Most recent "paper" on Phygg, fram July 2nd, begins Red Bull Hats: Wholesale from factory, limited time! Get MLB Hats, NFL Hats, New Era Hats for your favorite teams. It's gathered net upvotes. Most papers there have been automatically cross-posted from Arxiv.
I don't think we can take Phygg to be a proven model. There's a wider issue of how new gatekeepers can be established for such a new model.
I see no reason why this shouldn't work for arvix as a whole.