But if the only token we have to trade is Steem and everyone starts trading it, will it not just flood the markets and drive down the price, negating the stability claimed to be gained by SBD's removal.
No the Steem is already on the markets. If anything it should reduce the Steem on markets as those who want to invest in the Steem ecosystem only have one choice.
Having a place to park Steem, in steem power or SBD, is a nice feature.
It's a nice feature but no Steem is actually parked in the SD. It is a smart contract that entitles you to a certain amount of Steem in the future. If everybody parks there money in SD then their are fewer people parking their money in Steem itself.
if all I had was Steem I would still have 2 choices. Power up or sell my steem for BTC or fiat. No different than now except I would have to decide the minute the Steem is earned to avoid the volatility.
Exactly. So you without it you either choose Steem or you don't. There is no Steem lite with lower risk which is how I'm starting to view SD. By holding SD you don't take the volatility risk.