Indigo Protocol iUSD
iUSD is Cardano’s first fault-tolerant and fully collateralized native stablecoin, released in November 2022 as part of Indigo Protocol v1. iUSD is pegged to the median value of USDC, TUSD, and USDT; this design allows iUSD to maintain its peg even if one of the three stablecoins (USDC, TUSD, and USDT) depegs. Indigo Protocol is a CDP (Collateralized Debt Position)-based DeFi protocol that brings capital-efficient synthetic assets to the Cardano ecosystem. Users can purchase iUSD from a DEX like any Cardano native asset or mint iUSD within Indigo Protocol by depositing ADA as collateral. When users mint iUSD within Indigo Protocol, they must deposit sufficient ADA to ensure that their CDP remains above the applicable Minimum Collateralization Ratio (MCR), meaning that they deposit ADA collateral sufficient to ensure overcollateralization. If the value of a user's ADA collateral begins to decrease toward the MCR, the user can choose to add more collateral to keep their iUSD position above the MCR. If a user’s collateral becomes worth less than the MCR of their iUSD debt, Indigo Stability Pool providers allow the user to retain their iUSD while exchanging Stability Pool iUSD for the user’s higher-value ADA collateral. This ensures that iUSD remains overcollateralized and that Indigo Protocol remains solvent through its efficient liquidation process. Unique to Indigo, users continue to receive ADA staking rewards from stake pool delegation while ADA is used as collateral in a CDP. This CDP Liquid Staking feature presents a unique use case for iUSD in trading strategies. The Indigo DAO controls iUSD parameters and can therefore vote to raise or lower the Minimum Collateralization Ratio for iUSD and all Indigo iAssets.
Overview
iUSD is Cardano’s first fault-tolerant and fully collateralized native stablecoin, released in November 2022 as part of Indigo Protocol v1. iUSD is pegged to the median value of USDC, TUSD, and USDT; this design allows iUSD to maintain its peg even if one of the three stablecoins (USDC, TUSD, and USDT) depegs. Indigo Protocol is a CDP (Collateralized Debt Position)-based DeFi protocol that brings capital-efficient synthetic assets to the Cardano ecosystem. Users can purchase iUSD from a DEX like any Cardano native asset or mint iUSD within Indigo Protocol by depositing ADA as collateral. When users mint iUSD within Indigo Protocol, they must deposit sufficient ADA to ensure that their CDP remains above the applicable Minimum Collateralization Ratio (MCR), meaning that they deposit ADA collateral sufficient to ensure overcollateralization. If the value of a user's ADA collateral begins to decrease toward the MCR, the user can choose to add more collateral to keep their iUSD position above the MCR. If a user’s collateral becomes worth less than the MCR of their iUSD debt, Indigo Stability Pool providers allow the user to retain their iUSD while exchanging Stability Pool iUSD for the user’s higher-value ADA collateral. This ensures that iUSD remains overcollateralized and that Indigo Protocol remains solvent through its efficient liquidation process. Unique to Indigo, users continue to receive ADA staking rewards from stake pool delegation while ADA is used as collateral in a CDP. This CDP Liquid Staking feature presents a unique use case for iUSD in trading strategies. The Indigo DAO controls iUSD parameters and can therefore vote to raise or lower the Minimum Collateralization Ratio for iUSD and all Indigo iAssets.