One of the caveats with these funds - which is often overlooked - is the fact that since they are being offered as pay for development, there is a high likelihood that one result is a constant downward price pressure on the Steem token as developers/beneficiaries will be looking to sell the tokens they get paid.

Well, it could be that some downward pressure is needed on the price of SBDs. I like getting overpriced SBDs in author rewards as much as anyone, but I'd really rather see them pegged near $1.

But you're right that there's a risk there. I would expect the fund manager's strategy to include controlling the release rate.

In the end, I see three possible paths (though we can change direction again at any time):

1. Release the funds for burning and/or disable the 10% inflation funding that's going into it.
2. Let it continue to grow without limit until it becomes valuable enough to make it worthwhile for someone to purchase enough STEEM to gain control of it.
3. Start disbursing funds to projects again and try to limit the exploitation.

I agree with this:

One of the potentials for abuse of the SPS is the possibility of it becoming a circle-jerk for the biggest stakeholders... which could possibly be circumvented by enacting some form of weighted voting, or capping support votes at 50K SP or something like that, meaning a larger number of community members would have to approve a project for it to fund. Otherwise you end up with a system where a single account (like UPVU, for example) has the power to decide what gets approved and what doesn't.

Sooner or later, I think this is a very likely result if we don't come up with some governance model that imposes a fiduciary duty on the recipients of the funding. And as the fund continues to grow in value, it becomes increasingly attractive to someone who is prone to misuse it.

Would the corporate model work? I honestly don't know...

Yeah, I guess there's no way to know without trying it.