# Table of Contents - [Guides | Indigo Documentation](#guides-indigo-documentation) - [Resources | Indigo Documentation](#resources-indigo-documentation) - [Protocol Statistics | Indigo Documentation](#protocol-statistics-indigo-documentation) - [Audit | Indigo Documentation](#audit-indigo-documentation) - [Socials, Interviews & Others | Indigo Documentation](#socials-interviews-others-indigo-documentation) - [Month in Review | Indigo Documentation](#month-in-review-indigo-documentation) - [Stability Pools | Indigo Documentation](#stability-pools-indigo-documentation) - [🛠️ Indigo Protocol V2 | Indigo Documentation](#-indigo-protocol-v2-indigo-documentation) - [Indigo Basics | Indigo Documentation](#indigo-basics-indigo-documentation) - [🏦󠀥 Interest | Indigo Documentation](#-interest-indigo-documentation) - [CDP | Indigo Documentation](#cdp-indigo-documentation) - [💧CDP Liquid Staking | Indigo Documentation](#-cdp-liquid-staking-indigo-documentation) - [🚨 Liquidations | Indigo Documentation](#-liquidations-indigo-documentation) - [💻 Using Indigo | Indigo Documentation](#-using-indigo-indigo-documentation) - [💱 Redemptions | Indigo Documentation](#-redemptions-indigo-documentation) - [📊 Tokenomics | Indigo Documentation](#-tokenomics-indigo-documentation) - [🌟Indigo Protocol Brief Overview | Indigo Documentation](#-indigo-protocol-brief-overview-indigo-documentation) - [Wallets | Indigo Documentation](#wallets-indigo-documentation) - [💲 iAssets | Indigo Documentation](#-iassets-indigo-documentation) - [🛡️ Collateralized Debt Positions (CDPs) | Indigo Documentation](#-collateralized-debt-positions-cdps-indigo-documentation) - [🏊 Stability Pools | Indigo Documentation](#-stability-pools-indigo-documentation) - [🗳️ How To Vote | Indigo Documentation](#-how-to-vote-indigo-documentation) - [🌱 Governance & INDY Staking | Indigo Documentation](#-governance-indy-staking-indigo-documentation) - [Public Testnet | Indigo Documentation](#public-testnet-indigo-documentation) - [APR / APY calculations | Indigo Documentation](#apr-apy-calculations-indigo-documentation) - [AQB & Minimum Quorum | Indigo Documentation](#aqb-minimum-quorum-indigo-documentation) --- # Guides | Indigo Documentation Content in the following sections is NOT financial advice and should not be relied upon to make financial decisions. [PreviousWallets](https://docs.indigoprotocol.io/readme/wallets) [NextCDP](https://docs.indigoprotocol.io/guides/cdp) Last updated 1 year ago --- # Resources | Indigo Documentation [Indigo Paper](https://indigoprotocol.io/paper.pdf) [Governance Forum](https://forum.indigoprotocol.io/) [Indigo Tokenomics](https://github.com/IndigoProtocol/tokenomics) [Audit](https://docs.indigoprotocol.io/resources/audit) [Socials, Interviews & Others](https://docs.indigoprotocol.io/resources/socials-interviews-and-others) [Protocol Statistics](https://docs.indigoprotocol.io/resources/protocol-statistics) [PreviousStability Pools](https://docs.indigoprotocol.io/guides/stability-pools) [NextAudit](https://docs.indigoprotocol.io/resources/audit) Last updated 3 years ago --- # Protocol Statistics | Indigo Documentation [Month in Review](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review) [APR / APY calculations](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations) [PreviousSocials, Interviews & Others](https://docs.indigoprotocol.io/resources/socials-interviews-and-others) [NextMonth in Review](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review) Last updated 2 years ago --- # Audit | Indigo Documentation [](https://docs.indigoprotocol.io/resources/audit#tweag-october-2021) Tweag - October 2021 ----------------------------------------------------------------------------------------------- An audit summary can be found by following [this link](https://indigoprotocol1.medium.com/indigo-protocol-tweag-security-audit-report-949b3c359f17) . [](https://docs.indigoprotocol.io/resources/audit#mlabs-november-2022) MLabs - November 2022 ------------------------------------------------------------------------------------------------- 362KB [Indigo Audit Report - MLabs 2022.pdf](https://20369032-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FnyeBVQAS0X1aGXABzyhK%2Fuploads%2Fn8MhvnBuo4FsyIxrimPt%2F2022-12-09-Indigo-audit-report-rev-1_2.pdf?alt=media&token=b4d0169f-6476-42cd-a38f-a2afe2280c86) PDF Download[Open](https://20369032-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FnyeBVQAS0X1aGXABzyhK%2Fuploads%2Fn8MhvnBuo4FsyIxrimPt%2F2022-12-09-Indigo-audit-report-rev-1_2.pdf?alt=media&token=b4d0169f-6476-42cd-a38f-a2afe2280c86) [PreviousResources](https://docs.indigoprotocol.io/resources) [NextSocials, Interviews & Others](https://docs.indigoprotocol.io/resources/socials-interviews-and-others) Last updated 2 years ago * [Tweag - October 2021](https://docs.indigoprotocol.io/resources/audit#tweag-october-2021) * [MLabs - November 2022](https://docs.indigoprotocol.io/resources/audit#mlabs-november-2022) --- # Socials, Interviews & Others | Indigo Documentation [](https://docs.indigoprotocol.io/resources/socials-interviews-and-others#social-platforms) Social Platforms ----------------------------------------------------------------------------------------------------------------- * [Twitter](https://twitter.com/Indigo_protocol) * [Youtube channel](https://www.youtube.com/c/IndigoLabs1) [](https://docs.indigoprotocol.io/resources/socials-interviews-and-others#interviews) Interviews ----------------------------------------------------------------------------------------------------- * [Cardano With Paul - March 2022](https://www.youtube.com/watch?v=l0OMgNNlS7c) * [Big Pey - April 2022](https://www.youtube.com/watch?v=zua5NeT0nrA) * [Cardano With Paul - August 2022](https://www.youtube.com/watch?v=cJB_3OEiV3s) [PreviousAudit](https://docs.indigoprotocol.io/resources/audit) [NextProtocol Statistics](https://docs.indigoprotocol.io/resources/protocol-statistics) Last updated 3 years ago * [Social Platforms](https://docs.indigoprotocol.io/resources/socials-interviews-and-others#social-platforms) * [Interviews](https://docs.indigoprotocol.io/resources/socials-interviews-and-others#interviews) --- # Month in Review | Indigo Documentation The content below is provided for educational and informational purposes. Any past performance is historical and not indicative of future results. Any use of decentralized finance involves various significant financial risks; always Do Your Own Research (DYOR). [](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#id-2023) 2023 -------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#february) February ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FLeoieYAZavEc7574uBgP%252FFeb%25202023.jpg%3Falt%3Dmedia%26token%3Dfa219f12-c414-4e99-9854-41a885fffa18&width=768&dpr=4&quality=100&sign=84a0bee9&sv=2) ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#january) January ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FDwmSNvY3AGDLs5H1onQu%252FJan%25202023.jpg%3Falt%3Dmedia%26token%3Dad49e814-26f7-40a1-be38-f7f9aabb0d51&width=768&dpr=4&quality=100&sign=45019c09&sv=2) [](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#id-2022) 2022 -------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#december) December ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FK1DI0xe66lNW8kEdu1Xm%252FDec%25202022.jpg%3Falt%3Dmedia%26token%3Db2d55d9e-f6f1-4f76-9649-bad262062a7d&width=768&dpr=4&quality=100&sign=a4a58396&sv=2) [PreviousProtocol Statistics](https://docs.indigoprotocol.io/resources/protocol-statistics) [NextAPR / APY calculations](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations) Last updated 2 years ago * [2023](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#id-2023) * [February](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#february) * [January](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#january) * [2022](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#id-2022) * [December](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review#december) --- # Stability Pools | Indigo Documentation [](https://docs.indigoprotocol.io/guides/stability-pools#opening-a-stability-pool-account) Opening a Stability Pool account -------------------------------------------------------------------------------------------------------------------------------- In this section, you will learn how to open a Stability Pool account, via the web application. Opening a Stability Pool account has risks. As CDP liquidation occurs, some of your deposited iAssets will be burned. In exchange, you will receive a pro-rata share of ADA collateral from each liquidated CDP, which will be claimed as rewards automatically. ### [](https://docs.indigoprotocol.io/guides/stability-pools#summary) Summary Opening a Stability Pool account corresponds to depositing iAssets in a Stability Pool for the first time. Opening a Stability Pool account incurs a 5 ADA fee that will be redistributed to Stability Pool providers. ### [](https://docs.indigoprotocol.io/guides/stability-pools#detail) Detail 1\. From the Stability Pool page, click on the **Open Account** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FZae6aKQXnriatac1yR35%252FSP%252001%2520-%2520Deposit.png%3Falt%3Dmedia%26token%3D6dcfaac6-a0a5-434d-b6c1-e9b9d7e8f19f&width=768&dpr=4&quality=100&sign=d887caf2&sv=2) Indigo Web App - Stability Pool 2\. Input the amount of iAsset you wish to deposit or click on one of the button below to pre-fill the input field based on the iAsset balance of the connected wallet. 3\. Tick the checkbox, and click on the **Open Account** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, your iAssets will be deposited into the Stability Pool. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FPrjRHcgzcqxr1gqQoHPQ%252FSP%252002%2520-%2520Open%2520Account.png%3Falt%3Dmedia%26token%3D5d7a4a76-c111-4370-aedb-d458df339a80&width=768&dpr=4&quality=100&sign=a442ef07&sv=2) Indigo Web App - Stability Pool - Open Account [](https://docs.indigoprotocol.io/guides/stability-pools#depositing-iassets) Depositing iAssets ---------------------------------------------------------------------------------------------------- In this section, you will learn how to deposit iAssets into a Stability Pool, via the web application. Depositing iAssets in a Stability Pool has risks. As CDP liquidation occurs, some of your deposited iAssets will be burned. In exchange, you will receive a pro-rata share of ADA collateral from each liquidated CDP, which will be claimed as rewards automatically. ### [](https://docs.indigoprotocol.io/guides/stability-pools#summary-1) Summary Depositing iAssets to an existing Stability Pool incurs several fees listed below. * A Stability Pool account adjustment fee of 1 ADA that will be redistributed to all Stability Pool providers. * A 2% protocol fee taken from the total amount of ADA rewards you are owed (corresponding to your pro-rata share of seized collateral from liquidated CDPs), which will be redistributed to INDY stakers. ### [](https://docs.indigoprotocol.io/guides/stability-pools#detail-1) Detail 1\. From the Stability Pool page, click on the **Manage** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FgHGvZXK34gN9UdzdUi72%252FSP%252005%2520-%2520Manage.png%3Falt%3Dmedia%26token%3D89789e42-d2bd-46f1-ae7a-a87301a020f8&width=768&dpr=4&quality=100&sign=d3373b53&sv=2) Indigo Web App - Stability Pool - Manage 2\. Input the amount of iAsset you wish to deposit or click on one of the button below to pre-fill the input field based on the iAsset balance of the connected wallet. The ADA collateral seized from liquidated CDPs that you are owed will be automatically sent to your wallet. The amount you are owed depends on how many shares of the Stability Pool you own (i.e.: how many iAssets you have deposited versus how many total iAssets are in the Stability Pool). 3\. Tick the checkbox, and click on the **Deposit** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, your iAssets will be deposited into the Stability Pool. