[TEMP CHECK] Safety Module Upgrade Part III - Enable Gauges on BPT in Safety Module (smBPT)
Vote Result: YES
Rationale
It is important for Aave to have strategic assets in the treasury, which AURA is; this is not a consequence of the SM upgrade, but implementing the smBPT gauge would allow for more of these assets to be collected. Moreso, this strategy is shorter-term and flexible, and can be changed as per the community’s decision when needed. As shown in Part IV here, implementing the smBPT gauges and utilising the AURA strategy has the potential to increase cover from $119M to $175M and reduce the cost of insurance from 30.02% down to 17.23%. If users receive BAL and AURA, the selling pressure is externalised only from AAVE, and reducing the liquidity mining budget helps reduce AAVE token inflation and selling pressure on the token. This strategy also incentivises users to deposit into the SM with multiple assets, increasing cover for Aave.
A few negatives are the risks from Balancer gauge and Aura smart contract risk exposure, and from the upgraded SM contracts having greater smart contract risk than in the current implementation. This can be mitigated with comprehensive smart contract audits, which the DAO will have to bear the cost for. However, these costs can also be mitigated if Aave receives AURA in exchange for the audit costs being borne by Aave, which will increase yield and allow higher voting power. As discussed earlier, accumulating strategic assets like AURA and BAL would be beneficial for Aave in the longer term.
Therefore, we will vote YES in favour of this TEMP CHECK and look forward to hearing the community’s opinions on these proposals from Llama as well.