# Fathom Litepaper # Abstract Fathom is a borrow & earn platform where users can stake XDC and tokenized real-world assets (RWA) as collateral to borrow the over-collateralized price stable currency FXD. Fathom is the largest lending/borrowing platform built on XDC Chain. Fathom uses liquid staking and a borrowed interest APR as the foundation to provide users with a variable yet sustainable, high yield for contributing to liquidity pools. The protocol is a fork of MakerDAO and was built by experienced DeFi experts and smart contract developers. Fathom’s goal is to position the revolutionary price stable currency, FXD, as a unique decentralized protocol currency through leveraging Proof-of-Stake (PoS) rewards, liquid staking, and yield-bearing RWA. The Fathom team aims to bring blockchain technologies into mainstream adoption by incentivizing borrowers and those staking collateral to become a part of the new decentralized economy of scale. **Fathom allows users to:** * Collateralize XDC and institutional digital assets (real-world assets) * Borrow FXD * Repay the loan (FXD + borrow interest) * Withdraw collateral XDC * Claim FTHM tokens rewards * Participate in governance with FTHM token * Participate in revenue sharing via dividends on FTHM token * Buy, sell and trade within the Fathom DEX * Institutional users can issue products directly into the Fathom DEX * Enables retail participants to interact alongside institutional participants # Introduction Fathom began in 2021 with the recognition of investor demand for yield coupled with the identification of problems inherent with the current product offerings within the space. Under-collateralization, endogenous tokens, lack of risk management tools and improper governance were issues that were easy to identify but often overlooked in the search of high yield. Fathom set out to correct these issues by offering a protocol with institutional attributes that would see a conservative approach to generating sustainable yet significant yields. **The Existing Ecosystem and the State of Stablecoins** As blockchain enters its 13th year in existence much of the promise that it would offer trustless disintermediated alternatives to the traditional banking and asset management systems remains unfulfilled. Historically, this has been due in large part to the volatility that cryptocurrencies exhibit which inhibit main use cases such as payments and storing value. More recently as pioneers in the space have attempted to address these shortcomings we have seen this new form of banking struggle with the improper design and management of alternative yield bearing systems that utilize stable coins. Despite these early stumbles the demand for yield bearing products that can act as a store of value has been clearly demonstrated. This long-term trend has been fed by multiple macro-economic factors that have seen centralized governing bodies mismanage their stores of value. During the time in which blockchain has existed the supply of the US Dollar (M2) has been increased ~275% without any discernable application to long term investment in physical or economic infrastructure which has led to record inflation. Decentralized finance (DeFi) promises to correct this trend by empowering users to move beyond a system in which the control over their own assets is placed in the hands of a centralized authority which often has competing needs and values. The problem within DeFi to date has been that the leaders within this industry lack technical competency, have discarded key tenants of institutional finance that could benefit decentralized systems, or both. Through launching Fathom we intend to bring retail investors alongside institutions within a decentralized marketplace for the first time. The entry point for retail investors will be a first of its kind over-collateralized price stable currency, FXD, that can be collateralized not only using cryptocurrencies but tokenized traditional assets such as tokenized Gold, Treasuries and eventually ETF's, Equities and other commodities. From here we will begin to facilitate the offering and trading of products that mimic existing markets but blend traditional exposures with decentralized yield components. The result will be a highly liquid and competitive decentralized market in which retail investors have direct access to institutional quality products for the first time. **The Demand for Stable Coins and Yield** While the applications for blockchain and DLT appear virtually unlimited, two main tenants of traditional value systems have taken the forefront as their inefficiencies have been laid bare in recent years: payments and storage of value. Fathom’s initial launch will service both of these areas through providing a liquid bearer instrument as a claim to collateral staked to Fathom. This bearer instrument, FXD, will also provide access to variable yet sustainable protocol