since noone mentioned it yet: https://twitter.com/MagicalTux/status/596622731711352832?s=09

Yes, an actually decent suggestion from Mark Frappacino.

I think Cryptonote (Monero) actually adjusts the miner's reward depending on the size of his block, and updates the block size limit like this:

(median of past n blocks, with constant lower-limit) * 2

if I'm reading this correctly:

https://github.com/monero-project/bitmonero/blob/c41d14b2aa3fc883d45299add1cbb8ebbe6c9ed8/src/cryptonote_core/blockchain.cpp#L2230-L2244

Thats correct, our block size is dynamically scaled by the size of the previous blocks with no hard limit for the block size. Its been this way since the launch in early 2014. There is also a dynamic coinbase penalty above a size threshold to prevent people from making too large of blocks, too quickly. Gmaxwell and some of the other bitcore developers argued against such a design, saying that it gave too much power to miners to decide the size of the blocks.