So I noticed it says unused Merit can be decayed at some point in the future - What's the point of this?
Unused sMerit (sendable Merit). I think it's supposed to incentive rewarding others with merit and punish those that hoard their sMerit.
The merit system works only if people actively use it, else everyone is stuck at their current rank.
That seems circular reasoning. How is decaying sMerit an incentive if there is no reward to sending or holding sMerit in the first place? In fact, sending Merit is consuming a non-zero amount of time and labor. Consequently sending Merit is punished instead of rewarded.