returns while using a reference rate system to limit volatility. Conceptually, this is very analogous to how a traditional bank provides yield on savings and checking accounts in return for customers providing liquidity so they can complete a number of activities using the depositor’s capital. Traditional debit cards and checks that give the user access to, or act as a claim on their capital are replaced by our cryptographic bearer instrument which acts in the same manner. Fathom’s differentiator from traditional systems is that while existing banks provide little to no yield to customers for providing them with the capital they need to operate and instead harvest a majority of profits for themselves, Fathom, via the use of blockchain technologies, automates much of the processes and can therefore pass returns from capital deployment back to the users who provided capital in the first place. This replicates what other lending protocols, most famously MakerDao, provide as a service, however in Fathom’s case, yields are further enhanced with liquid staking. The one-sided taking of profits described above which has grown in recent decades forms the underlying basis for demand from users. With less than 15% of the world population reliant on investing beyond checking/savings accounts a large swath of the global community is experiencing negative real yields on their assets. As inflation grows these negative real yields increase and the impacts are felt the most by those most in need. Fathom will provide a stable alternative to checking and savings accounts with routes to use our bearer instruments the same way as cash, checks or debit cards. # The Fathom Protocol The Fathom protocol, powered by the XDC Network, is a borrow and earn protocol and introduces an innovative architecture to stablecoin minting. Fathom's price-stable currency, FXD, is over-collateralized with XDC and other tokens as they are approved by the DAO. This includes security tokens with exposure to real world assets from institutional participants on the XDC network. To obtain FXD, the user will need to provide XDC collateral and borrow FXD against it. After that, FXD can be staked for long-term yield and/or transferred to other protocols to generate additional yield. Due to FXD being over-collateralized its peg is highly secure and comparable to the MakerDAO DAI token which has shown significant resistance. **Fathom the Difference** Fathom Protocol is similar to MakerDAO and differs from other stablecoins like Terra USD, as it is not algorithmic, but instead is over-collateralized by XDC. In a second phase we will be adding high-quality on-chain commodities (including gold) and security tokens (preferably with low correlation to crypto markets, i.e. no tech stocks). This is made possible with Securrency’s Compliance Aware Token Framework, and a combined network of institutional partners. All of these measures provide much higher stability. Fathom also combines lending returns with XDC liquid staking returns, achieving a much higher interest rate for savers than what is typically available on more one-dimensional lending platforms. XDC staking is delegated to our staking infrastructure partner Ankr and is instantly liquid unlike staking XDC or crypto-assets directly. Fathom was built to scale cost efficiently. XDC Network was chosen as it doesn’t have high gas fees like Ethereum. Therefore, we have an advantage over DAI in terms of scalability and efficiency. **Over-collateralized** The collateral provided is worth more than enough to cover potential losses to the protocol in the event of default due to reduced collateral value. Fathom will be overcollateralized between 110%-200% depending on the collateral vault; the more volatile the asset, the more collateral. Equally, the less liquid the collateral, the higher the collateral. For example: Alice deposits $100 USD in XDC as collateral on Fathom. Fathom allows Alice to borrow $75 USD in FXD (75%). The remaining $25 USD of XDC is locked in the Fathom protocol as over-collateral. Alice will be granted access to the $25 in XDC used as over-collateral once her FXD loan is paid off. In other words the maximum Loan to Value (LTV) is 75%, which corresponds to an overcollateralization of 133.33%. **Breadth of Collateral** Fathom will accept a wide range of tokenized collateral that spans not only crypto assets but focuses on traditional real-world assets. A larger breadth of collateral breeds stability in the face of a variety of market conditions. Furthermore, it counteracts potential centralization issues. E.g. even MakerDao is 40% collateralized with USDC, inviting significant counterparty risk to Circle. **Institutional Tools** High quality institutional collateral, both commodities, as well as yield-bearing on-chain securities. In addition to its base-design, the protocol will have several security mechanisms, including safe