What do you mean by democratic? Are you thinking of some kind of election system to replace mods, and if so have you seen such a mechanism work anywhere else on forums?
Also, make it hard to perma-ban someone with over 100K karma points, especially in regional subs (like /r/india, etc.); you can change your interests, but you can't really change where you are from. If nothing else, force the mods to actually justify bans; and one subjective offense should not be enough to ban someone.
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Edit: I was going to respond to [1], but I'm rate limited. Below is my comment:
> Anonymity really hurts profits.
That's what killed YikYak and continues to beleaguer anonymous message board monetization (well, maybe it's the content).
Reddit at least has an interest graph going for it. If they can figure out how to boost subreddit discovery and encourage users pick the things they'll spend money on, then they'll be golden.