If Arxiv was the only game in town and it allowed everything, the result would be more like GitHub or Substack. That is, you wouldn't be able to trust everything hosted there, and a lot of it would be low-quality promotional garbage, with filtering moved to a different layer.
You could do some kind of karma system for example, where the prestige of your institution, your own karma, number of citations, papers published in high impact-factor journals etc would affect karma weight. You could have journals be like "awesome-x" lists on Github, with authors who have already been published there able to endorse other papers. I believe the mathematics community is trying that.