Yes, exactly.

The biggest issue I see with ERC20 tokens is that they piggyback on Ethereum blockchain and thus inherit the gas / transaction fees and congest the network.

Imagine some ICO ERC20 token for electricity distribution or tickets sale really start making traffic on the network. The rest of the transactions can go to sleep, basic eth payouts included :)

ERC20 concept has not taken the real life test - yet.

I don't know how will it be with SMT. Didn't read anything about it till now...

Steem blockchain with Proof of Stake, no fee and regular blocks is much more suitable for sidechains or whatever you call them.