Great @kevinwong. I strongly agree with you. I wrote about this problem three months ago (in the context of bid-bots) and I know you have raised the same issues several times in comments and posts. I have read posts from last year identifying the problems you discussed.
I am disappointed that Steemit Inc have not even raised vote-selling/self-voting to be a problem. If everyone self-voted or delegated to bots, Steem would be dead.
Maybe your ideas can be raised publicly at Steemfest. I believe @ned will be in attendance.
Yeah I hope someone raises it, I think I'm opting out of SF3 this year just in case I lose it trying to explain this thing over and over again haha
Without the ability to stop your holdings from being inflated away at 8% per year, there is no incentive for someone to hold Steem in the first place.
It would crash much worse and much quicker if people were guaranteed to lose there capital at a rate of 8% per year.
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Looks like you are assuming the market cap for Steem remains the same. If that is the case then you are correct. If people are producing content that adds value to the platform, the market cap will increase; 8% is not exactly a huge annual increase to compete with. Take a look at Facebook for example, they've had many years of more than 100% increase in market cap.
We could argue 8% inflation per year could be too small. We need a rewards pool large enough to attract content creators with sufficient talent to attract more attention to Steem. The more activity we have on the platform, the faster the platform will grow. Eventually, we should see post sponsorship as well as advertisements appearing in the posts that are attracting the most attention.
In short, there is plenty of incentive to hold Steem even if our Steem holdings increase by less than 8%.