The whitepaper has not been updated. The interest rate is now about 9.3% (issuance rate).

Yes, this problem of crowding of the pool has been an issue all the way along. This is partly why I have designed into DIV a contrary rate issuance that lowers issuance rate as user activity accelerates beyond a certain point, or in other words, reduces the pay rate when there is too many users to share out evenly, and vice versa, when there is not enough, the rate increases

This is designed to front-run the network utilisation so that where as it does here, in a lagging fashion at first everyone gets less and less when there is too many, and then with the excess tokens dumped on the market, the effective value of the earnings are reduced, after a period of congestion, and then causing a sharp drop-off in users, and this again causing a lagging reaction in the price.

By lowering the rewards as activity accelerates, it naturally will brake the activity before the excess supply hits the market, allowing the price to remain more stable, and vice versa, as activity slows, the rewards are suddenly a lot higher per capita, and this will naturally draw more users to compete for it (which will then slow the rate down). This, combined with zero liquid rewards, and a daily 1% drawdown, should see the outflows of capital dramatically much more stable than with Steem, which will make it much more attractive as an investment.

Without using a stupid hedged instrument, complicating the monetary system like is necessary with Steem, where VESTS have a rate against Steem and a rate against SBD, this will just have 1 token, and a deposit contract with a random interest payout with a transaction volume driven issuance rate for interest on the contract built from necessary change operations (this sounds like a mouthful, but it is based on the property-registry token model called Refractory Token Ledger). Initially, using basecoin it will not operate quite like this, but eventually this token will be phased out once the RTL is implemented, and converted (I haven't cooked up the scheme for this.

I hope that the combination of a monetisation system for peer reviewed code and documentation writing, and the clear advantages of the architecture, all derived from observing the operation of Steem, that indeed, there will be a flood of developers and what took a year for people to build for steem will be done in 3 months.

:)