liquidation processes with additional hedging overlays. **Platform Assurance** Fathom was developed by top engineers from Securrency Inc., extending audited best-of-breed smart contracts. First of their kind features such as on-chain clawbacks ensure that user assets can be returned in any event that involves the loss of funds. Reference Rates that reflect the current environment **Fees from Products and Services** Fathom will benefit from charging fees during collateral on-off boarding, product trading and issuance. These fees will be collected in Fathom’s treasury and will be partially allocated to an insurance fund, assist with yield production and be passed to dividends distributed through the FTHM token. **Higher Yield** Fathom boosts lending returns with liquid staking, through its partnership with Ankr. **No leverage!** Fathom’s platform, including its liquidation process is fully automated and user funds are not actively managed and staked or lent out on other DeFi platforms. Funds are directed towards liquid staking, with an emphasis on liquid, instant staking redemptions, no staked ETH2.0. # Fathom Mechanics The key components of Fathom functions lie between a set of smart contracts that interact across blockchains and existing contracts. Fathom created its customized smart contracts based on a fork of MakerDAO smart contract set. **Modules** Fathom consists of 2 main modules: • Core module (a MakerDAO fork and Fathom's Interaction contract) — provide collateral, borrow FXD, repay FXD, withdraw collateral, liquidate collateralized assets. • Rewards module — claim rewards in FTHM. **Fees** • Borrowing interest — an interest paid to Fathom for borrowing FXD. The rate is a fixed number set by Fathom governance platform. • Liquidation penalty — percentage [10%] subtracted in the form of FXD when selling user's collateral in a Dutch auction (which settles immediately) during the liquidation process. More on liquidations below. **Ratios** • Collateral ratio — the percentage of the user's collateral value ratio that determines the maximum borrowing limit for the user. Current value is 75% from the collateral value. Collateral ratio is used in triggering the liquidation process when the borrowed FXD value becomes higher than 75% of the user's collateral value. In other words, this means that FXD is always overcollateralized at 133.33%. **Rewards** • Users get rewards for staking collateral and thus borrowing FXD, in FTHM — the Fathom token. Rewards are calculated dynamically and are the product of rewards rate and total user’s debt in FXD. The rewards rate is a fixed amount set by Fathom. • Anybody who started the liquidation process ( the liquidator), receives a flat fee (tip) and a dynamic % (chip) for just initiating the process. • Anybody who restarted the Dutch auction, which is part of the liquidation process, receives a fee for restarting it. # Liquidation Mechanics CDP-based stable-asset protocols keep the level of issued debt in a range-bound state through an efficient liquidation process. Liquidation within the Fathom platform is analgous to foreclosure which is forced when the borrower cannot cover the interest rate and principal on time, and therefore, the lender will initiate a sale of the borrower's collateral. The difference here is that foreclosure, or liquidation, occurs when the borrower cannot keep up with the agreed cash flow, or in other words, liquidation of a position in stable-asset protocols happens when the value of collateralized assets decreases and moves the Loan to Value ratio(LTV) of a position to a level that is considered too risky. This level is variable depending on the underlying collateral's risk profile and is set through a DAO governance model. **Loan to Value Ratio** -LTV in Real Estate terms LTV = Value of Debt borrowed / Value of Collateralized House In the Fathom's case this would be LTV = Value of USF issued / Value of collateralized Assets **Total level of debt in the protocol.** (Macro level) The protocol is be considered solvent when the issued amount or value of debt is lower than the value of collateralized assets. Assuming that 1)Max LTV of the whole protocol is 75% 2)Total value of collateralized assets is $500,000 Maximum amount of debt that can be issued is $500,000 * 75% = $375,000 This means that the amount of FXD issued must never be more than $375,000 to remain solvent. Let's assume that the total amount of issued debt is $300,000. If the total value of collateralized assets plummets to $375,000; down from $500,000 The newly established cap of the total debt becomes $375,000 * 0.75 = $281,250. In this case, there is a $18,750 ($300,000 - $281,250) amount of debt that is issued over the solvent level. Due to this, the protocol needs to liquidate unhealthy or insolvent CDPs to move the level of issued debt lower. **The liquidation, although counter-intuitive, is a strategy to bring back issued debt from the market|circulation.