Bullcrap.

It's not complicated at all.

You have a market of lenders that want to hedge and so they offer their steem for loans at say 1% daily interest. Then you have the short seller fund a margin account to cover the interest due and let them borrow whatever they can cover as an interest payment. Then let them short to their hearts content, but force a margin call before they run completely out of funds. This means you prioritize margin calls over all other orders including market orders.

This is how margin works and you can use it to go long or short.

Since it's all cleared on the exchange, nothing is needed on our end and poloniex has a dozen currencies or more you can lend or borrow and go long or short.

Short selling steem is not a good idea for the price, period point blank.
Holding SBD is already a short position. You want to short steem just buy SBD.

If you mean shorting currency you don't actually have, then all that will do is add even more liquidity to the market. The market already has WAY too much liquidity. They need a way of burning liquidity, possibly the same way we do promoted posts right now. Promoted posts help to mop up the SBD liquidity and is the primary reason SBD is $0.94 instead of $0.75 like it was a little while back.

Do the same thing for steem and the price will rise. Otherwise promote the uses of the coin by helping to build the ecosystem.

No currency has ever been made more attractive by naked shorting, except to those who want to crash the price.

I do agree on lifting the 7 day limit and I would take it a step further and say that the price avg point used should be 3 day avg instead of 7 day.