the stake saturation limit, you don’t need a near fully pledged pool to fully realize your pledge benefit, you can fully realize your pledge benefit with any amount of pledge but you will need additional delegation to achieve that. This disincentivizes having more than k pools, a property which the proposed pledge changes in this thread lacks.
So every time k is doubled, many more people get to enjoy the same benefits that only a few do at the moment, and the gap between people that enjoy the maximum benefit and the average pool is significantly lessened. The real problem is not how much people at the top are making, it’s the difference between the top and the bottom, increasing k decreases this gap.
Paying this extra yield is preferable to me than having a system that converges to the staking ecosystem being controlled by a handful of whales. 500k pledge at k = 1000 would give close to 0.5% more rewards to delegators, this is significant relative to pretty much any margin a non private stake pool is currently charging. As delegators take advantage of these financial opportunities and the system becomes more decentralized, a0 can be reduced, further decreasing the gap between fully pledged and average pledged pools.
I think this is something that we will have to watch play out. As more projects come online in the ecosystem users who are looking to take additional risks via smart contracts will have to choose between some extra yield on their staking rewards via pledge locking or other new yield opportunities from projects adding different kinds of value. It seems likely to me these new projects will stake the ada in their smart contracts rather than pledge it as liquidity is often a necessity.
You make two statements here about incentives going in the wrong direction, however I don’t see any support for that in your post, it seems to instead be about some people earning more rewards than others. Could you clarify further?