The initial distribution isn’t as much of a big deal, since it’s a larger sum. The idea of slightly favoring smaller users is that after this initial large sum, subsequent payments to remaining smaller victims will be significantly impacted by gas costs to claim.
If bt8’s proposal ends up being approved, for example, 10 victims would remain, and 6/10 would be collectively owed less than 10% of the remaining debt. The smallest would only be owed 0.07% of it.
Hypothetically, if future payments are, just for example 50 wstETH total, the bottom user would receive only 0.035 ETH per payment if paid pro-rata. It would take 54 of these payments to be made whole, and if the user claimed at each payment that would cost them a significant % of their remaining claims in gas costs.
If instead each payment is capped per user, the bottom remaining users would have fewer claims, while maintaining the same schedule for making the largest users whole.
For example, if 10 users remained, and the 2nd payment totaled 50 wstETH, the bottom user would be paid their remaining 1.91 in a single claim, and all other users would receive ~5.34 wstETH ((50-1.91)/9). The following payment, if also 50 wstETH, each user would receive 5.55 (50/9), and it would continue to go up each time another user is made whole, until eventually the entire payment is going to only the top user.
Maybe there can be some sort of happy medium, where it is scaled so maybe bottom remaining user isn’t paid back in just 1 payment, but still receives more than 0.035 each time to account for gas costs.
Could maybe do a min instead of a max? If minimum payment is set to ~1 wstETH, I think this eliminates all concerns about gas costs forcing users to stack up their claims.
Also want to mention I agree with @PrismaWillProsper that while payments should be in ETH or wstETH, it makes sense to set payment budgets in USD, since market is constantly changing.