The proposal for changes to the Steemit economy would abruptly change STEEM inflation to 9.5% APR, including a reduction of witness (including miner) block creation rewards to 10% of the new yearly inflation. The proposed changes to witness and miner Steem Power reward distribution in the tentative hardfork that Dan has proposed would rebalance witness rewards by reducing the top 19 (full time) witnesses' SP rewards to 1/29th of all witness rewards.
The backup witness and miner slots will each receive 5/29ths of the daily witness rewards. Part of the rationale for this is to give backup witnesses a more proportional reward, which I support. Backup witnesses have votes from stakeholders in Steem and generally are contributing in some way to have earned them. However, this proposed change would give the miner slot 5 times the SP reward as a top 19 witness.
Daily numbers
At the current supply of STEEM (214.2 million), multiplied by the proposed annual inflation (9.5%), multiplied by the proposed witness cut of that inflation (10%), divided by 29 and divided again by 365 days, we come to an estimate of a top 19 witness being rewarded 192 Steem Power a day. Multiplied by 5, we see the miner slot receiving around 960 SP per day.
This is roughly an 86% reduction in SP rewards for top 19 witnesses and a 30% reduction in SP rewards for the backup pool and miner slot.
Mining queue monopoly?
Given the situation that the Steem mining queue is in, this would effectively reward two people, perhaps one, with outsized SP rewards compared to the top witnesses.
If you don't know, the mining queue has been dominated for months by a couple sets of accounts. One set is named rabbit-00 through rabbit-79. Another group, gxt-1080-sc0001 (to 0150) and supercomputingXX (120 accounts) are claimed by someone who goes by 'nobody' on steemit.chat. Interestingly, at almost the same time a few days ago, the rabbit and supercomputing accounts both started mining after a hiatus (11 days for supercomputing and about 14 hours for rabbit). It's not definitive evidence they're owned by the same person but it's too coincidental to ignore. Here are their first PoWs of the day:
https://steemd.com/tx/890ef0cb8de6d16b538d3c0e198a1951c68a26cc
https://steemd.com/tx/440a800cda5e472c60b0a81884fd7f554f9aeabb
16 minutes apart. You can verify these are their first PoWs after the hiatus by visiting https://steemd.com/@rabbit-00 and https://steemd.com/@supercomputing-0
The mining queue thus may be monopolized. The person who claims ownership to the 150 gxt-1080-sc-XXXX and 120 supercomputing accounts does not, as far as I know, provide anything to Steem beyond filling in the 21st block producer slot. They have monopolized the mining queue in the past using an exploit. They came back to dominate the queue again, claiming to have a private GPU miner. The supercomputing accounts' departure from the mining queue when Zcash was released corroborates that story. However, the rabbit accounts were still dominating the queue, off and on, during this period. Using the original PoW exploit, 'nobody' named their accounts "gxt-1080...", perhaps as a deception. I think using the rabbit account names could also be a deception that they have any competition for the miner queue at all.
If the miner slot is monopolized, as I believe it may be now, the proposed changes to witness rewards could give a single person nearly 5 times the SP given to the 19 witnesses who are trusted enough by Steem's stakeholders to be at the top.
I agree that the curve should be smoothed so that the backup witnesses are paid in more SP. Backups need to be able to cover server costs and be compensated for the time they put in. But I think giving the miner slot just as much is a mistake, given the situation.
Addendum: The @steemitblog proposal brings up the idea of using Zcash's Equihash mining algorithm, which would even the playing field a bit. This is because CPUs are somewhat competitive with GPUs, and there are publicly available GPU miners for it (though it's said private ones are a few times more efficient). However, Dan's proposal kicks the Equihash can down the road, while making the changes to witness and miner rewards immediate.