** Liquidators can only purchase the bad debt(liquidated CDPs) by purchasing a collateral asset with the protocol's stablecoin. In the FTHM case, the liquidator will purchase collateralized assets with FXD. When FXD is returned to the protocol through liquidation, the protocol can burn the stablecoin thus lowering the level of issued debt. The MAX LTV of a protocol will be initialy set and later be decided by the governance voting process. **Liquidation process** (Micro level) A position is considered 'open' when a user collateralizes assets to borrow the stablecoin. A position is considered 'closed' when a user pays back the debt fully or the user's position is fully liquidated. The liquidation strategy of FTHM is Fixed Spread Liquidation (FSL). Fixed Spread Liquidation is adopted by Alpaca, AAVE, and Compound. Fixed Spread Liquidation has two characteristics: 1) It liquidates a position with a fixed loss for the CDP holder and profits for a liquidator and the protocol. 2) It partially closes a CDP. Using Alpaca as an example, a 25% portion of a CDP's collateral is subject to a single liquidation process. The profit margin for the liquidator and protocol will be decided by the governance process. The portion (it is called close factor in Alpaca) that can be liquidated at a time may also be decided by the governance process. **Fixed Spread Liquidation (FSL) step by step** This scenario is borrowed from Alpaca's liquidation scenario since FTHM and Alpaca both share the same liquidation strategy. https://docs.alpacafinance.org/ausd/ausd-liquidation#how-liquidation-is-executed In this scenario, assume that: 1) CDP holder's penalty is 5% 2) Liquidator's profit is 1% 3) Protocol's profit is 4% 5% = 1$ + 4% 4) The portion that can be liquidated at once is 25% value of borrowed debt. Let us also assume that the collateral asset is XDC. At time T+0, a CDP user visits Fathom and opens a position with 10,000 XDC. The value of 10,000 XDC at a T+0 is $1,000, therefore, they could have borrowed $1,000 * LTV. Assuming for example the max LTV set by the protocol is 75%. The max amount of FXD that the user can borrow is: $1,000 * 75% = $750 In a scenario where the borrower was more conservative and only **borrowed $600**. It means that the user borrowed $150 less than they could have. However, at T+1, the value of 10,000 XDC had decreased to $767 The current LTV of the position is 600/767 = 0.7823 or 78.23% This is over the max LTV of 75%. In this case, the position needs to be adjusted by liquidating a portion of the collateralized asset. Collateralized assets worth 25% of the debt will need to be liquidated. Recalling that the user borrowed $600. Now 25% of it will be liquidated. $600 * 0.25 = $150 In addition to this 25% portion there will need to be incentive to encourage participation of the liquidator as well as compensate the protocol for taking on risk. Therefore, the amount of XDC to be liquidated will be as below. $600 * 0.25 * 1.05 = $157.50 // Recalling the the 5% penalty from above the CDP holder needs to liquidate 5% more of its borrowed value. $157.50 in XDC currently represents $157.50 / $.07667($/XDC) = 2,054 XDC 2,054 XDC. 2,054 XDC will be sold for $157.50. Although the total value of 2,054 XDC is worth $157.50 the combined profit for the liquidator and the system is $7.50. The system will accrue 4/5 of $7.50 and the liquidator will recieve 1/5 of $7.50. Now that the bad debt was reduced, let's calculate the LTV again. Amount of collateral in XDC: 7,946 Value of collateral in $ : $609.17 = 7,946 * $.07667 Max LTV for the position : $456.88 = $609.17 * 0.75 Actual amount that was borrowed : $442.50 = $600 - $157.50 //$157.50 was paid back when a portion of the collateral asset was liquidated. The LTV of the CDP after the liquidation is $442.50/$609.17 = 0.7264 or 72.64% This is below 75%, therefore, the position has again become solvent. # Workflow Here are the main Fathom's operations described in high-level detail. **Collateralize user’s assets to borrow FXD** 1. User transfers XDC to Fathom via FathomProvider::provide(). 2. FathomProvider mints fXDC for the user as a deposit receipt for their collateral. 3. FathomProvider gets ceAXDCc, running the following logic inside: . Exchanges XDC for aXDCc via Yield converter::deposit({value: msg.value}). During this step, Yield converter weighs the method profitability, deciding between 2 methods — swap on DEX or stake in Ankr Liquid Staking via the XDCPool smart contract —, and exchanges XDC for aXDCc. The price difference between the two is stored for the user, who collateralizes assets, to collect. i. Yield converter sends aXDCc to CeVault for storing, via CeVault::depositFor(msg.sender, amount after exchange). msg.sender — FathomProvider address and amount after exchange — the amount of exchanged aXDCc. ii. CeVault mints ceAXDCc for FathomProvider. 