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Adding an Asset
as of 17/06/2023
The decentralized nature of the Hatom Lending Protocol implies risks from individual interactions with all dependent systems.
Crypto assets are at the core of the Hatom Lending App, as they enable operations and hold the assets and liabilities of the protocol.
The Hatom Risk Management Team has created this documentation with a focus on assessing the risks associated with the crypto assets supported by the Hatom protocol. The risk assessment considers the selected crypto assets' market, counterparty, and smart contract risks to contribute to higher risk standards within the DeFi space.
On Hatom Lending Protocol, users can Supply and Borrow crypto assets in an over-collateralized fashion through decentralized Lending Pools. Suppliers receive an equivalent amount of their deposit in HTokens, "which is a protocol-issued token" that gathers the interest generated.
Borrowers have to deposit collateral to be able to take a loan. The collateral secures the loan and plays the role of a risk mitigation tool against default. Crypto assets are at the core of Hatom's decentralized lending operations. More details on how the protocol works can be found in Hatom's Whitepaper.
The selection of the crypto assets has been realized with the following constraints:
- 1.The protocol risk of insolvency increases with each crypto asset added as collateral to the Hatom lending protocol. The assets of the Hatom Protocol are the collaterals, while the liabilities are the borrowed amounts. The crypto assets supplied and borrowed often differ, with loans mostly taken in stablecoins and collateralized by volatile tokens. This means that the protocol is strongly exposed to the failure of the supported token systems and market fluctuations.
- 2.Exposing the protocol to the centralization risk of the centralized currency accepted as collateral. The single point of failure risks of underlying crypto-assets flow into Hatom Lending Protocol.
- 3.Reducing risks via diversification benefits by having a volume from different crypto assets in our lending pools.
Significant controls are mandatory to ensure the currency implemented will add more value than risk.
Crypto assets need a fantastic product and a large community to be considered.
The risk assessment investigates and decides whether the crypto assets represent a reasonable risk for the protocol, calibrating the currencies parameters to reduce those risks.
Last modified 5mo ago