This is not quite true. In the regime where STEEM is successful, STEEM's supply will simply send SBD prices down, and we will need the other tool to prop up SBD (interest rates), or simply just the conversion mechanism itself that burns SBD's for the equivalent of STEEM. Yes, it may still be slightly volatile, but it will be much easier to control.

Agreed on the point about smaller market caps. That's just makes it easy for manipulation.