At every block, SP holders receive 9 SP for every 1 STEEM created. So their debasement is already 1 ÷ 9 = 11.1% on that aspect alone. But slowing down to look at it again, I realize that is only looking at the delta of the debasement not the dilution of the existing. To correct your original computation to my assumption of a steady 9-to-1 ratio between SP and STEEM, then SP holders would have 1.80 out of 2.0 yearly, so that is a 0% debasement as they start and end with 90% of the supply.

But that computation above does not factor the debasement of SP holders by the fact that 50% of the 7.75% annual rewards are distributed as SP. Thus that is a debasement of existing SP holders because the 9 tokens that are distributed proportionally so these new SP holders take some of the 1.80 in the calculation above. The precise calculation requires a compounded function. It is going to be some where in the realm of your 1.7% factor in your most recent calculation. It is 3.875% yearly, but it accrues throughout the year. So I'll just round off (because I am lacking time to write down the precise math for that small difference) and say debasement is 0.85% (instead of my 15%) in this case of 9-to-1 ratio. But I'd need to check your compounding calculations to be sure it is that low. Obviously that considerably alters my analysis of the value of powering up to SP.

In my second calculation (21%) which had the same assumptions as you did that all STEEM is powered up immediately, then I had the same error of considering only the delta, wherein the correct is 1.90 of 2.0 so 5%. And I did add the a factor for 7.75% being powered up, and again this needs a compounding calculation to be accurate. You seem to have computed 1.7% which seems low to me, so a total of 6.7%, but I guess that is the power of compounding and I'll assume your math is correct.

With a ratio lower than 9-to-1, the compounding debasement is changed to a compounding gain.

I will correct my post which linked to this one. Thanks.