Together with Daniel Matthes, Eva-Maria Rott and Giuseppe Savaré we propose a spatial discretization of the fourth-order nonlinear DLSS equation on the circle. Our choice of discretization is motivated by a novel gradient flow formulation with respect to a metric that generalizes martingale transport. The discrete dynamics inherits this gradient flow structure, and in addition further properties, such as an alternative gradient flow formulation in the Wasserstein distance, contractivity in the Hellinger distance, and monotonicity of several Lypunov functionals. Our main result is the convergence in the limit of vanishing mesh size. The proof relies an a discrete version of a nonlinear functional inequality between integral expressions involving second order derivatives. arXiv:2312.13284