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252F9X7bw9XgvZdLALfFInWL%252FSP%252002-2%2520-%2520Deposit.png%3Falt%3Dmedia%26token%3D54ff12df-806d-4667-b600-ac5be602c811&width=768&dpr=4&quality=100&sign=15468fd2&sv=2) Indigo Web App - Stability Pool - Deposit iAssets [](https://docs.indigoprotocol.io/guides/stability-pools#withdrawing-iassets) Withdrawing iAssets ------------------------------------------------------------------------------------------------------ In this section, you will learn how to withdraw iAssets from a Stability Pool, via the web application. Seeing fewer iAssets than originally deposited? As CDP liquidation occurs, some of your deposited iAssets will be burned. In exchange, you will receive a pro-rata share of ADA collateral from each liquidated CDP. ### [](https://docs.indigoprotocol.io/guides/stability-pools#summary-2) Summary There could be 2 scenarios when withdrawing iAssets in a Stability Pool: * Scenario A: Partial withdrawal of iAssets * Scenario B: Total withdrawal of iAssets (corresponds to closing your Stability Pool account) Scenario A Scenario B The partial withdrawal of iAssets incurs several fees listed below. * A Stability Pool account adjustment fee of 1 ADA that will be redistributed to all Stability Pool providers. * A 2% protocol fee taken from the total amount of ADA rewards you are owed (corresponding to your pro-rata share of seized collateral from liquidated CDPs), which will be redistributed to INDY stakers. The closing of your Stability Pool account incurs a fee listed below. A 2% protocol fee taken from the total amount of ADA rewards you are owed (corresponding to your pro-rata share of seized collateral from liquidated CDPs), which will be redistributed to INDY stakers. ### [](https://docs.indigoprotocol.io/guides/stability-pools#detail-scenario-a) Detail - Scenario A 1\. From the Stability Pool page, click on the **Manage** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FgHGvZXK34gN9UdzdUi72%252FSP%252005%2520-%2520Manage.png%3Falt%3Dmedia%26token%3D89789e42-d2bd-46f1-ae7a-a87301a020f8&width=768&dpr=4&quality=100&sign=d3373b53&sv=2) Indigo Web App - Stability Pool - Manage 2\. Input the amount of iAsset you wish to withdraw or click on one of the button below to pre-fill the input field based on the amount of iAssets you have deposited in the Stability Pool. 3\. Tick the checkbox, and click on the **Withdraw** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, your iAssets will be sent to your wallet. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252Fcyok7pcKGWdmhlKO6hoH%252FSP%252003%2520-%2520Withdraw.png%3Falt%3Dmedia%26token%3D10034eb7-b96a-4d37-991d-8003f57d300d&width=768&dpr=4&quality=100&sign=2f337736&sv=2) Indigo Web App - Stability Pool - Withdraw ### [](https://docs.indigoprotocol.io/guides/stability-pools#detail-scenario-b) Detail - Scenario B 1\. From the Stability Pool page, click on the **Manage** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FgHGvZXK34gN9UdzdUi72%252FSP%252005%2520-%2520Manage.png%3Falt%3Dmedia%26token%3D89789e42-d2bd-46f1-ae7a-a87301a020f8&width=768&dpr=4&quality=100&sign=d3373b53&sv=2) Indigo Web App - Stability Pool - Manage 2\. Input the total amount of iAssets you currently have in the Stability Pool or click on the **100%** button below to automatically fill the input field. 3\. Tick the checkbox, and click on the **Close Account** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, the iAssets will be sent to your wallet. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FqrU0HPwDqLLtpE7SeU61%252FSP%2520-%252006%2520-%2520Close%2520Account.png%3Falt%3Dmedia%26token%3D3072d7d9-63dd-46a8-a1be-37886dce52d9&width=768&dpr=4&quality=100&sign=7d63d0e0&sv=2) Indigo Web App - Stability Pool - Close Account [PreviousCDP](https://docs.indigoprotocol.io/guides/cdp) [NextResources](https://docs.indigoprotocol.io/resources) Last updated 1 year ago * [Opening a Stability Pool account](https://docs.indigoprotocol.io/guides/stability-pools#opening-a-stability-pool-account) * [Summary](https://docs.indigoprotocol.io/guides/stability-pools#summary) * [Detail](https://docs.indigoprotocol.io/guides/stability-pools#detail) * [Depositing iAssets](https://docs.indigoprotocol.io/guides/stability-pools#depositing-iassets) * [Summary](https://docs.indigoprotocol.io/guides/stability-pools#summary-1) * [Detail](https://docs.indigoprotocol.io/guides/stability-pools#detail-1) * [Withdrawing iAssets](https://docs.indigoprotocol.io/guides/stability-pools#withdrawing-iassets) * [Summary](https://docs.indigoprotocol.io/guides/stability-pools#summary-2) * [Detail - Scenario A](https://docs.indigoprotocol.io/guides/stability-pools#detail-scenario-a) * [Detail - Scenario B](https://docs.indigoprotocol.io/guides/stability-pools#detail-scenario-b) --- # 🛠️ Indigo Protocol V2 | Indigo Documentation Indigo Protocol V2 was designed to enhance the stability, efficiency, and economic incentives of the protocol. The upgrade introduces new mechanisms and parameters to better manage the minting, trading, and stability of iAssets. [](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#key-features-of-the-upgrade) Key Features of the Upgrade ------------------------------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#id-1.-maintenance-ratio-mr) **1\. Maintenance Ratio (MR)** The Maintenance Ratio is a new parameter that sets the collateralization threshold required for users to mint additional iAssets or adjust their Collateralized Debt Positions (CDPs). This ratio aims to stabilize the system by limiting excessive debt minting, thus aiding in the maintenance of asset pegs. ### [](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#id-2.-redemption-margin-ratio-rmr) **2\. Redemption Margin Ratio (RMR)** The RMR is a hard peg mechanism that defines the conditions under which iAssets can be redeemed. RMR is currently set to 185% for $iUSD, 150% for $iETH, and $iBTC. The RMR provides an arbitrage opportunity that incentivizes market correction and peg stability. ### [](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#id-3.-interest-mechanism) **3\. Interest Mechanism** The introduction of an interest rate on all CDPs is a pivotal change in V2. This interest mechanism serves dual purposes: it generates a new revenue stream for the DAO and helps manage the peg of iAssets. By dynamically adjusting interest rates, the protocol can incentivize or disincentivize the minting of a surplus supply of iAssets. ### [](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#id-4.-fee-restructure) **4\. Fee Restructure** Indigo Protocol V2 introduced the DAO Treasury unlock and several new fee generation streams to create a more predictable and stable revenue model for INDY Stakers and the DAO. Long term, the DAO’s accrual of ADA from Interest will grant Indigo access to resources for development, incentives, and campaigns. * **Debt Minting Fee:** A percentage of the amount minted, deducted during the minting process to generate revenue from increased debt minting activities. * **Redemption Fee:** A 2% fee on redemptions, half directed towards the redeemed CDP and half directed to INDY Stakers, enhancing peg stability while providing additional fee generation for INDY Staking. * **Stability Pool Withdrawal Fee:** A 0.5% fee on withdrawals from the Stability Pool, redistributed among depositors as a loyalty bonus. * **Liquidation Processing Fee:** A 2% fee on liquidated iAssets, replacing the previous collateral fee, ensuring a consistent revenue stream during market downturns. **5\. Stability Pool Enhancements** The Stability Pool mechanism is further refined to ensure better management of liquidations and to provide more predictable rewards for stability providers. This includes the introduction of withdrawal fees and the redistribution of liquidation proceeds in a manner that rewards long-term stability pool participants. #### [](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#implementation-strategy) Implementation Strategy While the on-chain upgrade to Indigo Protocol V2 happened quickly, the transition to enable all of the Indigo Protocol V2 features such as interest, or redemption, was gradual and strategic. This approach ensured that the protocol evolved in a balanced and sustainable manner, with community feedback and participation playing a crucial role in the process. [Previous🌟Indigo Protocol Brief Overview](https://docs.indigoprotocol.io/readme/about-indigo) [Next💻 Using Indigo](https://docs.indigoprotocol.io/readme/using-indigo) Last updated 1 year ago * [Key Features of the Upgrade](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#key-features-of-the-upgrade) * [1\. Maintenance Ratio (MR)](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#id-1.-maintenance-ratio-mr) * [2\. Redemption Margin Ratio (RMR)](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#id-2.-redemption-margin-ratio-rmr) * [3\. Interest Mechanism](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#id-3.-interest-mechanism) * [4\. Fee Restructure](https://docs.indigoprotocol.io/readme/indigo-protocol-v2#id-4.-fee-restructure) --- # Indigo Basics | Indigo Documentation [🌟Indigo Protocol Brief Overview](https://docs.indigoprotocol.io/readme/about-indigo) [🛠️ Indigo Protocol V2](https://docs.indigoprotocol.io/readme/indigo-protocol-v2) [💻 Using Indigo](https://docs.indigoprotocol.io/readme/using-indigo) [🛡️ Collateralized Debt Positions (CDPs)](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp) [🏦󠀥 Interest](https://docs.indigoprotocol.io/readme/interest) [💧CDP Liquid Staking](https://docs.indigoprotocol.io/readme/cdp-liquid-staking) [🏊 Stability Pools](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations) [💱 Redemptions](https://docs.indigoprotocol.io/readme/redemptions) [🚨 Liquidations](https://docs.indigoprotocol.io/readme/liquidations) [💲 iAssets](https://docs.indigoprotocol.io/readme/iassets) [🌱 Governance & INDY Staking](https://docs.indigoprotocol.io/readme/governance-and-indy-staking) [🗳️ How To Vote](https://docs.indigoprotocol.io/readme/governance) [📊 Tokenomics](https://docs.indigoprotocol.io/readme/tokenomics) [Public Testnet](https://docs.indigoprotocol.io/readme/public-testnet) [Wallets](https://docs.indigoprotocol.io/readme/wallets) [Next🌟Indigo Protocol Brief Overview](https://docs.indigoprotocol.io/readme/about-indigo) Last updated 1 year ago --- # 🏦󠀥 Interest | Indigo Documentation [](https://docs.indigoprotocol.io/readme/interest#overview) Overview 🌐 ---------------------------------------------------------------------------- The interest mechanism in Indigo Protocol V2 is designed to enhance the stability of iAssets and provide a consistent revenue stream for the DAO. By applying interest rates to Collateralized Debt Positions (CDPs), the protocol encourages responsible borrowing, thereby maintaining the overall health of the system. [](https://docs.indigoprotocol.io/readme/interest#how-interest-is-applied) How Interest is Applied ⚙️ ---------------------------------------------------------------------------------------------------------- Interest rates in Indigo Protocol V2 are dynamic and can be adjusted by the DAO to respond to market conditions. Interest begins to accrue on all active CDPs from the moment they are created. The interest rate is applied to the debt amount, increasing the total amount owed over time. [](https://docs.indigoprotocol.io/readme/interest#benefits-of-the-interest-mechanism) Benefits of the Interest Mechanism 📈 -------------------------------------------------------------------------------------------------------------------------------- 1. Stability Management: By adjusting the interest rates, the protocol can influence the supply and demand of iAssets. Higher interest rates can discourage excessive borrowing, while lower rates can stimulate it, helping to stabilize the asset pegs. 2. Revenue Generation: The interest paid on CDPs provides a steady stream of ADA revenue for the DAO. This revenue can be used to fund protocol improvements, development initiatives, or other community-driven projects. [](https://docs.indigoprotocol.io/readme/interest#interest-rate-structure) Interest Rate Structure 💸 ---------------------------------------------------------------------------------------------------------- 1. The Interest rate is set at a level that balances accessibility with stability. An algorithmic interest mechanism will be the next upgrade to this feature. 