I get the incentive part, and it is normal to work this way, but the way it is described is misleading. When you say 5% interest for staking, I think about 5%, not 10%-20%.
When you get interest for a term deposit in a bank and the interest rate is 5%, you get 5%. It doesn't matter if other people keep their money in checking accounts and don't get any interest, you will still get only 5%. The bank doesn't calculate a 5% interest for all the money held by the bank, and then distribute it proportionally to those who have term deposits. It doesn't work this way, and any person who understand the concept of interest knows I am right.
This is why the way POS interest is described here is not the normal way interest works, but a very strange way.
I am also invested in NAV Coin, another POS coin, and from the discussions I've seen in their threads, it seems that the interest rate is exactly 5% and the coins that are not stalking are not generating any interest. In their case, the inflation is about 2.5% instead of 5% because around half of the coins are not stalking. This is how people are describing it. Now, after what I read here, I'm not even sure if NAV works the way I understood it does.
You also said "Some coins have 25% or even 100% per year." which is true, but nobody would invest in such coins unless he/she is a staker.
There must be a balance between the incentive to support the network and the inflation that affects regular investors/users who are not staking. The major fiat currencies like USD and EUR have a target inflation rate of around 2%, and people still complain about it. As a comparison, 5% for the whole monetary mass is big. If the interest was working the way I thought it did and the stakers got 5% while the rest got zero, than the inflation rate would be only 1.66% if only one third of the coins are staked, which is much better.
Remember that Bitcoin got successful once the mining rewards got low, and regular people who just wanted to buy/hold/spend got into the game. If miners would still be earning thousands of Bitcoins without a cap on the maximum amount of potential coins, there would be zero interest from the general public. And a coin made only of miners/stakers is not a coin.
Right. That's why this is not called "interest rate". It's the Proof of Stake reward, and we use Proof of Stake version 3 from Blackcoin. And for that system, the block reward depends on the block height, and as the block time adjusts automatically, the global "inflation" is about 5% yearly, fairly distributed between those who have contributed to the consensus. Fiat may have different numbers, because fiat is not a Proof of Stake system! Navcoin has their own implementation of Proof of Stake, which works differently. These are simply different systems, there is no point in discussing the differences.
If you think the reward is too high, then thanks, your point was made, it will not change soon. Many people complained that it is too low for their staking to be profitable. Just different points of view.