4. FathomProvider collateralizes ceAXDCc via Interaction::deposit(account, address(ceAXDCc), amount). account — user's account address, address(ceAXDCc) — address of ceAXDCc smart contract, amount — XDC initially collateralized by the user minus fees. Interaction runs the following logic inside: . Transfers ceAXDCc, which is an XRC-20 token, to the Interaction smart contract, via the transfer() function of the XRC-20 token smart contract. i. Transfers the assets to the MakerDAO vault via gem::join(). For more information, refer to the Join docs. ii. Makes the VAT smart contract fully trust the Interaction smart contract via VAT::behalf(). iii. Locks the assets inside MakerDAO via VAT::frob(), effectively collateralizing them. For more information, refer to the VAT docs. iv. Emits a deposit event. **Borrow FXD** 1. Borrow FXD via Interaction::borrow(). After the transaction is sent, Interaction runs the following logic inside: . Calculate the current FXD value inside MakerDAO. While calculating take into consideration the borrowing limit, which is the price of the total assets collateralized by the user * collateral ratio (fixed amount set by Fathom). i. Indebt the user equal to the borrowed FXD amount via VAT::frob(). For more information, refer to the VAT docs. ii. Transfer the borrowed FXD via FXDJoin::exit(). For more information, refer to the Join docs. iii. Emit a borrow event. **Repay FXD** 1. Repay Fathom the borrowed FXD via Interaction::payback(). After the transaction is sent, Interaction runs the following logic inside: . Transfer the FXD, which is a XRC-20 token, to the Interaction smart contract, via the transfer() function of the XRC-20 token smart contract. i. Transfer the FXD to the MakerDAO vault via FXDJoin::join(). For more information, refer to the Join docs. ii. Calculate the current FXD value inside MakerDAO. iii. Subtract the repaid FXD amount from the user’s debt via VAT::frob(). For more information, refer to the VAT docs. iv. Emit a payback event. W**ithdrawal Collateral** 1. Burn user's fXDC via FathomProvider::release(). 2. FathomProvider gets ceAXDCc back via Interaction::withdraw(account, address(ceAXDCc), amount). account — user's account address, address(ceAXDCc) — address of ceAXDCc smart contract, amount — XDC initiallly collateralized by the user - fees. Interaction runs the following logic inside: . Unlock the assets via VAT::frob(). For more information, refer to the VAT docs. i. Transfer the assets from the CDP engine to the MakerDAO vault via VAT::flux(). For more information, refer to the VAT docs ii. Transfer the assets to the user’s wallet via gem::exit(). For more information, refer to the Join docs. iii. Emit a withdraw event. 3. Exchange ceAXDCc to XDC. . FathomProvider exchanges ceAXDCc for aXDCc via Yield converter::withdraw(address recipient, uint256 amount). address recipient — desired user's address to release XDC to in the future, amount — amount fXDC to exchange to XDC. i. Yield converter in turn calls CeVault::withdrawFor(msg.sender, address(this), amount) to exchange aXDCc for XDC. address(this) — address of Yield converter, amount — amount fXDC to exchange to aXDCc, msg.sender — address of the FathomProvider smart contract. ii. CeVault burns aXDCc and unstakes XDC via BinancePool::unstakeCerts(recipient, realAmount). recipient — user's address, realAmount — amount of XDC * aXDCC.ratio() **Claim Rewards** 1. Claim a reward, in FTHM, for the borrowing FXD, to the user’s wallet, via FathomRewards::claim(). After the transaction is sent, FathomRewards runs the following logic inside: . Update the rewards pool size and rewards rate. i. Transfer the pending user rewards to the user’s wallet via FathomToken::transfer(). **Liquidation** 1. When the collateral ratio is >=75%, the liquidation process can be triggered by anybody via Interaction::startAuction(token, user, keeper), where token — address of the liquidated assets, user — address of user whose collateral is to be liquidated, keeper — address of the user who gets a reward for starting the auction. Then Interaction runs the following logic inside: . Start a Dutch auction: a. Set the starting auction price for the liquidated collateral to be equal (100% of the current collateral price * 1.1). b. Let anybody come and bid via buyFromAuction(token, auctionId, collateralAmount, maxPrice, receiverAddress) to buy any amount that is > than dust (currently 1 USD). token — address of the liquidated assets, auctionId — ID of the auction, collateralAmount — amount to buy, maxPrice — bidding price, receiverAddress — address of the bidder. c. If the bid is > current auction price, sell the requested amount of the user's collateral to the bidder. d. Else, incrementally lower the auction price and let anybody bid still. e. When the lower price limit or the time limit is reached, wait for anybody to come and restart the auction. i. Transfer the price