2. Dynamic Adjustments: The DAO has the authority to adjust interest rates based on market conditions. For instance, if there is a high volume of redemptions indicating that iUSD leverage demand, the interest rate may be increased to tighten the supply. [](https://docs.indigoprotocol.io/readme/interest#payment-process) Payment Process ⚙️ ------------------------------------------------------------------------------------------ 1. During CDP Closure: When a user decides to close their CDP, they must repay the total debt, including the accrued interest. Interest is paid in ADA, based on the iAsset debt. Example: a user accrues 10 iUSD worth of interest, which is paid in an amount of ADA equal to the value of 10 iUSD. 2. During Liquidation: If a CDP becomes undercollateralized and is liquidated, the interest owed is included in the total debt settled by the liquidation process. The interest portion is extracted first, ensuring that the protocol and INDY Stakers receive their due revenue. [Previous🛡️ Collateralized Debt Positions (CDPs)](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp) [Next💧CDP Liquid Staking](https://docs.indigoprotocol.io/readme/cdp-liquid-staking) Last updated 1 year ago * [Overview 🌐](https://docs.indigoprotocol.io/readme/interest#overview) * [How Interest is Applied ⚙️](https://docs.indigoprotocol.io/readme/interest#how-interest-is-applied) * [Benefits of the Interest Mechanism 📈](https://docs.indigoprotocol.io/readme/interest#benefits-of-the-interest-mechanism) * [Interest Rate Structure 💸](https://docs.indigoprotocol.io/readme/interest#interest-rate-structure) * [Payment Process ⚙️](https://docs.indigoprotocol.io/readme/interest#payment-process) --- # CDP | Indigo Documentation [](https://docs.indigoprotocol.io/guides/cdp#opening-a-cdp) Opening a CDP ------------------------------------------------------------------------------ In this section, you will learn how to open a CDP, via the web application. A wallet can only have one CDP opened for a given type of iAsset. For example, **Wallet A** can only open 1 iUSD CDP and 1 iBTC CDP. ### [](https://docs.indigoprotocol.io/guides/cdp#summary) Summary Opening a CDP requires to: (1) deposit some amount of ADA collateral and (2) input a collateral ratio. In exchange, some amount of iAsset will be minted (e.g.: opening a CDP for iBTC requires depositing ADA, in exchange the user will receive iBTC). The collateral ratio influences: (1) the amount of iAsset that will be minted, and (2) the risk of liquidation. The higher the collateral ratio, the fewer iAsset minted, but the lower the risk of liquidation is. On the contrary, the lower the collateral ratio, the more iAsset minted, but the higher the risk of liquidation. ### [](https://docs.indigoprotocol.io/guides/cdp#detail) Detail Ratios to know: Redemption Ratio: The ratio at which a CDP under this value is available for redemption. Maintenance Ratio: The ratio at which a user can open their CDP and the minimum CR that a user can have to mint tokens or adjust their position. Liquidation Ratio: The ratio at which a CDP is available for liquidation. 1\. From the Dashboard page, click on the **Open Position** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FjJ39SE5YNnUqT9fHECQq%252FCDP%252001%2520Open%2520Position%2520-%2520Dashboard.png%3Falt%3Dmedia%26token%3Dc264913a-cbe8-44b0-b37c-6e5bdcd35260&width=768&dpr=4&quality=100&sign=af6ef5e9&sv=2) Indigo Web App - Dashboard - Open Position 2\. In the Open Position page you can either: * Option A: let the web app choose for you the amount of iAsset to be minted; or * Option B: choose the amount of iAsset to be minted. Option A Option B * Input a collateral amount or click on one of the button below to pre-fill the input field based on the ADA balance of the connected wallet. * Input a collateral ratio or select one of the pre-defined value. This will result in the amount of iAsset to be automatically computed. * Input a collateral ratio or select one of the pre-defined value. * Input an iAsset amount This will result in the collateral amount to be automatically computed. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FIOUtR7AWsYjdPxtATsQp%252FCDP%252002%2520-%2520Open%2520Position.png%3Falt%3Dmedia%26token%3Daa29182f-1af9-4417-a807-7cec4e9fb04d&width=768&dpr=4&quality=100&sign=2c7b3b93&sv=2) Indigo Web App - Open Position 3\. Tick the checkbox, and click on the **Open Position** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, you will receive the minted iAssets in your wallet. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252Fqx8uLk7045tOAxDYrXSc%252FCDP%252003%2520-%2520Open%2520Position%2520-%2520Sign.png%3Falt%3Dmedia%26token%3D249d934f-6986-44a7-b1b0-bdecc176adb3&width=768&dpr=4&quality=100&sign=672b02f4&sv=2) Indigo Web App - Open Position - Sign Transaction [](https://docs.indigoprotocol.io/guides/cdp#depositing-collateral) Depositing Collateral ---------------------------------------------------------------------------------------------- In this section, you will learn how to deposit collateral to an existing CDP, via the web application. ### [](https://docs.indigoprotocol.io/guides/cdp#summary-1) Summary Once we have opened a CDP, you can interact with it in different ways; one of which is to deposit more collateral. Depositing more collateral into a CDP will increase its collateral ratio; this helps to keep the CDP healthy and lowers the risk of the CDP being liquidated. ### [](https://docs.indigoprotocol.io/guides/cdp#detail-1) Detail 1\. From the Dashboard page, click on the **Manage** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FfSpowdiGVxcqDYLpzfRW%252FCDP%252004%2520Manage%2520Position%2520-%2520Dashboard.png%3Falt%3Dmedia%26token%3D09d652b6-aa97-4751-a94c-f8bef4fc4eff&width=768&dpr=4&quality=100&sign=b7809f73&sv=2) Indigo Web App - Dashboard - Manage Position 2\. Input the collateral amount you wish to deposit or click on one of the button below to pre-fill the input field based on the ADA balance of the connected wallet. Inputting different amount of collateral will automatically update the Collateral Ratio and Total Collateral values in the **Result** section. These values can be compared with the ones displayed in the **Current Position** section on the right side of the web page. 3\. Tick the checkbox, and click on the **Deposit Collateral** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, your CDP will have a higher ADA collateral amount, and its collateral ratio will have increased. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FOsbWqy2KplzxzB1fLmyw%252FCDP%252004%2520-%2520Deposit.png%3Falt%3Dmedia%26token%3D1dffdebd-2e14-4e48-bda3-af631f5e4c94&width=768&dpr=4&quality=100&sign=8bf1642f&sv=2) Indigo Web App - Deposit Collateral [](https://docs.indigoprotocol.io/guides/cdp#withdrawing-collateral) Withdrawing Collateral ------------------------------------------------------------------------------------------------ In this section, we will learn how to withdraw collateral from an existing CDP, via the web application. ### [](https://docs.indigoprotocol.io/guides/cdp#summary-2) Summary Withdrawing collateral from a CDP means that you will take out a portion of the collateral that was deposited in the CDP. Withdrawing collateral from a CDP will decrease its collateral ratio, which in turn will increase the risk of the CDP being liquidated. A Protocol Fee of 2% is incurred when withdrawing collateral, which is computed according to the amount of collateral to be withdrawn. ### [](https://docs.indigoprotocol.io/guides/cdp#detail-2) Detail 1\. From the Dashboard page, click on the **Manage** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FfSpowdiGVxcqDYLpzfRW%252FCDP%252004%2520Manage%2520Position%2520-%2520Dashboard.png%3Falt%3Dmedia%26token%3D09d652b6-aa97-4751-a94c-f8bef4fc4eff&width=768&dpr=4&quality=100&sign=b7809f73&sv=2) Indigo Web App - Dashboard 2\. Input the collateral amount you wish to withdraw or click on one of the button below to pre-fill the input field based on the ADA balance of the connected wallet. Inputting different amount of collateral will automatically update the **Collateral Ratio** and **Total Collateral** values in the **Result** section. These values can be compared with the ones displayed in the **Current Position** section on the right side of the web page. 3\. Tick the checkbox, and click on the **Withdraw Collateral** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, your CDP will have a lower ADA collateral amount, and its collateral ratio will have decreased. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FyzWg2sYetrqffhnaM7nq%252FCDP%252005%2520-%2520Withdraw.png%3Falt%3Dmedia%26token%3Df6af1477-3acc-4754-9e75-1984d47975d9&width=768&dpr=4&quality=100&sign=46a1a526&sv=2) Indigo Web App - Withdraw Collateral [](https://docs.indigoprotocol.io/guides/cdp#minting-iassets) Minting iAssets ---------------------------------------------------------------------------------- In this section, you will learn how to mint additional iAssets from an existing CDP, via the web application. ### [](https://docs.indigoprotocol.io/guides/cdp#summary-3) Summary Minting iAssets allows you to obtain more iAssets from an existing CDP. The amount of iAssets that can be minted depends on the current amount of collateral deposited in the CDP. Minting iAssets from a CDP will decrease its collateral ratio, which in turn will increase the risk of the CDP being liquidated. ### [](https://docs.indigoprotocol.io/guides/cdp#detail-3) Detail 1\. From the Dashboard page, click on the **Manage** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FfSpowdiGVxcqDYLpzfRW%252FCDP%252004%2520Manage%2520Position%2520-%2520Dashboard.png%3Falt%3Dmedia%26token%3D09d652b6-aa97-4751-a94c-f8bef4fc4eff&width=768&dpr=4&quality=100&sign=b7809f73&sv=2) Indigo Web App - Dashboard 2\. Input the amount of iAssets you wish to mint or click on one of the button below to pre-fill the input field based on the current amount of collateral deposited in the CDP. Inputting different amount of iAssets will automatically update the **Collateral Ratio** and **Total Debt** values in the **Result** section. These values can be compared with the ones displayed in the **Current Position** section on the right side of the web page. 3\. Tick the checkbox, and click on the **Mint iAsset** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, you will receive the requested amount of iAssets, and your CDP will have a lower collateral ratio. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252Fws1zyMRH6aLLHlkeIYxd%252FCDP%252006%2520-%2520Mint.png%3Falt%3Dmedia%26token%3D5b15f8f1-aaf2-400d-a29f-d57a78feeb78&width=768&dpr=4&quality=100&sign=f0e48af6&sv=2) Indigo Web App - Mint iAssets [](https://docs.indigoprotocol.io/guides/cdp#burning-an-iasset) Burning an iAsset -------------------------------------------------------------------------------------- In this section, you will learn how to burn iAssets from an existing CDP, via the web application. ### [](https://docs.indigoprotocol.io/guides/cdp#summary-4) Summary Burning iAssets allows you to repay your debt. The amount of iAssets that can be burnt depends on the amount of iAssets you minted under the CDP. Burning iAssets from a CDP will increase its collateral ratio; this helps to keep the CDP healthy and lowers the risk of the CDP being liquidated. ### [](https://docs.indigoprotocol.io/guides/cdp#detail-4) Detail 1\. From the Dashboard page, click on the **Manage** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FfSpowdiGVxcqDYLpzfRW%252FCDP%252004%2520Manage%2520Position%2520-%2520Dashboard.png%3Falt%3Dmedia%26token%3D09d652b6-aa97-4751-a94c-f8bef4fc4eff&width=768&dpr=4&quality=100&sign=b7809f73&sv=2) Indigo Web App - Dashboard 2\. Input the amount of iAssets you wish to burn or click on one of the button below to pre-fill the input field based on total amount of debt you owe (i.e.: the total amount of iAssets you minted under the CDP). Inputting different amount of iAssets will automatically update the **Collateral Ratio** and **Total Debt** values in the **Result** section. These values can be compared with the ones displayed in the **Current Position** section on the right side of the web page. 3\. Tick the checkbox, and click on the **Burn iAsset** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, you will have fewer iAssets in your wallet and your CDP will have a higher collateral ratio. