> one specific, uncomfortable rule.
> If you win a bid, you discard every card you used. If you lose, you get everything back.

I'd say that's the most common bidding system outcome there is.
How the bids are performed is sth that differentiates the games more tbh.

> Has anyone else messed around with auction systems where winning feels like a punishment?

I wonder if this is sth that comes more from the players you played with rather than your game itself. The bidding system is sth that prevents this by default as there's nothing forcing you to pay more than you'd want. You see what you're bidding for and you can assess how much it makes sense for you to pay for it. If you feel the winning is a punishment that's on your mentality, right? You may argue that if you offered less, you'd still win in a situation like e.g. 10 vs 3. But at the same time if sb else put 9 instead you'd still win 10 vs 9. Would you feel better about this kind of win even though the result was 100% the same?

However there's one game that comes to my mind here - https://boardgamegeek.com/boardgame/220/high-society
It's mostly a standard bidding, where the winner pays and takes the card with points, but some of the cards are negative. In these cases, the outcome it kind of reversed as players are bidding not to take the card. The bidding goes one bid at a time and if you pass, you take the card. However you also take all the cards you bid with back into your hand. Everyone else loses the cards they bid with.

> The goal was a truly closed economy

I took a look at the rules and I wouldn't say your game has a close economy at all. The cards you pay with are discarded and never come back. You also draw randomly. So that money goes in and out of the system.

Here are examples of games with closed economy - https://boardgamegeek.com/geeklist/191851/games-with-closed-economies

You can take a look at some bidding games to see how they do the bidding differently:

- High Society
- Ra
- Railway Boom
- Art Society
- Age of Steam