Steemit is mathematically designed to collapse in on itself (yes, I've read the whitepaper).
The white paper is out of date. The business (economic) model has been changed.
As for the rest of what you said, I'd only ask why that same logic hasn't caused the demise of every social media ever developed, and, if not, why not? (Then you'd probably be on to why Steemit just might not only survive, but also thrive.)