As "ye/you" slipped slowly into the singular it was first used in a socially upward sense. Shakespeare frequently used it in this manner. When people are talking to their social betters they will frequently use "ye" and "you." When talking to their inferiors or equals they will often use "thou" and "thee." Slowly, as people started using "ye/you" to suck up to others it eventually completely displaced "thou/thee." Why the nominative "ye" was dropped I couldn't say.