"Sustainable in that they had to keep selling steem, it was never going to thrive under that business model."

Of course not! There is virtually no significant demand for the Steem coin outside of the Steemit forum, and even that demand has been rapidly decreasing as more and more member decide to leave Steemit to go elsewhere.

"If the user based expands enough the ad revenue becomes a significant source of revenue."

I'm not so sure! Banner revenue is no longer a significant source of revenue, even if the user base is huge. Most people these day use some sort of Ad Blocker, so they never see the ads that are being displayed. In fact, I was not even aware that Steemit actually displayed Banner Ads at the top of the page until you just mentioned the ad revenue, and I turned off my Ad Blocked to see where the ads were being displayed.

"Though Sun already talked about getting rid of ads... so I am not sure how he plans to fund it."

Indeed! Much like the costs of running WhatsApp being absorbed by Facebook, since WhatApp also has no ads.