>Furthermore there is no real 'risk' here, in the sense of risk to the overall system. SBD regardless of the amount issued is capped at 10% of STEEM's value period

That's exactly right, and the missing piece I was forgetting about. It's not like SBD is at risk of a total collapse if too much is printed.

Except its not a conversion, its a sale.
The steem is not burned, but added to/replaces the inflation created by block production.
We could burn an amount equal to what the blocks produced to lower overall inflation to match demand, if that is desirable.

The procedes from sales goes to the sp holders, witnesses, and authors in the percentages now used.
This turbocharges sbd creation buy selling them directly to anybody with one usd of steem.
As determined by the x day average.

In order for sbd to be adopted there needs to be enough of them to matter.
15m barely makes payroll at one pro hockey game.
With none left over to use for concession sales.
Nobody can buy a jersey because all the sbd went to the players.

By selling them directly supply can meet demand.
Tether has ~2.5b? in circulation, with luck we can match that.
By putting the steem derived from sales into the inflation pool, all stakeholders benefit.

I know there isnt an actual pool, and i dont know how to tie sales to block production like regular inflation, but i was thinking a bot to power up the 25% that gets paid in sp, and adding the balance to the rewards pool.

What i am unsure about is what happens when demand drops and the price of steem goes down.
Existing sbd would have been paid for with one usd of steem, except those paid out as author rewards which have time value attached.
Does the peg hold or does steem defaulting cause sbd to crash, too?

Right now the usd is down 98% but it is still accepted more places than silver.
I guess the trick would be to get enough into circulation that sbd holders refuse to take the loss and continue to use them in commerce on par with the usd.

NuBits didn't have another coin to shit on. I agree with you that SBDs can be printed indefinitely. It just results in downwards pressure on STEEM. I have no issue with anyone at Upbit or elsewhere buying SBDs over a dollar if they're just using it as a fast trade. The peg is really only maintained to the downside as long as STEEM's ability to trade over $0 remains.