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FAyqV8lwW4HmwwNf0Xwzv%252FCDP%252007%2520-%2520Burn.png%3Falt%3Dmedia%26token%3D1e8beba6-4407-42e3-b821-2fa1d921ab0b&width=768&dpr=4&quality=100&sign=7aeb3c0f&sv=2) Indigo Web App - Burn iAssets [](https://docs.indigoprotocol.io/guides/cdp#closing-a-cdp) Closing a CDP ------------------------------------------------------------------------------ In this section, you will learn how to close a CDP, via the web application. ### [](https://docs.indigoprotocol.io/guides/cdp#summary-5) Summary Closing a CDP allows you repay your debt in full and retrieve the total amount of collateral deposited under the CDP. Closing a CDP is final. If you wish to mint more iAssets, you will need to re-open a CDP. A Protocol Fee of 2% is incurred when closing a CDP, which is computed according to the total amount of collateral in the CDP. The collected fee will be distributed to INDY stakers. If you do not have enough iAssets to close your CDP, you can buy more iAssets on a DEX. ### [](https://docs.indigoprotocol.io/guides/cdp#detail-5) Detail 1\. From the Dashboard page, click on the **Manage** button. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FfSpowdiGVxcqDYLpzfRW%252FCDP%252004%2520Manage%2520Position%2520-%2520Dashboard.png%3Falt%3Dmedia%26token%3D09d652b6-aa97-4751-a94c-f8bef4fc4eff&width=768&dpr=4&quality=100&sign=b7809f73&sv=2) Indigo Web App - Dashboard 2\. Input the total amount of iAssets you had minted, or click on the **100%** button below to automatically fill the input field. The **Result** section will automatically update and state that you are closing your CDP. 3\. Tick the checkbox, and click on the **Close CDP** button. You will be prompted to sign the transaction. Once the transaction is validated on the blockchain, you will have repaid your debt and will have received the total amount of collateral you had deposited. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FFGcMT2EbShpfdtxoHXu5%252FCDP%252008%2520-%2520Close.png%3Falt%3Dmedia%26token%3Da640f1ed-3c8b-4255-a113-c19316f1dde0&width=768&dpr=4&quality=100&sign=9b08a89d&sv=2) Indigo Web App - Close CDP [PreviousGuides](https://docs.indigoprotocol.io/guides) [NextStability Pools](https://docs.indigoprotocol.io/guides/stability-pools) Last updated 1 year ago * [Opening a CDP](https://docs.indigoprotocol.io/guides/cdp#opening-a-cdp) * [Summary](https://docs.indigoprotocol.io/guides/cdp#summary) * [Detail](https://docs.indigoprotocol.io/guides/cdp#detail) * [Depositing Collateral](https://docs.indigoprotocol.io/guides/cdp#depositing-collateral) * [Summary](https://docs.indigoprotocol.io/guides/cdp#summary-1) * [Detail](https://docs.indigoprotocol.io/guides/cdp#detail-1) * [Withdrawing Collateral](https://docs.indigoprotocol.io/guides/cdp#withdrawing-collateral) * [Summary](https://docs.indigoprotocol.io/guides/cdp#summary-2) * [Detail](https://docs.indigoprotocol.io/guides/cdp#detail-2) * [Minting iAssets](https://docs.indigoprotocol.io/guides/cdp#minting-iassets) * [Summary](https://docs.indigoprotocol.io/guides/cdp#summary-3) * [Detail](https://docs.indigoprotocol.io/guides/cdp#detail-3) * [Burning an iAsset](https://docs.indigoprotocol.io/guides/cdp#burning-an-iasset) * [Summary](https://docs.indigoprotocol.io/guides/cdp#summary-4) * [Detail](https://docs.indigoprotocol.io/guides/cdp#detail-4) * [Closing a CDP](https://docs.indigoprotocol.io/guides/cdp#closing-a-cdp) * [Summary](https://docs.indigoprotocol.io/guides/cdp#summary-5) * [Detail](https://docs.indigoprotocol.io/guides/cdp#detail-5) --- # 💧CDP Liquid Staking | Indigo Documentation [](https://docs.indigoprotocol.io/readme/cdp-liquid-staking#overview) Overview ----------------------------------------------------------------------------------- Liquid staking is a unique capability offered by Indigo that allows the staking of ADA collateral within CDPs; enabling users to continue earning ADA rewards from the Cardano network. Cardano utilizes different keys within a wallet for various purposes. When creating a new wallet, for example using Nami, you are setting up two keys with your wallet: a payment key and a staking key. These keys are then used to derive your wallet address. Addresses in Cardano are split into three parts: a network ID, a payment address, and a staking address. The payment address is used to designate which wallet or smart contract has access to spend the funds. The staking address is used to designate who should receive ADA staking rewards from the Cardano Network for the funds locked at that address. ### [](https://docs.indigoprotocol.io/readme/cdp-liquid-staking#you-can-see-an-example-address-below) You can see an example address below: ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2Flh7-us.googleusercontent.com%2FSeRXN1GWv84Hj0nyYVNfbf5c5VMRSYDVhFebugKEAJR2aCiHUC2lN4kO6eR_nnuXm_owEenYnrbUAGbv2q7EdRWME_m3hw11kEGutAvGjRTOA3vCw0-Cb4fPmD6csnytBMRUfWxMzvDsqTCy6xIlOKA&width=768&dpr=4&quality=100&sign=3bf2feb6&sv=2) Indigo utilizes this particular feature when opening a CDP by sending the funds to the CDP contract but applying the user’s staking address to those funds. This means that the CDP contract has control of the constraints in which the CDP funds can be spent while allowing the user to accrue ADA staking rewards from the ADA locked in their CDP. [](https://docs.indigoprotocol.io/readme/cdp-liquid-staking#how-to-use-cdp-liquid-staking) How to Use CDP Liquid Staking 💸 -------------------------------------------------------------------------------------------------------------------------------- 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 and will still also be usable as voting power in Catalyst Funding rounds. [](https://docs.indigoprotocol.io/readme/cdp-liquid-staking#what-if-i-change-stake-pools-will-i-still-earn-staking-rewards) 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 at turn on the new epoch. [Previous🏦󠀥 Interest](https://docs.indigoprotocol.io/readme/interest) [Next🏊 Stability Pools](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations) Last updated 1 year ago * [Overview](https://docs.indigoprotocol.io/readme/cdp-liquid-staking#overview) * [You can see an example address below:](https://docs.indigoprotocol.io/readme/cdp-liquid-staking#you-can-see-an-example-address-below) * [How to Use CDP Liquid Staking 💸](https://docs.indigoprotocol.io/readme/cdp-liquid-staking#how-to-use-cdp-liquid-staking) * [What if I change stake pools? Will I still earn staking rewards?](https://docs.indigoprotocol.io/readme/cdp-liquid-staking#what-if-i-change-stake-pools-will-i-still-earn-staking-rewards) --- # 🚨 Liquidations | Indigo Documentation [](https://docs.indigoprotocol.io/readme/liquidations#overview) **Overview 🌐** ------------------------------------------------------------------------------------ #### [](https://docs.indigoprotocol.io/readme/liquidations#understanding-liquidations) Understanding Liquidations * Liquidations occur when Collateralized Debt Positions (CDPs) become undercollateralized. This process ensures the stability and solvency of the protocol. [](https://docs.indigoprotocol.io/readme/liquidations#liquidation-process) **Liquidation Process ⚙️** ---------------------------------------------------------------------------------------------------------- Two-Step Procedure: Liquidations in the Indigo Protocol are automated by bots but the actual two-step process is as follows. * **Freeze the CDP:** Once frozen, the CDP is inaccessible to its former owner, who forfeits all access and rights to it. * **Liquidate the CDP:** The CDP's debt is settled by burning iAssets from a Stability Pool, and its collateral is proportionally distributed to Stability Pool stakers. [](https://docs.indigoprotocol.io/readme/liquidations#incentive-to-liquidate) **Incentive to Liquidate 📈** ---------------------------------------------------------------------------------------------------------------- * Stability Pool stakers are motivated to take part in Stability Pool to liquidate CDPs as they can earn a share of the CDP's collateral. Typically, the value of the earned collateral may exceed the value of the canceled debt, especially when a liquidated CDP has a collateral value above 100% of the iAsset value. [](https://docs.indigoprotocol.io/readme/liquidations#fees) **Fees 💸** ---------------------------------------------------------------------------- * **Liquidation Processing Fee:** A 2% fee on liquidated iAssets, replacing the previous collateral fee, ensuring a consistent revenue stream during market downturns. * **Interest Fee:** Upon liquidation of a CDP, the interest owed is paid out of the collateral. [Previous💱 Redemptions](https://docs.indigoprotocol.io/readme/redemptions) [Next💲 iAssets](https://docs.indigoprotocol.io/readme/iassets) Last updated 1 year ago * [Overview 🌐](https://docs.indigoprotocol.io/readme/liquidations#overview) * [Liquidation Process ⚙️](https://docs.indigoprotocol.io/readme/liquidations#liquidation-process) * [Incentive to Liquidate 📈](https://docs.indigoprotocol.io/readme/liquidations#incentive-to-liquidate) * [Fees 💸](https://docs.indigoprotocol.io/readme/liquidations#fees) --- # 💻 Using Indigo | Indigo Documentation [](https://docs.indigoprotocol.io/readme/using-indigo#interacting-with-the-protocol) **Interacting with the Protocol 🔄** ------------------------------------------------------------------------------------------------------------------------------ ### [](https://docs.indigoprotocol.io/readme/using-indigo#getting-started) **Getting Started** To begin, a user can either purchase iAssets from a DEX or open a CDP following these steps: 1. Connect a Wallet to app.indigoprotocol.io 2. Choose an iAsset (iUSD, iETH, iBTC) to mint. 3. Provide ADA as collateral. 4. Select a Collateral Ratio that aligns with your risk profile, affecting your minting capacity, redemption eligibility, and CDP liquidation price. 5. Upon completion, the protocol creates a CDP, mints the designated iAssets, and sends it back to your wallet. Interest begins to accrue on the debt of a CDP daily. [](https://docs.indigoprotocol.io/readme/using-indigo#utilizing-iassets) **Utilizing iAssets 🌐** ------------------------------------------------------------------------------------------------------ ### [](https://docs.indigoprotocol.io/readme/using-indigo#stability-pool-deposits) **Stability Pool Deposits** * iAssets can be deposited into the Stability Pool, earning ADA and INDY rewards by participating in the protocol’s liquidation process. ### [](https://docs.indigoprotocol.io/readme/using-indigo#providing-liquidity) **Providing Liquidity** * Utilize iAssets to provide liquidity on Decentralized Exchanges (DEXs) and earn triple yields through ADA, INDY, and respective DEX Tokens. ### [](https://docs.indigoprotocol.io/readme/using-indigo#integration-with-dapps) **Integration with dApps** * iAssets, like iUSD, can be used on various decentralized applications (dApps) on Cardano, including popular lending and borrowing platforms. [](https://docs.indigoprotocol.io/readme/using-indigo#indy-staking-and-dao-participation) **INDY Staking & DAO Participation 🗳️** --------------------------------------------------------------------------------------------------------------------------------------- For Users Interested in INDY and the Indigo DAO If your initial plan doesn’t involve opening a CDP and focuses on INDY staking and DAO participation, follow these steps: 1. Swap for INDY on Minswap, Sundaeswap, other Cardano DEXs, or buy INDY on the MEXC centralized exchange 2. Connect a Wallet 3. Navigate to the INDY Staking page on the platform. 4. Begin staking by depositing your INDY in Governance. 5. Start accruing ADA from Protocol Fee Sharing. 