A very bold move, fully applaud the effort. 100% (+) inflation was already going to be dicy, given it has never worked in an economic system. It was an experiment, but it did not work. 9.5% is much more reasonable.
What resonates with me most is -
Steem can now transfer from weak hands to strong hands.
3 months is a reasonable period for that to happen. If Steem really is in weak hands, the price is going to fall steeply, but at the end of the 3 months, there'll be a new class of investors (strong hands) who'll take the price up and beyond. If Steem is in strong hands already, then we shouldn't see that decline, but judging by the continued decline in the last few months, I wouldn't bet on that.
Long term, once this transfer has happened, given the drastically low inflation rate, and a far lower contribution of the inflation rate back to SP holders, I wonder if there's a major benefit to the 3 month lock anymore?
Making it totally liquid will be psychologically much more attractive to investors (even if they don't themselves deal in Steem Power), and bring it up to par with pretty much every cryptocurrency today - Bitcoin, Ethereum or Ripple, some of whom have hundreds of millions of dollars market cap. Many of those have very stable prices and market caps, and inflation rates not much lower than 9.5%. The lock was necessary at 100%, but I would like to know what it is required for 9.5%. Of course, I totally agree it should be there till the platform balances itself.
Users of the platform will be incentivized to hold Steem Power in their accounts by earning curation rewards etc. (need more of those incentives)
Perhaps even drop Steem Power - make it whatever Steem held in your account dynamically gives you the incentives. This will also make it much simpler for content creators, many of whom struggle to wrap their heads around the system.
Just thinking aloud.
Lastly, while the witness pay does seem very drastic, being in Steem it's actually going to help continue funding the projects, at least in the short term. In the long term, one would hope the price would rise to a point where it wouldn't matter.
When inflation is reduced to 9.5% the only purpose of the lock period would be to prevent double voting ( so you can't get rid of it completely for security reasons) but you could reduce it a lot more than 3 months.
Keeping a lock time period of 3 months will actually results in less people curating and participating. Think about all these people that want to use their leftover money to curate for a few days but don't want to lock that money because they might need it a week later, well all these people won't be able to participate.