 After driving the Dwarves out of their stronghold, Smaug occupied the interior of the mountain for the next 150 years, guarding a vast hoard of treasure.He destroyed the town of Dale; the men retreated to the Long Lake, where they built Lake-town of houses on stilts, surrounded by water to guard against the dragon.Gandalf realized that Smaug could pose a serious threat if used by Sauron.