## What is Indigo

Indigo is a decentralized non-custodial synthetic assets protocol built for Cardano. Using smart contracts, Indigo allows users to create fully collateralized synthetic assets known within the protocol as iAssets.

## What are iAssets

Indigo creates synthetic assets which are known in the protocol as iAssets (i.e., “Indigo Assets”). iAssets are cryptocurrency assets that derive their prices from tracked assets. To mint an iAsset we create a Collateralised Debt Position.

iAssets are not wrapped assets (e.g., an asset linked by a bridge to a deposit made on another chain); instead, iAssets use a price Oracle to track the price of the underlying asset.

One example of an iAsset is iBTC, representing a synthetic version of Bitcoin (BTC); it is designed to mimic the price action of BTC – an asset that lives in an ecosystem outside of Cardano.



What is Indigo

Every iAsset is backed by collateral held in a Collateralized Debt Position (a “CDP”). A CDP is created by a user locking collateral (a minimum of 10 ADA) into Indigo to mint a new iAsset. An iAsset is borrowed against the collateral, creating a debt, and this position is watched by liquidators to ensure overcollateralization.

## What can I do with a CDP?

As a CDP owner, you can take the following actions:
- Deposit Collateral - By depositing more collateral, you will increase your collateral ratio and thus may decrease the risk of liquidation.
- Withdraw Collateral - By withdrawing a portion of your collateral, you will decrease your collateral ratio and thus may increase the risk of liquidation.
- Mint iAsset - By minting more iAssets, you may decrease your collateral ratio.
- Burn iAsset - By burning iAssets, you may increase your collateral ratio. If you burn all the iAssets minted under the CDP, you will close your CDP and receive your collateral back.

## If you cant see your CDP
If you can't find your CDP, it likely means that it was undercollateralized (due to price movements of your collateral or the iAsset itself) and has been liquidated. To learn more about liquidations, head over to this section.

## Fees associated to a CDP
Anytime you withdraw collateral from your CDP or close your CDP, a fee of 2% will be taken and re-distributed to INDY stakers. This fee is a protocol parameter, meaning it can be modified by the DAO.

## Benefit of Liqwid Staking and CDP's
Liquid staking is a unique capability offered by Indigo that allows staking of ADA collateral within CDPs; enabling users to continue earning ADA rewards from the Cardano network.
To use liquid staking, you must first have your Cardano wallet staked to your preferred stake pool. The Indigo Web App automatically attaches your staking key when creating a CDP. All ADA deposited into that CDP will continue to earn staking rewards based on your chosen stake pool.

## What if I change stake pools? Will I still earn staking rewards?
Yes. If you delegate your wallet to a new stake pool after creating the CDP, the ADA collateral in the CDP will automatically earn rewards from the new stake pool.

Collateralized Debt Postition

## What are Stability Pools?

A Stability Pool helps maintain iAsset solvency by acting as the source of liquidity to repay debt from liquidated CDPs, thus intending all minted iAsset supply to remain overcollateralized.

Every supported iAsset has its own Stability Pool (e.g., iBTC Stability Pool), and is comprised of iAssets deposited by users (aka "Stability Pool stakers").

As CDPs become undercollateralized, they are eligible to be liquidated. When a liquidation occurs, iAssets deposited in their corresponding Stability Pool are burned to repay the CDP's debt, meaning that Stability Pool stakers lose a pro-rata share of their iAsset deposits while gaining a pro-rata share of the liquidated CDP's collateral.

## How do I deposit iAssets in a Stability Pool?
Assuming that you already own iAssets (either via the opening of a CDP or through a purchase on the open market), you simply need to deposit your iAssets into its corresponding Stability Pool.

In addition to receiving a pro-rata share of a liquidated CDP's collateral, Stability Pool stakers earn rewards in the form of INDY tokens.

## Fees associated with Stability Pool
there are 3 fees associated with Stability Pools.
- There is a 5 ADA fee when depositing iAssets into a Stability Pool for the first time. This fee will be redistributed to all Stability Pool providers.
- There is a 1 ADA fee for depositing, withdrawing or claiming rewards. This fee will be redistributed to all Stability Pool providers.
- There is a 2% fee taken from the total amount of ADA rewards a user is owed (which corresponds to the collateral seized from liquidated CDPs). This fee will be redistributed to INDY stakers and is a protocol parameter, meaning it can be modified by the DAO.


## Why did my iAsset balance in the Stability Pool shrink?
A lower iAsset balance indicates that liquidations occurred and that a portion of your iAsset deposit was burned. In exchange, you will have received a pro-rata share of the liquidated CDP's collateral.

Stability Pools

Liquidations can occur when CDPs become undercollateralized. Liquidations are performed by users of the protocol as well as a Liquidation Bot, operated by the Indigo Labs.

Liquidations are a two-step process:

1. Freeze the CDP. Upon freezing, a CDP is no longer usable by its former owner. The former owner loses all access and rights to the CDP.
2. Liquidate the CDP. The CDP debt is repaid by burning iAssets from a Stability Pool, and the CDP's collateral is distributed proportionally to Stability Pool stakers.

Liquidations

## How do I interact with Indigo?

Using Indigo can be broken down into 3 steps;
1. Select the iAsset you wish to mint.
2. Deposit an amount of ADA as collateral
3. Choose a collateral ratio (this will impact the amount of iAssets you are able to mint).

The protocol will then open a CDP and mint the required amount of iAssets and distribute it to your wallet directly. You are then free to use the iAssets as you see fit.(*more on this later*)

The above video shows opening a CDP to mint iETH. Entering an amount of ada and selecting 195% collateral ratio, in doing so the amount of the iAsset I was able to mint was automatically calculated. We then only need to click the open position button and sign the TX from our wallet.


Opening a CDP

Withdrawing collateral

Minting and Burning iAssets

Earning with Stability pools

How to use and earn with Indigo

What is the INDY token?

INDY Staking

The INDY token & Staking

DO NOT BUY, CURRENTLY BEING WORKED ON

***A complete guide to using Indigo Protocol***

A complete guide to using Indigo Protocol

How to: Indigo (WORK IN PROGRESS)

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