2. This high interest rate will only last for 9 months... so might as well take advantage of it
What makes you think that? I don't think that is correct. The Steem Power compounding is perpetual.
I read form a post by dan himself if I remember correctly... I think the interest rate changes
I am bit confused about this. There is one form of compounding that comes from the perpetual creation of 9X Steem Power for every 1 Steem that is minted. Those 9X SP are distributed proportionally to all SP holders. So your SP holdings are always increasing. I don't think it ever ceases nor changes.
Is there also another form of interest paid on SP?
The 9-1 ratio between SP and Steem never changes. I'm pretty sure what he means by the "high interest rate" is the numerical reduction in the rate of effective interest as the supply increases.
Example starting with a supply of one coin:
Add first coin (interest/inflation is 100%)
Add second coin (interest/inflation is 50%)
Add fourth coin (interest/inflation is 33 1/3%)
etc.
Hopefully this explains it correctly:
https://steemit.com/interest/@bacchist/steem-power-interest-is-not-compound-interest#@anonymint/re-bacchist-steem-power-interest-is-not-compound-interest-20160723t033339934zThe problem with this design is that if everyone wants to power up, then the STEEM POWER investors are paying for all the exponential debasement, which is paying for blogging (and mining).
The
Bitcoin money supply was debased at 100% per annum only the first year in 2009 and is now around 5%; whereas, Steem plans a perpetual 100% annual minting rate, but much of that is a forward stock split not debasement (approximately 2.8% per annum[1] appears to be the typical rate of debasement of STEEM POWER holders assuming STEEM remains about 10% of the money supply). Forward stock split means the price drop due to money supply increase is compensated with an increase in the number of tokens held.
In order to pay for the blogging without taking it collectively roughly 25% (9/10ths of 2.8% versus 1/10th of 100%) from STEEM POWER investors pockets, will require significant demand to hold STEEM tokens (note ownership changing hands rapidly is still demand as long as the demand doesn't want to power it up).
[1] 50% of 2 of the 4 STEEM created are paid as STEEM POWER for rewards, and that is at a ratio of 1/9th of STEEM POWER money supply per annum.
The flaw in this model is that although the STEEM POWER investors are protected from most of the debasement individually due 9/10th of it being a forward stock split, the price must decline due to 100% per annum increase in the money supply. Thus there is no incentive to hold STEEM for speculation. Thus most STEEM will end up powered up, thus most of the cost of funding the blogging will come from STEEM POWER investors.
However, the price might not decline because the supply of STEEM for purchase may become so limited. Locking up most of the money supply gives the impression that the money supply has increased but actually it is at worst 103/104th illiquid on any given week and at best only 50% liquid per year. So in that respect the model is clever.