I would make the rate of coin generation constant rather than decreasing, so that there would not be constant deflation as people lose coins. If one assumes that coins are lost at a constant proportional rate (-kC, where C = the number of coins and t = time), and coins are generated at a constant (unchanging) rate (G), then there is some circulation C for which G - kC = 0 (in other words, the circulation stays constant). That level is C = G/k. So if we want the circulation to stabilize at Cf, then G should be set to kCf. For example, if 5% of coins are lost each year, then k is equal to -ln(0.95) per year = 0.0513 per year (a weird unit). If we want C_f to be a trillion bitcoins, then roughly 51.3 bitcoins per year (a bit more than 5% of 1 trillion bitcoins) should be created.
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