The discussion revolves around a proposal by Llamaxyz to upgrade the Safety Module (SM) to improve its capital efficiency by enabling deposits to earn yield from other protocols. The proposal, titled "Safety Module Upgrade Part III - Enable gauges on BPT in Safety Module (smBPT)", aims to increase the sustainability of the SM by enabling rewards to scale with TVL over time¹.

The proposal suggests staking the LPs deposited in the SM on Aura Finance to receive BAL + AURA rewards distributed to SM depositors. Llamaxyz also proposes enabling the gauge on BPT assets in most projects, which would create vote incentives and direct more rewards to the pool. However, this could lead to a significant dilution for Aave. To mitigate this, Llamaxyz suggests an alternative referred to as "smBPT gauges", a concept from Solarcurve. This method involves implementing a wrapper in the SM and requires Balancer to approve BAL emissions to gauges that accept smBPT¹.

John_TV_Locke comments on the strategy, noting that while it could be beneficial for AAVE liquidity/utility, it adds complexity, cost, and risk to the Safety Module. However, he acknowledges that the "smBPT gauges mechanism" is a clever solution to the risk of users bypassing the SM lock period and cooldown to receive the same incentives as SM depositors². Dydymoon explains that the goal is to abstract complexity from users who would deposit on the SM and receive a proof of deposit³.

The proposal has been progressed to Snapshot and the vote is set to start on Monday 29th⁴. The discussion provides a comprehensive overview of the proposed changes to the Safety Module, the potential benefits and risks, and the community's response to these changes. The outcome of the vote will determine the next steps for the implementation of the proposal.