Smooth, I am addressing this question at you since you are a witness and seem to be knowledgable about steemit.
Why is 300% - 100% yearly inflation necessary when the actual inflation needed to reward content and miners is about 10% per year?
I wrote a post about this here https://steemit.com/steemit/@snowflake/5a2p2k-why-not-inflate-steem-by-only-10-or-whatever-reward-pool-is-instead-of-having-this-crazy-printing-going-on
If anyone else has an answer I'm all ears and yes I have already read the whitepaper.
Why is 300% - 100% yearly inflation necessary when the actual inflation needed to reward content and miners is about 10% per year?
I wrote a post about this here https://steemit.com/steemit/@snowflake/5a2p2k-why-not-inflate-steem-by-only-10-or-whatever-reward-pool-is-instead-of-having-this-crazy-printing-going-on
If anyone else has an answer I'm all ears and yes I have already read the whitepaper.
The main reason is probably to incentivize locking up coins in SP, which is is needed for a variety of security reasons including reputation but even double voting (if you can instantly move your coins from one account to another you can vote again with the second account).
If you do lock up your coins you don't suffer from the crazy inflation, so as I commented to iamnotback above, you can't really count both as disadvantages. Pick one or the other.
A much shorter luckup period would probably still solve most of the problems. I didn't design the thing
The way I see it is that Steem Power is a tool to play the steemit game, to participate in the steemit economy, the more you have the more you can get. So there you have your incentive. I would gladly lock my steem if I know I will be getting more and most importantly if the price of steem is solid. People don't care about locking their coins if they are confident 2 years from now the price will be good.
Also as Dan said it is only a psychologic incentive because in reality you don't get any benefit from locking up your steem power. (not suffering from inflation is not a benefit)
To me it would be much better to allow investors/traders/speculators to be able to buy and hoard steem at 10% per year ( the fundamentals will probably make up for this inflation ) and everyone who want to earn more steem can convert to steem power.
The price of steem is an indicator to how many people the platform can handle, if the devs don't allow steem price to grow by having unecessary inflation then steem can't grow. Investors/speculators are seeing the short comings which is also why they don't invest.
I agree with you that the lock up period should be a lot shorter and I also think that the inflation should be the minimum possible which is around 10%. They could also increase curation reward to increase incentive to convert to steem power .
If you could bring this up to the dev I'd appreciate it. Im convinced that it would solve many issue that steem currently faces and will face in the future