are you sure 20% profit is the right number? Imagine two people use it, and they both pay 1 BTC.

  Time | Event
  1    | First person pays 1 BTC
  2    | Second person pays 1 BTC
  2    | First person gets paid 1.2 BTC

The creator makes .8 BTC in this case. Pretty solid return if you ask me.

Only if you ignore that the 3rd person would get the 0.8 BTC (as long as the scheme goes on). At some point he stops, but how much money he made depends exactly on how many people he didn't pay back. So, in the simplest case:

    Time | Event
    1    | First person pays 1 BTC

The creator makes 1 BTC in this case. Even better return.

Keep going. Then a third person joins. Second gets 1.2. Creator now has only 0.6. Then a fourth one joins…

my thought process is: one large BTC pool. all transactions are feed into the pool. the order of the deposits dictate priority of withdrawal. Owner does not skim the transactions, only makes a large initial deposit and then markets the site like crazy. Big assumption here is that he is running an "honest" ponzi operation.

why would he even need an initial deposit? he can simply delay to pay people until enough other people have paid.

So that he can "honestly" take the 20% additional of that first deposit.