I would explain #1 as: STEEM has such a heavy penalty for holding it, that one must essentially choose between SP and "not at all". You have obviously chosen SP, which works for you, but leaves out many people for whom it does not work. One reasonable objection to this proposal would be that Steem works for people who are really committed to it and should not pander to those who are less sure about making a largely irreversible long-term commitment. I don't agree with that (I'd rather offer a "big tent") but I do see the merits of that point of view.
The proposal addresses this with two prongs, one being a shorter power-down period and the second being lower inflation on STEEM (meaning holding it for reasonable periods would no longer have a heavy penalty).
As far as #2, I don't really understand or necessarily agree with it, so I won't comment.
Why would someone who chooses not to power up liquid steem into locked SP simply convert STM into SBD, it is now still liquid and stable and attracts interest payments.
Thus someone feeling the need for 250 liquid Steem for something or some potential reason they are not sure of would not want it sitting in the medium term as steem, would not converting it to SBD protect its stability ?
I hit you with this question @smooth because i liked and gravitated toward your other answers in this post, if your busy or choose not to answer this random spammed ? just /ignore it : )
Thank You for your time and efforts . . .
SBD is great for what it does (stable value, great for payments, earns some interest), but what it doesn't do is allow you to profit as a risk taking investor from the success of the platform over any time horizon. (Actually this is not correct, since SBD has been, and still is to a lesser extent, trading at a discount, so one could buy it and profit if the price gets closer to $1, which it has. However, it will be correct once the witnesses get the peg working properly and SBD at a stable value near $1, which we are in the process of doing.)
People who want to invest in the success of the platform but don't want to be locked in and unable to get out should they so choose will participate if they can buy STEEM, not power up, and not be punished for that. They still won't be able to participate in the extra added benefits of SP (currently voting, curation rewards, and some extra inflation reduction, though more could be added later), but they still get to participate, which I consider a good thing. More participants make Steem bigger and better.
One more thought: someone who quite isn't sure may buy STEEM to hold for some indefinite period, but not want to power it up. After gaining more confidence they might then decide to power up. Getting them in the door even when not ready to make a time-locked commitment is a good thing.
I am so smart; and you have proved it again, I am brilliant in that I chose you to answer my question and your answer is simply ultra easy to follow and understand and inspired. Thank you so much for explaining a few essential key concepts in like 110 words, More STEEM POWER to you as Rewards ! ! !
More Good Karma @ U; thank you . . .