This proposal appears to be flawed, unless I am missing something. I have only read the first 4 pages thus far.

1. You propose to decrease the coin rewards as coin-days-destroyed volume increases, so this makes it less costly for an attacker to obtain > 50% of the hash rate assuming the attacker includes all the transactions. You apparently are attempting to imply there is no useful attack to do if the attacker is including the most coin-days-destroyed? Please confirm or deny then I will dig into more analysis of this vector.

2. Also how do you choose between someone who generates a proof-of-work hash with lower coin-days-destroyed several times sooner than the network propagation delay versus another who generates it that much delayed with a higher coin-days-destroyed? If you choose the latter, then you've killed the proof-of-work incentive because it means it will always pay to be later and wait for more transactions to arrive.

3. You claim to defeat my Transactions Withholding Attack, by blacklisting those who send blocks with transactions that were not recently seen by all miners. I retorted against this recently. This centralizes the network (all for one and one for all outcome) by requiring every miner to be responsible for the incoming network connectivity of other miners. And it centralizes the network in other ways, such it can't tolerate a temporary partitioning of the network due to connectivity outages.

P.S. By coin-days-destroyed, I assume you mean coin value x days, otherwise you would motivate proliferation of dust.

I'm very hopeful that this solution proves workable as I would like to see it used in Freicoin.  I will bring it to the attention of our lead programmer maaku and possibly Luke-Jr too.  We have long desired a solid PoS system which would allow for a decentralized distribution of the demurrage fee, but we have always been stymied by possible PoW attack vectors that our designs were vulnerable too.