Frequently Asked Questions

As of 02/01/2025

1. What is Hatom USD (USH), and how does it function within the MultiversX ecosystem?

Hatom USD (USH) is a decentralized, over-collateralized stablecoin designed to maintain a stable value while being backed by a diverse array of liquid crypto assets. It is the first native stablecoin of the MultiversX ecosystem, offering users a stable and reliable asset for various DeFi activities.

2. How is USH minted, and what assets can be used as collateral?

USH is minted through the Hatom Lending Protocol and Isolated Pools. Users can use assets such as EGLD, UTK, HTM, wBTC, wETH, and other supported tokens as collateral to mint USH. The collateral must exceed the value of the USH being minted, ensuring that the stablecoin remains over-collateralized.

3. How does the over-collateralization mechanism ensure the stability of USH?

Over-collateralization ensures that USH is always backed by more assets than the value of the stablecoin in circulation, providing security and protecting the system from insolvency. USH relies on various mechanisms such as arbitrage opportunities and redemptions to maintain its peg to a stable value, typically 1:1 with USD. These mechanisms actively correct any price deviations and ensure that USH remains stable, even during periods of market volatility.

4. What role does the USH Staking Module play in the Hatom ecosystem?

The USH Staking Module allows users to stake their USH LPs to earn HTM tokens as rewards. The staking process helps with deeper liquidity by enabling users to generate passive income on their LPs providing additional stability to its value and strong utility. The rewards distributed to stakers are derived from the protocol’s revenue, ensuring a sustainable incentive model.

5. How does USH compare to other stablecoins in the DeFi market?

USH is the first native stablecoin on the MultiversX blockchain, and it is over-collateralized, enhancing its stability and security. Unlike many stablecoins that rely on centralized reserves, USH is fully decentralized and operates within a robust ecosystem with all changes requiring Governance approval.

6. What are the risks associated with using or holding USH, and how are they mitigated?

Risks include potential de-pegging and smart contract vulnerabilities. These risks are mitigated through over-collateralization, real-time monitoring of collateral values, automated liquidation mechanisms, and regular security audits of the smart contracts involved in minting and managing USH.

7. How does the minting fee for USH work, and what factors influence it?

The minting fee is a small percentage applied when USH is minted through the Lending Protocol. This fee varies depending on the type of collateral provided and prevailing market conditions. For a detailed explanation of how fees are calculated, refer to the Borrow Rate section.

8. What is the role of Isolated Pools in the minting of USH?

Isolated Pools provide a unique approach for minting USH, allowing users to supply specific assets like EGLD and wTAO to mint USH without incurring minting fees. These pools offer additional flexibility and opportunities for users to engage with the stablecoin ecosystem.

9. How does the integration of wTAO with USH expand its utility?

The integration of wTAO allows USH to be the first stablecoin backed by TAO across all ecosystems. This expands the utility of USH, enabling TAO holders to engage with a stable asset while participating in the broader DeFi ecosystem on MultiversX.

10. How does the Hatom Protocol ensure the transparency and auditability of USH reserves?

The Hatom Protocol ensures transparency through on-chain data, allowing users to verify the collateral backing USH in real time. Additionally, the protocol undergoes regular audits to ensure that reserves are accurately maintained and that the stablecoin remains fully backed.

11. What are the implications of a USH de-pegging event, and how does the protocol respond to it?

In the event of a USH de-pegging, the protocol relies on robust peg stability mechanisms such as Arbitrage and Redemption to restore its value to 1:1 with USD. These mechanisms are designed to ensure price stability and protect the ecosystem. For a detailed explanation of how these mechanisms function, please refer to the dedicated Price Stability section.

12. How does the Hatom Protocol handle the liquidation of collateral backing USH?

If the value of the collateral backing USH falls below a certain threshold, the protocol initiates a liquidation process to sell the collateral and stabilize the value of USH. This process is automated and ensures that USH remains fully collateralized.

13. What is the role of Facilitator Pools in the USH stablecoin mechanism, and how do they influence the minting and burning of USH?

Facilitator Pools are collections of accounts authorized to mint and burn USH. Each pool has a defined capacity, limiting the amount of USH it can mint under specific conditions. The difference between the minted and burned amounts determines the balance of each pool, which in turn influences the overall circulating supply of USH.

14. How does the USH stablecoin ensure that the maximum supply of USH in circulation remains within a controlled limit?

The maximum supply of USH at any given time is controlled by the cumulative capacity of all Facilitator Pools. Each pool’s ability to mint USH is constrained by its assigned capacity, ensuring that the total circulating supply does not exceed a predefined maximum, thus maintaining stability.

15. What is the significance of the USH Borrow Rate, and how does it differ from the interest rates applied to other assets within the Hatom ecosystem?

The USH Borrow Rate is a predefined parameter within the smart contract, not influenced by supply and demand. It can be adjusted by governance, subject to time locks and rate change limitations. Unlike other assets where interest rates fluctuate based on market conditions, the USH Borrow Rate is consistent and can be discounted based on the borrower’s collateral distribution.

16. How does the protocol compute an account's borrow amount with a discount rate, and what factors influence the discount applied?

The protocol computes an account's borrow amount with a discount by applying a discount rate to the base borrow rate, which is influenced by the collateral distribution of the user. This computation involves translating the borrowed amount across time using a discrete-time equivalent of continuous compounding. The discount rate is determined by market-specific parameters and the user’s collateral type, resulting in personalized borrowing conditions.

17. How does the coverage rate in the USH Discount Rate Model determine the amount of USH that can be borrowed at a discount, and how does it affect overall borrowing costs?

The coverage rate is a conversion factor that defines the amount of USH that can be borrowed at a discounted rate based on the user’s collateral. It influences the overall borrowing costs by determining how much of the borrowed USH qualifies for the discount. Higher coverage rates reduce borrowing costs, while lower rates increase them, making the model crucial for optimizing user borrowing strategies.