paid in 1.d, in FXD, from the bidder’s wallet to Fathom. ii. Transfer the collateral, in aXDCc, to the bidder. iii. Subtract the due amount (the FXD the user borrowed + borrowing interest + liquidation penalty) from the received action price on behalf of Fathom. iv. Transfer the rest of the FXD from the action price, if any left, to the user’s wallet. # Smart Contracts The smart contracts that implement Fathom are: • MakerDAO set — the Maker Protocol, also known as the Multi-Collateral Dai (MCD) system, allowing users to generate FXD by leveraging collateralized assets. FXD is a decentralized, unbiased, collateral-backed cryptocurrency soft-pegged to the US Dollar. o ABACI — price decrease function for Dutch auctions during the liquidation process of user's assets. o CLIP — liquidation v2.0 mechanics. o DOG — starts Dutch auctions during the liquidation process of user's assets. o JOIN — XRC-20 token adapters. o JUG — collects Fathom's borrowing interest for lending FXD to the user. o FXD — stable coin the user can borrow from Fathom. o SPOT — oracle that fetches the price of aXDCc, which is an intermediate token used during the process of collateralizing user's assets.. o VAT — сore vault for collateralized debt positions (CDP). o VOW — vault balance sheet. Keeps track of debt or surplus of FXD. • FathomRewards — rewards distribution, in the FTHM rewards token. • FathomToken — XRC-20 compatible rewards token given to the user for borrowing FXD. • FathomOracle — oracle for the FTHM rewards token. • FathomProvider — wraps XDC into ceAXDCc via Yield converter. • Yield converter — finds the best way to obtain aXDCc, which is an intermediate token used during the process of collateralizing user's assets. • CeToken — ceAXDCc, which is the underlying collateral token inside MakerDAO. • CeVault — stores obtained aXDCc, which is an intermediate token used during the process of collateralizing user's assets. • Interaction — proxy for the MakerDAO contracts. Provides deposit, withdraw, borrow, payback, and liquidation functions to the end users. • AuctionProxy — entrypoint for Dutch auction methods, which is part of the liquidation process of user's assets. Allow users to start and participate in auctions. • aXDCc — liquid yield-bearing token used during the process of collateralizing user's assets. aXDCc has liquidity properties and gains the user rewards in XDC received when they withdraw their collateral. • fXDC — token minted for the user as a deposit receipt for their collateral. For the addresses, refer to [smart contracts addresses table] smart contracts addresses table. For the codebase, refer to the [smart contracts repo on GitHub] # Additional FAQs **What makes FXD sustainable again?** Amongst the various stablecoin models, it has been proven that over-collateralized stablecoins are the most sustainable. MakerDAO's DAI stablecoin is the perfect example, maintaining its peg in the June 2022 crash, and FXD's architecture is similar. The main difference is that Fathom is an enhanced version aiming to solve the capital inefficiency of MakerDAO by allowing the collateral to generate rewards earned by the Fathom protocol through XDC Liquid Staking. Fathom token holders will then decide how the protocol’s revenue (borrowing interest + rewards from collateral) will be redistributed to FXD liquidity providers and stakers. This effectively enables FXD to enable yield in a sustainable way since the collateral is mechanically larger than the staked FXD coming from borrowing due to the over-collateralization nature of the Fathom protocol. **How does FXD protect its peg to the US Dollar?** Here's how the price stability mechanism works: When FXD's price is above USD 1.00: • The supply of FXD will have to be increased in order to bring the FXD price back down to USD 1.00. In this scenario, FXD is at a premium, and borrowers are incentivized to borrow more FXD to sell for other assets. • Fathom will reduce FXD farming rewards by decreasing FXD borrowing interest to reduce demand for FXD farming. When FXD's price is below USD 1.00: • The supply of FXD will have to be reduced in order to bring the price of FXD back up to USD 1.00. In this scenario, FXD is at a discount, and borrowers are incentivized to purchase FXD from the market to pay back the debt. • Fathom will increase FXD borrowing interest to decrease FXD borrowing demand, which increases FXD farming rewards. **What is the minimum collateral ratio % for FXD?** FXD’s collateral ratio is stable and the maximum LTV is 75%, which means a 133.33% collateralization for XDC. This ratio can vary for other assets, e.g. a gold token that is less volatile than XDC could attract a higher LTV or a slower liquidation process. The collateralization ratios will be set by the Fathom Risk Management Team. Community members – FTHM tokenholders – may suggest members to the team. This will be voted upon by the community. Will it be a vote at first or will we move that way over time? **Is the FXD collateral ratio transparently maintained?