Good analysis, Niel.

The alternative to inflation would probably be to ask folks to give up their own STEEM to upvote. That's already been proven to not work. People will hoard and hodl before they'll give any up, generally speaking.

However, rather than a percentage, a static number would be preferable. For instance, set it so that 10,000 STEEM is paid per day, forever. This would cause the percentage to drop over time and should result in the increase in value growing stronger. Sure, folks would get less STEEM per post as the competition increases, but the value per STEEM should increase as well.

Side note: We upvoted this one, but cannot promote it since it promotes another website. Keep up the good work.