6. Vote in Indigo DAO Governance at least once every 90 days to earn INDY. [Previous🛠️ Indigo Protocol V2](https://docs.indigoprotocol.io/readme/indigo-protocol-v2) [Next🛡️ Collateralized Debt Positions (CDPs)](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp) Last updated 1 year ago * [Interacting with the Protocol 🔄](https://docs.indigoprotocol.io/readme/using-indigo#interacting-with-the-protocol) * [Getting Started](https://docs.indigoprotocol.io/readme/using-indigo#getting-started) * [Utilizing iAssets 🌐](https://docs.indigoprotocol.io/readme/using-indigo#utilizing-iassets) * [Stability Pool Deposits](https://docs.indigoprotocol.io/readme/using-indigo#stability-pool-deposits) * [Providing Liquidity](https://docs.indigoprotocol.io/readme/using-indigo#providing-liquidity) * [Integration with dApps](https://docs.indigoprotocol.io/readme/using-indigo#integration-with-dapps) * [INDY Staking & DAO Participation 🗳️](https://docs.indigoprotocol.io/readme/using-indigo#indy-staking-and-dao-participation) --- # 💱 Redemptions | Indigo Documentation [](https://docs.indigoprotocol.io/readme/redemptions#overview) Overview 🌐 ------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/redemptions#understanding-redemptions) Understanding Redemptions Redemptions are a critical mechanism in Indigo Protocol that help maintain the stability of iAssets by providing an opportunity for users to exchange iAssets for their underlying collateral. This process helps correct market imbalances and ensures that the price pegs of iAssets are maintained. [](https://docs.indigoprotocol.io/readme/redemptions#redemption-process) Redemption Process ⛓️ --------------------------------------------------------------------------------------------------- Two-Step Procedure: The redemption process in Indigo Protocol involves two main steps: 1. Redemption: Users redeem by exchanging their iAssets for a portion of the underlying ADA collateral when a CDP is below the Redemption Margin Ratio (RMR). 2. Collateral Transfer: Upon successful redemption, the redeemed CDP will have a Collateral Ratio equal to RMR, and the redeemed iAsset amount will be burned. [](https://docs.indigoprotocol.io/readme/redemptions#incentive-to-redeem) Incentive to Redeem 📈 ----------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/redemptions#why-redeem) Why Redeem? Redemptions are incentivized as they provide users with an arbitrage opportunity in the presence of price discrepancies between the iAssets oracle price and their DEX trading price. When iAssets trade below their peg, users can buy them at a discount on the market and redeem them for a higher value in collateral, thereby stabilizing the asset's price. [](https://docs.indigoprotocol.io/readme/redemptions#redemption-margin-ratio-rmr) Redemption Margin Ratio (RMR) 💹 ----------------------------------------------------------------------------------------------------------------------- The Redemption Margin Ratio is a critical parameter that dictates the level of over-collateralization required to be exempt from the possibility of redemption. It varies for each iAsset as follows: * **$iUSD:** 185% * **$iETH:** 150% * **$iBTC:** 150% [](https://docs.indigoprotocol.io/readme/redemptions#fees) Fees 💸 ----------------------------------------------------------------------- 1. **Redemption Fee:** A 2% fee is applied to the total redemption amount. This fee is split between the redeemed CDPs and INDY Stakers. Specifically, 1% is returned to the CDP, improving its Collateral Ratio and lessening the burden of redemption, and 1% is distributed to INDY Stakers as revenue. 2. **Partial Redemption Fee:** A flat ADA fee is charged for partial redemptions to manage system load and ensure the security of the protocol. This fee structure encourages full redemptions over partial ones. By implementing these fees and maintaining specific Redemption Margin Ratios, Indigo Protocol ensures a balanced approach to maintaining the stability of iAssets while providing consistent revenue streams for the protocol and its participants. [Previous🏊 Stability Pools](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations) [Next🚨 Liquidations](https://docs.indigoprotocol.io/readme/liquidations) Last updated 1 year ago * [Overview 🌐](https://docs.indigoprotocol.io/readme/redemptions#overview) * [Understanding Redemptions](https://docs.indigoprotocol.io/readme/redemptions#understanding-redemptions) * [Redemption Process ⛓️](https://docs.indigoprotocol.io/readme/redemptions#redemption-process) * [Incentive to Redeem 📈](https://docs.indigoprotocol.io/readme/redemptions#incentive-to-redeem) * [Why Redeem?](https://docs.indigoprotocol.io/readme/redemptions#why-redeem) * [Redemption Margin Ratio (RMR) 💹](https://docs.indigoprotocol.io/readme/redemptions#redemption-margin-ratio-rmr) * [Fees 💸](https://docs.indigoprotocol.io/readme/redemptions#fees) --- # 📊 Tokenomics | Indigo Documentation [](https://docs.indigoprotocol.io/readme/tokenomics#indigo-protocol-tokenomics) **Indigo Protocol Tokenomics 🔄** ---------------------------------------------------------------------------------------------------------------------- Distribution Breakdown * Indigo Protocol’s tokenomics ensures a balanced and sustainable economic model, distributing the INDY token across various sectors to incentivize participation, reward users, and fund ongoing development over a 5-year span. Here’s a breakdown of the INDY token distribution: * 54.13% DAO Rewards * 13.87% DAO Treasury * 5% Governance Participation * 1% Protocol Owned Liquidity * 1% Launch Airdrop * 25% Team & Labs Treasury **Detailed Token Allocation 📜** * INDY tokenomics are strategically designed to support the ecosystem's growth, governance, and operational efficiency. A significant majority, 54.13%, is allocated to DAO Rewards, ensuring that users who participate actively in the ecosystem are incentivized. The Team & Labs Treasury receives 25%, a share that funded initial development and operational support by the core team behind Indigo. An additional 13.87% is reserved for the DAO Treasury, which funds future initiatives, development, and proposals approved by the community. Governance participation is encouraged with a dedicated 5% of tokens rewarding users for engaging in the protocol's decision-making processes. To ensure token trading liquidity post-launch, 1% of INDY tokens were designated as Protocol Owned Liquidity. Finally, to distribute tokens widely and engage a broad user base, 1% was allocated for the Launch Airdrop in 2022, promoting initial liquidity and adoption. INDY is set to reach its total supply cap of 35 million by 2030, providing a generous 8-year runway to achieve its strategic goals, thereby ensuring a gradual and balanced token release into the market while the protocol reaches self-sustainability from pure usage. This phased approach underpins the protocol’s commitment to long-term development and community engagement. [Previous🗳️ How To Vote](https://docs.indigoprotocol.io/readme/governance) [NextPublic Testnet](https://docs.indigoprotocol.io/readme/public-testnet) Last updated 1 year ago --- # 🌟Indigo Protocol Brief Overview | Indigo Documentation [](https://docs.indigoprotocol.io/readme/about-indigo#why-cardano) Why Cardano? ------------------------------------------------------------------------------------ Given that the Indigo Protocol has been built to manage billions of dollars worth of assets, a well researched, secure, decentralized and scalable blockchain is necessary. Cardano is the most suitable blockchain that meets the requirements to fulfill Indigo’s mission. [](https://docs.indigoprotocol.io/readme/about-indigo#brief-overview) Brief Overview 🌟 -------------------------------------------------------------------------------------------- Welcome to Indigo Protocol, a decentralized synthetic assets protocol on the Cardano blockchain. Indigo facilitates secure and efficient trading through iAssets, enabling straightforward transactions and strategic trading. Users can mint and trade synthetic assets like iUSD, a stablecoin, and other assets such as iBTC and iETH, which mirror the value of Bitcoin and Ethereum, respectively. These iAssets provide diverse trading and investment opportunities within the Cardano ecosystem. Collateralized Debt Positions (CDPs) and Liquid Staking allow users to collateralize assets while continuing to earn ADA rewards from the Cardano network, ensuring users can maximize their yield across the protocol. Stability Pools play a vital role in maintaining the protocol’s liquidity and stability by managing debt from liquidated CDPs and ensuring the solvency of iAssets. Through INDY Staking, INDY holders and DAO members can engage in protocol governance, influencing its direction while earning multi-yield rewards, and aligning governance with tangible benefits for its participants. Indigo Protocol is designed to cater to traders, liquidity providers, and governance enthusiasts, offering a range of opportunities in the decentralized finance space on Cardano. Please join the [Indigo community Discord server](https://discord.gg/YUbduZezdP) to learn and be part of the community. [](https://docs.indigoprotocol.io/readme/about-indigo#how-do-i-interact-with-indigo) How do I interact with Indigo? ------------------------------------------------------------------------------------------------------------------------ To interact with the Indigo Protocol, you simply need to: 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](https://docs.indigoprotocol.io/readme/collateral-debt-position-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. To participate in the governance of Indigo and have a say in its evolution, head on over to our [Governance Forum](https://forum.indigoprotocol.io/) ! [PreviousIndigo Basics](https://docs.indigoprotocol.io/) [Next🛠️ Indigo Protocol V2](https://docs.indigoprotocol.io/readme/indigo-protocol-v2) Last updated 1 year ago * [Why Cardano?](https://docs.indigoprotocol.io/readme/about-indigo#why-cardano) * [Brief Overview 🌟](https://docs.indigoprotocol.io/readme/about-indigo#brief-overview) * [How do I interact with Indigo?](https://docs.indigoprotocol.io/readme/about-indigo#how-do-i-interact-with-indigo) --- # Wallets | Indigo Documentation [](https://docs.indigoprotocol.io/readme/wallets#which-wallet-can-i-use) Which wallet can I use? ----------------------------------------------------------------------------------------------------- See the table below for a list of compatible wallets. Wallet Out of the box \+ Ledger (Hardware Wallet) \+ Trezor (Hardware Wallet) Nami ✅ ✅ ✅ Eternl ✅ ✅ ✅ Gero ✅ ❌ ❌ NuFi ✅ ✅ ✅ (via Eternl emulate) Flint ✅ ❌ ❌ Lode ✅ ❌ ❌ If you are using a hardware wallet, make sure it is up to date. For Ledger users, please follow [this guide](https://support.ledger.com/hc/en-us/articles/7294217589277-Cardano-v5-app-Plutus-?docs=true) . For Trezor users, please see [this article](https://trezor.io/learn/a/trezor-device-firmware-update-august-2022) . [](https://docs.indigoprotocol.io/readme/wallets#what-is-wallet-fragmentation) What is wallet fragmentation? ----------------------------------------------------------------------------------------------------------------- ADA and other Cardano Native Assets such as NFTs that you see in your wallet are locked in UTXOs. The more you interact with the blockchain (e.g.: use DEXs, buy NFTs), the likelier these assets are locked across a large number of UTXOs, resulting in what we call **wallet fragmentation.