** It is maintained by the governance that FTHM holders can participate in, effectively making the governance decentralized and secure. The collateralization ratios will be set by the Fathom Risk Management Team. Community members – FTHM tokenholders – may suggest members to the team. The ratios will be transparent and disclosed on Fathom’s website. We’ve talked about making this publicly available on the website; thoughts? **How can I earn yield with FXD?** FXD yield comes from Fathom’s revenue pool, which is derived from FXD’s borrowing interest and XDC collateral being staked by Fathom’s protocol. This effectively enables FXD to enable yield in a sustainable way since the collateral is mechanically larger than the staked FXD coming from borrowing due to over-collateralization. You can learn and see how the staking works on [testnet] **What is the expected yield when staking FXD?** When you stake FXD, you can expect around 12% of sustainable APR. **How does Fathom use the yield it gains?** This yield Fathom gains from the borrowing interest and PoS staking, by governance decision, will be sent to the DEX as farming rewards and possibly to buy back the FTHM token (TBD). **Is there deposit/smart contract insurance?** Not for now. Nonetheless, deposit insurance is unnecessary because FXD is over-collateralized. Fathom's smart contract was created by some of the industry's best developers, and it was audited by five of the world's leading smart contract auditing firms. Furthermore, Fathom maintains a bug bounty program for any bugs discovered in its smart contracts. Despite the fact that Fathom is one of the most inclusive, safe, and long-term DeFi stablecoin project on the market today, we recommend that any potential user assess their risk tolerance and conduct due diligence before investing in any crypto/DeFi project. **How are FTHM and FXD related? And how can I use FTHM outside the Fathom platform?** After providing XDC as collateral you will be able to borrow FXD which is Fathom Protocol’s stablecoin. When you borrow and mint FXD , you also earn FTHM tokens that offset FXD’s borrowing fees. We also plan to introduce other utilities for the FTHM token which includes a democratic governance by token holders (e.g. voting on new collateral) and much more — more announcements to come regarding this in the future! **How do you ensure FTHM has any value anytime?** In order to ensure the FTHM token will maintain value regardless of market conditions, we have limited the amount of tokens and we will do buy back by governance decision which is one of FTHM’s utility, so it can be staked for reward and/or used for governance. **Will Fathom use native tokens of other platforms?** For example, to help influence its reward emission. No. However, Fathom over time will add different types of collateral including commodities and security tokens, always with an eye on the security of the protocol first, and secondly to allow borrowers to liquify high-quality real world assets. **Does Fathom plan to integrate with other blockchains?** Not for the moment. Our highest priority is to be the top provider on the XDC Chain before moving to other chains. Maybe best to delete this section for now. **What is the decision-making process for Fathom? In other words, are you going to renounce privileges for the admin team and implement a governance systems/DAO for a more decentralized administrative control of the Fathom Protocol?** We will take a staggered approach. First, we aim to enable the FTHM token holders to vote on the distribution from the Fathom Revenue Pool (staking rewards from collateral captured by Fathom protocol + borrowing interest from borrowers) to FXD liquidity pools, and in a second step also FXD stakers. Furthermore, FTHM token holders will be able to vote on the distribution of the FTHM token Reserve Pool, coming from minted FTHM. The main choices will be related to borrowing incentives and incentivizing FTHM token liquidity pools. Decisions related to target borrowing rates and collateral ratio for every type of collateral will be taken by the community, supported by an advisory Fathom Risk Management Team. Finally, the Governance System/DAO is the ultimate goal to make sure that significant decisions related to Fathom strategy and future developments are taken by FTHM voters. **Marketing is crucial for any project's success. How will Fathom attract new users and investors?** Our marketing aims to build a stronger community and to grow brand awareness. We will focus on a strong brand identity around concepts such as freedom, trust and reliability. We will organize a launch campaign, AMA’s, workshops, a strong social media presence, support on Discord and of course an intelligent FTHM incentive campaign for lenders and borrowers.