Agree.
You have pointed out something that I hadn’t completely appreciated:
If K is increased then this makes it viable for more whales to earn increased yield through running private pools 100% pledged. With K=500 you have to be a mega-whale with 68M pledge to fully saturate your pool and get that extra yield. With K=5000 then now you only need 6.8M pledge to get this extra yield.
Also checkout the fantastic calculate created by @dstratio
The more we increase K within the current framework, the more whales will enter the range that can benefit from the far greater returns for 100% pledge.
If you think this doesn’t matter much then here is how I would game the system if I was a multi-pool operator with plenty of pledge:
Let’s say I had 17M Ada and K was increased to 2000. Now I can run a fully saturated pool with 17M pledge to earn extra yield. I would do that and also continue as a multi-pool operator with almost no pledge in my mult-pools for the community because these are still additionally profitable.
Hence, I think we need to be careful about increasing K within the current framework. And, I can definitely see reasons for reducing K within the current framework.