The nature of level set percolation in the two-dimension Gaussian Free Field has been an elusive question. Using a loop-model mapping, we show that there is a nontrivial percolation transition, and characterize the critical point. In particular, the correlation length diverges exponentially, and the critical clusters are logarithmic fractals, whose area scales with the linear size as $A sim L^2 / sqrt{ln L}$. The two-point connectivity also decays as the log of the distance. We corroborate our theory by numerical simulations. Possible CFT interpretations are discussed.
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