** Users with fragmented wallets may see their transactions fail, due to Plutus scripts having to traverse all UTXOs, causing the Plutus Execution Unit Limit to be exceeded. Therefore, we recommend users to create a new wallet when interacting with Indigo Protocol. [PreviousPublic Testnet](https://docs.indigoprotocol.io/readme/public-testnet) [NextGuides](https://docs.indigoprotocol.io/guides) Last updated 1 year ago * [Which wallet can I use?](https://docs.indigoprotocol.io/readme/wallets#which-wallet-can-i-use) * [What is wallet fragmentation?](https://docs.indigoprotocol.io/readme/wallets#what-is-wallet-fragmentation) --- # 💲 iAssets | Indigo Documentation [](https://docs.indigoprotocol.io/readme/iassets#overview) **Overview 🌐** ------------------------------------------------------------------------------- #### [](https://docs.indigoprotocol.io/readme/iassets#defining-iassets) Defining iAssets * iAssets, or "Indigo Assets," are synthetic assets created within the Indigo Protocol. Unlike wrapped assets, Protocol prices for iAssets are derived from tracked assets using a price Oracle, not requiring a bridge to deposit on another chain. These prices are used for liquidations, redemption, and interest settlements. [](https://docs.indigoprotocol.io/readme/iassets#available-iassets) **Available iAssets** ---------------------------------------------------------------------------------------------- * Upon launch, iBTC and iUSD were available for minting within the Indigo Protocol, offering users immediate access to synthetic versions of Bitcoin and a USD-pegged stablecoin. iETH came just a couple of months later after being approved by the DAO, providing exposure to Ethereum's price dynamics within the Cardano ecosystem. [](https://docs.indigoprotocol.io/readme/iassets#creating-new-iassets) **Creating New iAssets 🛠️** -------------------------------------------------------------------------------------------------------- #### [](https://docs.indigoprotocol.io/readme/iassets#asset-potential) Asset Potential * Any asset with a real-world price can be transformed into an iAsset with the Indigo Protocol so long as there is a viable price feed for the proposed iAsset. #### [](https://docs.indigoprotocol.io/readme/iassets#dao-member-responsibility) DAO Member Responsibility * The addition of new iAssets is overseen by DAO Members. If you wish to propose new iAssets, visit our Governance Forum to initiate a temperature check and engage in the discussion. ### [](https://docs.indigoprotocol.io/readme/iassets#undefined) [Previous🚨 Liquidations](https://docs.indigoprotocol.io/readme/liquidations) [Next🌱 Governance & INDY Staking](https://docs.indigoprotocol.io/readme/governance-and-indy-staking) Last updated 1 year ago * [Overview 🌐](https://docs.indigoprotocol.io/readme/iassets#overview) * [Available iAssets](https://docs.indigoprotocol.io/readme/iassets#available-iassets) * [Creating New iAssets 🛠️](https://docs.indigoprotocol.io/readme/iassets#creating-new-iassets) * [](https://docs.indigoprotocol.io/readme/iassets#undefined) --- # 🛡️ Collateralized Debt Positions (CDPs) | Indigo Documentation [](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#overview) **Overview 🌐** ---------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#understanding-cdps) Understanding CDPs * A Collateralized Debt Position (CDP) is fundamental to minting iAssets in the Indigo Protocol. By locking a minimum of 10 ADA as collateral, users can create a CDP, borrowing against this collateral on a variable interest rate to mint iAssets. The protocol ensures that each iAsset is over-collateralized, safeguarding the system against market volatility. [](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#managing-a-cdp) **Managing a CDP 🔄** ---------------------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#actions-for-cdp-owners) Actions for CDP Owners As a CDP owner, you have the flexibility to: 1. **Deposit Collateral:** Increase your collateral ratio, potentially reducing the risk of liquidation. 2. **Withdraw Collateral:** Decrease your collateral ratio, which may elevate liquidation risk. 3. **Mint iAsset:** Mint additional iAssets, which may lower your collateral ratio. 4. **Burn iAsset:** Increase your collateral ratio by burning iAssets. Burning all iAssets under a CDP closes it, returning your ADA collateral. 5. **Close CDP:** Close off your CDP by burning all of the iAsset debt and settle the interest owed. [](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#fees) **Fees 💸** -------------------------------------------------------------------------------------------- * Debt Minting Fee * A percentage of the amount minted, deducted during the minting process to generate revenue from increased debt minting activities. * Interest Payment * Interest is paid in ADA, based on the iAsset debt. Example: a user accrues 10 iUSD worth of interest, which is paid in an amount of ADA equal to the value of 10 iUSD. [](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#cdp-liquidation) **CDP Liquidation ⚠️** ------------------------------------------------------------------------------------------------------------------ Locating and Understanding Liquidation * If your CDP is not locatable, it may have been undercollateralized and liquidated due to collateral or iAsset price fluctuations. For detailed insights into liquidation processes, refer to the dedicated liquidation section. [Previous💻 Using Indigo](https://docs.indigoprotocol.io/readme/using-indigo) [Next🏦󠀥 Interest](https://docs.indigoprotocol.io/readme/interest) Last updated 1 year ago * [Overview 🌐](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#overview) * [Understanding CDPs](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#understanding-cdps) * [Managing a CDP 🔄](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#managing-a-cdp) * [Actions for CDP Owners](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#actions-for-cdp-owners) * [Fees 💸](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#fees) * [CDP Liquidation ⚠️](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp#cdp-liquidation) --- # 🏊 Stability Pools | Indigo Documentation [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#overview) Overview 🌐 ---------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#purpose-of-stability-pools) Purpose of Stability Pools * Stability Pools play a pivotal role in maintaining iAsset solvency by providing liquidity to repay debts from liquidated CDPs, ensuring all minted iAsset supply remains overcollateralized. Each iAsset, such as iBTC, has its dedicated Stability Pool, composed of iAssets deposited by users, also known as "Stability Providers." [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#functionality) Functionality 🔄 -------------------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#liquidation-and-compensation) Liquidation and Compensation * When CDPs become undercollateralized and are liquidated, iAssets in the corresponding Stability Pool are burned to repay the CDP's debt. Stability Providers lose a pro-rata share of their iAsset deposits but gain a pro-rata share of the liquidated CDP's collateral. [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#depositing-iassets) Depositing iAssets 💼 ------------------------------------------------------------------------------------------------------------------------ #### [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#how-to-deposit) How to Deposit * If you own iAssets, either through opening a CDP and minting iAssets or purchasing them from a DEX, you can deposit your iAssets into the corresponding Stability Pool and earn INDY rewards and ADA from liquidations #### [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#reward) Reward * In addition to receiving a pro-rata share of a liquidated CDP's collateral, Stability Providers earn rewards in the form of INDY. [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#balance-changes) Balance Changes 📉 ------------------------------------------------------------------------------------------------------------------ ### [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#why-the-shrinkage) Why the Shrinkage? * A reduced iAsset balance in the Stability Pool indicates that liquidations have occurred, burning a portion of your iAsset deposit. In return, you receive a pro-rata share of the liquidated CDP's ADA collateral. [](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#fees) **Fees 💸** ------------------------------------------------------------------------------------------------ In Indigo Protocol V2, the fees associated with Stability Pools have been updated to ensure the protocol's efficiency and sustainability. The new fee structure is as follows: * **Initial Deposit Fee:** A 5 ADA fee is charged when depositing iAssets into a Stability Pool for the first time. This fee is redistributed to all Stability Pool providers as a reward for their participation. * **Withdrawal Fee:** A 0.5% fee applies when withdrawing iAssets from a Stability Pool. This fee is designed to discourage opportunistic behavior and is redistributed among Stability Pool depositors as a loyalty bonus. * **Transaction Fee:** A 1 ADA fee applies for each transaction involving deposits, withdrawals, or claiming rewards. This fee is redistributed to all Stability Pool providers. * **Reward Fee:** A 2% fee is taken from the total ADA rewards owed to a user and redistributed to INDY Stakers. This fee can be adjusted by the DAO to align with protocol requirements and community feedback. [Previous💧CDP Liquid Staking](https://docs.indigoprotocol.io/readme/cdp-liquid-staking) [Next💱 Redemptions](https://docs.indigoprotocol.io/readme/redemptions) Last updated 1 year ago * [Overview 🌐](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#overview) * [Purpose of Stability Pools](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#purpose-of-stability-pools) * [Functionality 🔄](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#functionality) * [Liquidation and Compensation](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#liquidation-and-compensation) * [Depositing iAssets 💼](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#depositing-iassets) * [Balance Changes 📉](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#balance-changes) * [Why the Shrinkage?](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#why-the-shrinkage) * [Fees 💸](https://docs.indigoprotocol.io/readme/stability-pools-and-liquidations#fees) --- # 🗳️ How To Vote | Indigo Documentation [](https://docs.indigoprotocol.io/readme/governance#undefined) ------------------------------------------------------------------ [](https://docs.indigoprotocol.io/readme/governance#what-is-the-policy-id-and-fingerprint-of-the-indy-token-on-mainnet) What is the Policy ID and Fingerprint of the INDY token on Mainnet? ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Policy ID: **533bb94a8850ee3ccbe483106489399112b74c905342cb1792a797a0** Asset Fingerpint: **asset1u8caujpkc0km4vlwxnd8f954lxphrc8l55ef3j** [](https://docs.indigoprotocol.io/readme/governance#how-does-voting-work) How does voting work? ---------------------------------------------------------------------------------------------------- See the Indigo [DAO Voting Procedures document](https://forum.indigoprotocol.io/uploads/short-url/iYdEJXNHMCIIfRrV8roqHTtG87G.pdf) , that was ratified by the community in our Governance Forum. [](https://docs.indigoprotocol.io/readme/governance#how-do-i-vote-on-chain) How do I vote on-chain? -------------------------------------------------------------------------------------------------------- In order to vote, you first need to have some INDY. Those INDY will then need to be staked in the protocol. Your voting power is set to the total amount of INDY staked at the time of voting, for example if you had staked 10 INDY and then voted on a proposal, those 10 INDY will correspond as your voting power. After voting on a proposal, your staked INDY are locked until that proposal's Voting Period has concluded. Let's go over a few scenarios. **Scenario 1** * Violet stakes 10 INDY. * Violet votes on Proposal A, which ends on January 2, 2022 at 10:00 pm UTC. * Violet's 10 INDY are locked until the Proposal A ends. * Violet votes on another, say Proposal B, which ends on January 4, 2022 at 10:00 pm UTC. * Violet's 10 INDY are locked until Proposal B ends. **Scenario 2** * Violet stakes 10 INDY. * Violet votes on Proposal A, which ends on January 2, 2022 at 10:00 pm UTC. * Violet's 10 INDY are locked until the Proposal A ends. * Violet's stakes 20 INDY. Violet can unstake her 20 INDY at anytime. * Violet votes on another, say Proposal B, which ends on January 4, 2022 at 10:00 pm UTC. * Violet's 30 INDY are locked until Proposal B ends. [](https://docs.indigoprotocol.io/readme/governance#how-do-i-change-my-vote) How do I change my vote? ---------------------------------------------------------------------------------------------------------- Votes cannot be changed. We may offer this option in a future release of the protocol. [](https://docs.indigoprotocol.io/readme/governance#what-is-the-cost-of-submitting-a-proposal-on-chain) What is the cost of submitting a proposal on-chain? ---------------------------------------------------------------------------------------------------------------------------------------------------------------- DAO