Indigo Protocol iETH $IETH

The Indigo Protocol iETH is a synthetic Ether that was the initial new iAsset endorsed by the Indigo DAO for the Indigo Protocol. The Indigo Protocol is a Collateralized Debt Position (CDP) based DeFi protocol that introduces highly efficient synthetic assets into the Cardano ecosystem. iETH can be bought from a DEX as any other Cardano native asset, or users can mint iETH within the Indigo Protocol using ADA as collateral.

Minting and Collateralization of iETH

When users opt to mint iETH within the Indigo Protocol, they are required to deposit sufficient ADA to ensure their CDP maintains above the set Minimum Collateralization Ratio (MCR). This means a user secures over-collateralization by depositing collateral in the form of ADA. Should the value of a user's ADA collateral begin to decline close to the MCR, a user retains the option to add more collateral to keep their iETH position above the MCR.

Liquidation Process and Stability

If a user’s collateral worth drops below the MCR of their iETH debt, the Indigo Stability Pool providers will permit the user to retain their iETH but will trade Stability Pool iETH for the user’s higher value ADA collateral. This guarantees that iETH stays overcollateralized and the Indigo Protocol sustains solvency via its effective liquidation process.

CDP Liquid Staking and ADA Rewards

What distinguishes Indigo is that users continue to earn their ADA staking rewards from the stake pool delegation while ADA is used as collateral in a CDP. This CDP Liquid Staking feature introduces a unique application for iETH in trading strategies.

Indigo DAO and iETH Parameters

The Indigo DAO is responsible for controlling the iETH parameters and thus has the ability to vote in favor of increasing or decreasing the Minimum Collateralization Ratio for iETH and all Indigo iAssets.