What incentivises me to be active and commit time and energy to the site knowing that at any time I could be permabanned by the behaviour of someone two levels away whom I've never even heard of? That's worse than Twitter banning you for some rule break, that's Twitter banning you for someone else's rule break.

You might say that would make you think thrice about inviting people, and yes it would - what incentivises anyone to invite anyone, ever? What makes your system different from a small group of friends making a private invite-only Discord/IRC channel/etc. and keeping it exclusive right now?