members that wish to submit on-chain proposals will need to deposit 100 INDY. This deposit will be returned to the proposal owner if the proposal successfully passes; if not, the deposit will be sent to the DAO Treasury. [PreviousAQB & Minimum Quorum](https://docs.indigoprotocol.io/readme/governance-and-indy-staking/aqb-and-minimum-quorum) [Next📊 Tokenomics](https://docs.indigoprotocol.io/readme/tokenomics) Last updated 1 year ago * [](https://docs.indigoprotocol.io/readme/governance#undefined) * [What is the Policy ID and Fingerprint of the INDY token on Mainnet?](https://docs.indigoprotocol.io/readme/governance#what-is-the-policy-id-and-fingerprint-of-the-indy-token-on-mainnet) * [How does voting work?](https://docs.indigoprotocol.io/readme/governance#how-does-voting-work) * [How do I vote on-chain?](https://docs.indigoprotocol.io/readme/governance#how-do-i-vote-on-chain) * [How do I change my vote?](https://docs.indigoprotocol.io/readme/governance#how-do-i-change-my-vote) * [What is the cost of submitting a proposal on-chain?](https://docs.indigoprotocol.io/readme/governance#what-is-the-cost-of-submitting-a-proposal-on-chain) --- # 🌱 Governance & INDY Staking | Indigo Documentation [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#overview) **Overview 🌐** --------------------------------------------------------------------------------------------------- The Indigo DAO Token (“INDY”) is a Cardano native asset that can be owned, held, or transferred by any user. INDY serves as Indigo’s utility token, with one of its key purposes being to allow on-chain voting on DAO proposals (a “proposal”). The total supply of INDY is 35M with a 6 decimal precision. INDY’s monetary policy disallows future minting and burning, therefore making the total supply constant and unchanging. Indigo is undergoing a Fair Launch, therefore there has been no pre-sale nor private distribution to investors prior to launch. ### [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#empowering-decentralization) Empowering Decentralization Indigo Protocol is deeply rooted in decentralized principles, empowering its community through a governance model that allows INDY token holders to steer the protocol’s development and future. [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#governance) **Governance 🏛️** -------------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#dao-and-decision-making) DAO and Decision Making * The Indigo Decentralized Autonomous Organization (DAO) is a collective that makes pivotal decisions about the protocol. From introducing new iAssets to adjusting protocol parameters, DAO members utilize their INDY tokens to vote on proposals and guide the protocol’s evolution. ### [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#proposing-changes) Proposing Changes * Community members are encouraged to propose changes and new features. To initiate a proposal or engage in ongoing discussions, members can visit the Governance Forum, ensuring a collaborative and inclusive multi-step decision-making process. [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#indy-staking) **INDY Staking** -------------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#staking-and-dual-rewards) Staking and Dual Rewards * INDY token holders can stake their tokens to participate in the protocol’s Fee Sharing Mechanism. By staking INDY, participants receive INDY rewards and ADA fees from protocol activities like minting, liquidations, and redemptions. This aligns incentives between the protocol's growth and its users. ### [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#governance-participation) Governance Participation * Stakers are not only rewarded but are also encouraged to participate in governance, ensuring that those who have a stake in the protocol have a say in its direction. To continue receiving INDY rewards, a user must participate in at least 1 governance vote every 90 days. [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#security-and-transparency) **Security & Transparency 🛡️** ------------------------------------------------------------------------------------------------------------------------------------ #### [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#secure-participation) Secure Participation * Indigo Protocol prioritizes security and transparency, ensuring that governance and staking processes are not only user-friendly but also secure, safeguarding the interests and assets of its community. [Previous💲 iAssets](https://docs.indigoprotocol.io/readme/iassets) [NextAQB & Minimum Quorum](https://docs.indigoprotocol.io/readme/governance-and-indy-staking/aqb-and-minimum-quorum) Last updated 1 year ago * [Overview 🌐](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#overview) * [Empowering Decentralization](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#empowering-decentralization) * [Governance 🏛️](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#governance) * [DAO and Decision Making](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#dao-and-decision-making) * [Proposing Changes](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#proposing-changes) * [INDY Staking](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#indy-staking) * [Staking and Dual Rewards](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#staking-and-dual-rewards) * [Governance Participation](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#governance-participation) * [Security & Transparency 🛡️](https://docs.indigoprotocol.io/readme/governance-and-indy-staking#security-and-transparency) --- # Public Testnet | Indigo Documentation [](https://docs.indigoprotocol.io/readme/public-testnet#is-there-a-public-testnet) Is there a Public Testnet? ------------------------------------------------------------------------------------------------------------------ Yes, Indigo is deployed on **Cardano's Preview Network**. You can explore all functionalities of the protocol by following this link: [Indigo Preview Testnet](https://preview.indigoprotocol.io/) . [](https://docs.indigoprotocol.io/readme/public-testnet#which-wallet-can-i-use) Which wallet can I use? ------------------------------------------------------------------------------------------------------------ Currently, only Nami and Eternl wallets are supported on the Preview Network. [](https://docs.indigoprotocol.io/readme/public-testnet#how-can-i-connect-to-the-preview-network) How can I connect to the Preview Network? ------------------------------------------------------------------------------------------------------------------------------------------------ Using Nami wallet, follow the steps below. * Click on your wallet icon, then select "Settings". ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252F25tOxcFoLopf9A13sH2q%252F01%2520Go%2520to%2520Settings.png%3Falt%3Dmedia%26token%3D88a2c0f5-d176-4df0-9083-7c035c16f94a&width=300&dpr=4&quality=100&sign=f5344f18&sv=2) * Then, select "Network". ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252F0vLeeeyHv2wSXWn2R2GR%252F02%2520Go%2520to%2520Network.png%3Falt%3Dmedia%26token%3Deaa3871a-9102-4886-b926-d378d7f05efa&width=300&dpr=4&quality=100&sign=cce8582c&sv=2) * In the drop-down list, select "Preview". ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FPOO9Qo6jHQRNQzq9l4hn%252F03%2520Select%2520Preview.png%3Falt%3Dmedia%26token%3Dc9ff540d-d4eb-4adb-840c-a967299fc257&width=300&dpr=4&quality=100&sign=57fe5dbe&sv=2) * You're done! To confirm, you should now see the word "Preview" in the bottom left corner. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FJbRHv1NTAWUF2zSVVj6v%252F04%2520See%2520Preview.png%3Falt%3Dmedia%26token%3Ddcb83c42-8bb6-435b-8d4c-878c95b4e5f6&width=300&dpr=4&quality=100&sign=ccdbf9b4&sv=2) [](https://docs.indigoprotocol.io/readme/public-testnet#why-do-i-get-transaction-failed-error) Why do I get "transaction failed" error? -------------------------------------------------------------------------------------------------------------------------------------------- If you are using Nami, it is very likely that you have not set a collateral amount; for more info, see [this article](https://docs.cardano.org/plutus/collateral-mechanism) . You can also follow these steps to fix the issue. * Click on your wallet icon, then select "Collateral". ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FBLuclUOSTI4TncGdqBjo%252F01%2520Go%2520to%2520Collateral.png%3Falt%3Dmedia%26token%3Dfd2903f7-8255-4e18-be73-60a055f27c1c&width=300&dpr=4&quality=100&sign=fbb2b57d&sv=2) * Then, enter your wallet password and press "Submit". ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FgnBG1sQRzpWty5WCN0hY%252F02%2520Add%2520Collateral.png%3Falt%3Dmedia%26token%3D7ff2ee6c-4a8d-4732-bc89-1b50c7af1674&width=300&dpr=4&quality=100&sign=d2ca66e9&sv=2) * That's it! To confirm, you should see a pop-up stating that collateral was added to your wallet. ![](https://docs.indigoprotocol.io/~gitbook/image?url=https%3A%2F%2F20369032-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FnyeBVQAS0X1aGXABzyhK%252Fuploads%252FEZY9rve74RGY7xxOAJLd%252F03%2520Collateral%2520Added.png%3Falt%3Dmedia%26token%3Dca47c3f3-14a4-46a5-931e-52bd2af3e3f4&width=300&dpr=4&quality=100&sign=2974b6f9&sv=2) [](https://docs.indigoprotocol.io/readme/public-testnet#how-can-i-get-tada-and-tindy) How can I get tADA, and tINDY? ------------------------------------------------------------------------------------------------------------------------- For tADA, you may go the [Cardano testnet faucet](https://docs.cardano.org/cardano-testnet/tools/faucet) , select the Preview Network and provide your wallet address (make sure it is a Preview Network address); to receive 10,000 tADA per day. For tINDY, you may go to the [Sundaeswap DEX](https://testnet.sundaeswap.finance/) , and swap your tADA for tINDY (Policy ID: fa3eff2047fdf9293c5feef4dc85ce58097ea1c6da4845a351535183). [Previous📊 Tokenomics](https://docs.indigoprotocol.io/readme/tokenomics) [NextWallets](https://docs.indigoprotocol.io/readme/wallets) Last updated 1 year ago * [Is there a Public Testnet?](https://docs.indigoprotocol.io/readme/public-testnet#is-there-a-public-testnet) * [Which wallet can I use?](https://docs.indigoprotocol.io/readme/public-testnet#which-wallet-can-i-use) * [How can I connect to the Preview Network?](https://docs.indigoprotocol.io/readme/public-testnet#how-can-i-connect-to-the-preview-network) * [Why do I get "transaction failed" error?](https://docs.indigoprotocol.io/readme/public-testnet#why-do-i-get-transaction-failed-error) * [How can I get tADA, and tINDY?](https://docs.indigoprotocol.io/readme/public-testnet#how-can-i-get-tada-and-tindy) --- # APR / APY calculations | Indigo Documentation The formulas below are provided for educational and informational purposes. Any past performance is historical and not indicative of future results. Any use of decentralized finance involves various significant financial risks; always Do Your Own Research (DYOR). [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#stability-pool-staking) Stability Pool staking ---------------------------------------------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-indy-rewards) **APR for INDY rewards** _Averaged over the prior epoch_ #### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#formula) **Formula** APRt\=ct−1∗dt−1at−1∗bt−1∗365∗100APR\_t = \\frac{c\_{t-1} \* d\_{t-1}}{a\_{t-1} \* b\_{t-1}} \* 365 \* 100APRt​\=at−1​∗bt−1​ct−1​∗dt−1​​∗365∗100 Where * `t` is the day at which the calculation is performed * `a` is the amount of a given iAsset staked in a Stability Pool * `b` is a given iAsset price at daily close, denominated in ADA * `c` is the daily amount of INDY awarded to a given iAsset’s Stability Pool * `d` is the INDY price at daily close, denominated in ADA ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-ada-rewards) **APR for ADA rewards** _Averaged over a period of last 3 months or over a period spanning from the day of iAsset launch till the day of reward calculation, whichever is shorter._ #### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#formula-1) Formula v\=a−b∗cv = a - b \* cv\=a−b∗c μ\=∑i\=1nxin \\mu = \\frac{\\sum\_{i=1}^nx\_i}{n}μ\=n∑i\=1n​xi​​ APR\=∑i\=1∣n∣viμ∗365n∗100APR = \\frac{\\sum\_{i=1}^{|n|}v\_i}{\\mu} \* \\frac{365}{n} \* 100APR\=μ∑i\=1∣n∣​vi​​∗n365​∗100 Where * `n` is min\[90, number of days from iAsset launch to the day of calculation\] * `v` is a set comprising values gained from liquidated CDPs over ‘n’ days, denominated in ADA * `a` is the amount of collateral from a liquidated CDP, denominated in ADA * `b` is amount of iAsset burned from a liquidated CDP * `c` is the Oracle Price of the iAsset from a liquidated CDP taken at the time of liquidation, denominated in ADA * `μ` is the average value staked in the iAsset’s Stability Pool over `n` days, denominated in ADA * `x` is a collection of total value staked in an iAsset Stability Pool, denominated in ADA and covering a period of n days [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#id-5fpo9qeotn0g) Liquidity Pool Tokens staking ---------------------------------------------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-indy-rewards-1) **APR for INDY rewards** _Averaged over the latest epoch_ #### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#formula-2) Formula APRt\=ct−1∗dt−12∗at−1∗bt−1∗365∗100APR\_t = \\frac{c\_{t-1} \* d\_{t-1}}{2\*a\_{t-1} \* b\_{t-1}} \* 365 \* 100APRt​\=2∗at−1​∗bt−1​ct−1​∗dt−1​​∗365∗100 Where * `t` is the day at which the calculation is performed * `a` is the amount of a given iAsset locked across all DEXs * `b` is the iAsset price at daily close, denominated in ADA * `c` is the daily amount of INDY awarded to LP stakers of a particular iAsset * `d` is the INDY price at daily close, denominated in ADA [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#bpd53ixkxkj0) INDY staking -------------------------------------------------------------------------------------------------------------------- ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-indy-rewards-2) **APR for INDY rewards** _**Based on the latest epoch**_ #### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#formula-3) Formula APR\=ba∗y∗100APR = \\frac{b}{a} \* y \* 100APR\=ab​∗y∗100 Where * `a` is the amount of INDY staked at a particular epoch * `b` is the amount of INDY awarded to INDY stakers at a particular epoch * `y` is a constant representing the number of Cardano epochs in a year (fixed at 73) #### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#considerations) Considerations The APR value can only be computed once per epoch (every 5 days), given the amount of INDY awarded to INDY stakers can only be determined at the end of an epoch. ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apy-for-indy-rewards) **APY for INDY rewards** _**Based on latest epoch**_ #### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#formula-4) Formula APY\=((1+APRy∗100)y−1)∗100APY = ((1 + \\frac{APR}{y\*100})^y - 1) \* 100APY\=((1+y∗100APR​)y−1)∗100 Where * `APR` is the estimated annualized return for INDY stakers * `y` is a constant representing the number of Cardano epochs in a year (fixed at 73) ### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-ada-rewards-1) **APR for ADA rewards** _Based on last 30 days_ #### [](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#formula-5) Formula v\=a∗(bc)v = a \* (\\frac{b}{c})v\=a∗(cb​) APR\=∑i\=1∣v∣∗vis∗12∗100APR = \\frac{\\sum\_{i=1}^{|v|}\*v\_i}{s} \* 12 \* 100APR\=s∑i\=1∣v∣​∗vi​​∗12∗100 Where * `v` is a set comprising the value of ADA distributed in a day, over a period of the last 30 days and denominated in INDY * `a` is the amount of ADA distributed in a day * `b` is the daily close price of ADA, denominated in USD * `c` is the daily close price of INDY, denominated in USD * `s` is the average amount of INDY staked for the last 30 days [PreviousMonth in Review](https://docs.indigoprotocol.io/resources/protocol-statistics/month-in-review) Last updated 1 year ago * [Stability Pool staking](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#stability-pool-staking) * [APR for INDY rewards](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-indy-rewards) * [APR for ADA rewards](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-ada-rewards) * [Liquidity Pool Tokens staking](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#id-5fpo9qeotn0g) * [APR for INDY rewards](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-indy-rewards-1) * [INDY staking](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#bpd53ixkxkj0) * [APR for INDY rewards](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-indy-rewards-2) * [APY for INDY rewards](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apy-for-indy-rewards) * [APR for ADA rewards](https://docs.indigoprotocol.io/resources/protocol-statistics/apr-apy-calculations#apr-for-ada-rewards-1) --- # AQB & Minimum Quorum | Indigo Documentation One of the most important aspects when designing a governance system is to specify under which circumstances a proposal can pass. Intuitively, a vote will pass when there are more voters in favor of the proposal than voters against it. But how many yes votes are needed? The simplest option would be to tag a proposal as passed whenever there are more yes votes than no votes. However, this approach would not take the level of participation, or quorum, into consideration. In the case of a low voter turnout, the legitimacy of the result could be questioned. The immediate solution is to impose a minimum quorum threshold. This mechanism imposes a minimum level of participation, such that proposals with a level of participation below the quorum threshold would be automatically marked as failed. Although the minimum quorum threshold effectively prevents proposals that lack sufficient support from passing, it lacks flexibility. For impactful DAO decisions, a substantial voter turnout is essential, and thus, setting a high minimum quorum is justified. Conversely, imposing a high quorum for less impactful proposals could hinder their approval due to lower voter interest and participation. [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking/aqb-and-minimum-quorum#introducing-aqb) Introducing AQB --------------------------------------------------------------------------------------------------------------------------------- The Adaptive Quorum Biasing mechanism, or AQB, excels in providing flexibility for voting processes. AQB sets a dynamic threshold for the number of affirmative votes required for a proposal to pass. This threshold adjusts based on voter participation levels, lowering the threshold as voter turnout increases to enhance the vote's legitimacy. The exact threshold depends on three factors: the number of yes votes, the number of no votes and the number of possible votes (also called electorate). Specifically, it is controlled by the following relationship: q\=yeselectorate−noyes+noq = \\frac{yes}{ \\sqrt{electorate} } - \\frac{no}{ \\sqrt{yes+no} }q\=electorate​yes​−yes+no​no​ In the formula above, the value of q represents whether a proposal has passed or not. A positive q indicates that the proposal passed, while failing proposals result in a negative q. Let us illustrate the working mechanism of AQB by providing a series of examples. For the sake of simplicity, in these examples, we will assume that there are 100 people entitled to vote, all with equal voting power. **Scenario A: 40 yes votes, 20 no votes, 40 not voting** In this first scenario, we can see that there were double the amount of yes votes than no votes. Also, there was a healthy 60% voter participation, this should likely result in the proposal passing. Now to input these numbers into the AQB formula: 40100−2040+20\=1.418\\frac{40}{ \\sqrt{100} } - \\frac{20}{ \\sqrt{40+20} } = 1.418100​40​−40+20​20​\=1.418 As expected, the formula yields a positive value and a passed proposal. **Scenario B: 20 yes votes, 10 no votes, 70 not voting** Note that in this second scenario, there are also double the amount of yes votes than no votes. However, only 30% of the eligible voters participated in this poll. This result has less legitimacy than the previous one, as the opinion of a majority of voters is unknown. Should this proposal pass? The AQB formula can assist us here. 20100−1020+10\=0.174\\frac{20}{ \\sqrt{100} } - \\frac{10}{ \\sqrt{20+10} } = 0.174100​20​−20+10​10​\=0.174 The proposal has been approved, but we are approaching the critical threshold. Consider the scenario where 6 out of these 30 voters had neglected to cast their votes. **Scenario C: 16 yes votes, 8 no votes, 76 not voting** The engagement in this poll has declined noticeably. Only 24% of the electorate participated. 16100−816+8\=−0.032\\frac{16}{ \\sqrt{100} } - \\frac{8}{ \\sqrt{16+8} } = -0.032100​16​−16+8​8​\=−0.032 This proposal will not be passed. Despite receiving twice as many yes votes as no votes, the low level of participation undermines the legitimacy of the voting outcome. As we have seen, this proposal failed even if there were 66.6% of yes votes. But as indicated by the very small negative q number (-0.032), it was close to the AQB threshold. In fact, if just a single of the voters who voted no had voted yes, the outcome of the proposal would have been different: 17100−717+7\=0.27\\frac{17}{ \\sqrt{100} } - \\frac{7}{ \\sqrt{17+7} } = 0.27100​17​−17+7​7​\=0.27 This means that with 24% of participation, the effective threshold for a proposal to pass is higher than 66.66% at 67.11%. Considering these scenarios, one might be curious about the extremes. Let's look at a few. **Scenario D: 100% Participation** In the case where all the electorate had shown up to vote, the intuitive expectation is that the proposal would pass if there were more yes votes than no. A quick look at the formula confirms this expectation: x100−100−x100⇒x\=50\\frac{x}{ \\sqrt{100} } - \\frac{100-x}{ \\sqrt{100} } \\Rightarrow x = 50100​x​−100​100−x​⇒x\=50 **Scenario E: 5% Participation** On the other hand, in the event that the voter turnout is poor, the intuitive expectation is that the proposal would pass if there is full consensus among the participants. Again, a quick look at the formula confirms this expectation: x100−5−x5⇒x\>4\\frac{x}{ \\sqrt{100} } - \\frac{5-x}{ \\sqrt{5} } \\Rightarrow x > 4100​x​−5​5−x​⇒x\>4 [](https://docs.indigoprotocol.io/readme/governance-and-indy-staking/aqb-and-minimum-quorum#indigos-hybrid-approach) Indigo’s hybrid approach -------------------------------------------------------------------------------------------------------------------------------------------------- Scenario E described above makes it clear that with 5 participants or less, a full consensus among the participants would be needed. However, it also uncovers a valid concern. What if, for whatever reason, voter turnout was low in a mission-critical proposal? Should a single voter be able to make a decision on behalf of the whole electorate? The AQB formula indicates that if there is only one voter, a single yes vote would suffice for a proposal to pass. At Indigo, we find this insufficient, recognizing several valid reasons why a proposal might not receive votes from interested parties. For instance, the website from which most people vote could be down after only a few votes have been casted. This could result in a very unfair outcome for the proposal. This is why Indigo adopts a hybrid strategy that blends the minimum quorum with AQB. For a proposal to be approved, it must satisfy two criteria: the AQB formula must produce a positive q number, and the minimum quorum requirement must be fulfilled. Thanks to the effectiveness of AQB, the minimum quorum can be maintained at a relatively low level, serving primarily as a safeguard against unforeseen circumstances. Once this security threshold is met, the AQB takes the lead in determining whether a proposal is approved. With great power comes great responsibility! [Previous🌱 Governance & INDY Staking](https://docs.indigoprotocol.io/readme/governance-and-indy-staking) [Next🗳️ How To Vote](https://docs.indigoprotocol.io/readme/governance) Last updated 1 year ago * [Introducing AQB](https://docs.indigoprotocol.io/readme/governance-and-indy-staking/aqb-and-minimum-quorum#introducing-aqb) * [Indigo’s hybrid approach](https://docs.indigoprotocol.io/readme/governance-and-indy-staking/aqb-and-minimum-quorum#indigos-hybrid-approach) ---