Article Summary, Automatically Generated By AI
Summary of Indigo Protocol – iUSD
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Release Date:
November 2022 -
iUSD Peg:
Median value of USDC, TUSD, and USDT -
Indigo Protocol:
CDP-based DeFi protocol for capital-efficient synthetic assets on Cardano -
iUSD Minting:
Deposit ADA as collateral, maintaining Minimum Collateralization Ratio (MCR) -
MCR:
Ensures over-collateralization, adjustable by Indigo DAO -
Liquidation Process:
Indigo Stability Pool providers exchange iUSD for ADA collateral if MCR is breached - <
Introducing Indigo Protocol: The Birth of iUSD
iUSD, Cardano’s inaugural fault-tolerant and fully collateralized native stablecoin, launched in November 2022 as a key component of Indigo Protocol v1. By pegging its value to the median of USDC, TUSD, and USDT, iUSD is designed to maintain its peg even in the event that one of these three stablecoins (USDC, TUSD, or USDT) experiences a depegging.
The Indigo Protocol is a decentralized finance (DeFi) protocol built around Collateralized Debt Positions (CDPs), designed to introduce capital-efficient synthetic assets to the Cardano ecosystem. Users have the flexibility to acquire iUSD from a decentralized exchange (DEX) just like any native Cardano asset, or alternatively, mint iUSD within the Indigo Protocol by depositing ADA as collateral, thereby unlocking a seamless and efficient experience.
When users mint iUSD within the Indigo Protocol, they are required to deposit a sufficient amount of ADA to maintain a collateralization ratio that exceeds the applicable Minimum Collateralization Ratio (MCR), thereby ensuring over-collateralization. Should the value of a user’s ADA collateral begin to decline towards the MCR, the user has the option to supplement their collateral to maintain their iUSD position above the MCR threshold. In the event that a user’s collateral falls below the MCR of their iUSD debt, the Indigo Stability Pool providers will facilitate a collateral swap, exchanging Stability Pool iUSD for the user’s higher-value ADA collateral. This mechanism ensures that iUSD remains overcollateralized, thereby maintaining the solvency of the Indigo Protocol through its efficient liquidation process.
Exclusively available on Indigo, users can simultaneously reap the benefits of ADA staking rewards through stake pool delegation while utilizing ADA as collateral in a CDP. This innovative CDP Liquid Staking feature unlocks a distinctive use case for iUSD in sophisticated trading strategies.
The Indigo DAO exercises control over the iUSD parameters, thereby empowering it to vote on adjustments to the Minimum Collateralization Ratio for iUSD and all Indigo iAssets, either upward or downward.