Interesting!
More activity => more inflation or less inflation ?
Intuitively I could imagine that the more people we have in the ecosystem, the more tokens would be needed to fullfill the use cases: avoid using small fractions of coins like with Bitcoin, increase the overall ledger storage size (based on token supply), etc. This is in favor of more inflation with activity.
But that’s also leaning towards providing stability to the token price which is not what’s expected from a L1 token.
So apart from that, we have Damir’s arguments that the block reward is here to help node runners when there are not enough operation fees, and that less inflation would be better with activity.
I like also the arguments for burning part of the fees (spam resistance and deflationary pressure).
All in all on my side I think the actual formula with a constant block reward is good enough for the foreseeable future, and that the question of the amount of reward/inflation constant (like here) is more important to solve now, together with the governance process to move forward (here).