It’s an interesting proposal. The increased liquidity could make Steem a more attractive proposition for users and investors.

In particular it would most likely be easier to raise funds for projects from users outside the Steem economy. DApp owners could offer propositions out to the wider market with an attached yield - in a similar way that they do now for raising delegated SP. Although it would bring the additional risk of the SP/Steem rate moving against them.

I think that it might encourage continual “circular” powering down from users looking to take advantage of purchasing cheaper SP. However this is not necessarily a bad thing in itself as long as users are just providing liquidity between SP and Steem. The opportunity cost of powering down is likely to have an influence on the level of the discount in the price of SP (for example if there is no cost in powering down people will just circle funds and the discount will be close to zero).

You’ve asked for unwanted possible consequences so I’ve tried to think of a couple of potential challenges!

I don’t see how the “Discounted Liquidation Options” deals with the risk you raise yourself of abusive self-voting. If a short-term investor can buy discounted SP (say at 5% below the Steem price) and also instantly sell SP (assuming at roughly the same price) what stops a short term investor buying in, self voting for a month until flagged, and immediately heading out (even if they have to wait a little while to recharge their SP before selling)? I guess this leads to a wider point: Is this likely to attract short term investors and is Steem really a good fit for such investors?

More of a technical point - Not all SP is equal, due to associated voting-power and RC. Would there need to be standard terms applied to the market? I assume the trade could be for fully charged SP, with the trade permitted even if the seller was not at full power as long as the seller’s voting mana and RC mana were sufficiently high to absorb the exiting fully-charged voting mana and RC mana.

Very thought provoking! Nice work!