Overview
Indigo Protocol lets people create tokens that track the price of other assets, like the US dollar (iUSD), Bitcoin (iBTC), or Ether (iETH), by locking up ADA as backing. You open a position, deposit ADA, and mint a tracker token against it. If the value of your ADA drops too low, the position can be closed automatically to keep the system stable1.
Indigo runs on Cardano, with its rules written into automated code that anyone can inspect. The protocol is governed by holders of the INDY token through the Indigo DAO, a community-run decision body where token holders vote on protocol changes. It operates under the stewardship of the Indigo Foundation.
Key Features
- Mint tracker tokens backed by ADA or other Cardano coins. You lock ADA and mint iAssets such as iUSD, iBTC, and iETH that follow the price of real-world references, without moving your funds to another blockchain or handing them to a middleman1. Since the V3 upgrade, you can also back positions with other supported Cardano tokens such as USDCx, NIGHT, and xBTC2.
- Swap stablecoins into iUSD one-for-one. A Peg Stability Module, added in V3, lets you trade approved stablecoins such as USDCx and USDA for iUSD at a 1:1 rate, so you can get iUSD without opening a backed position of your own2.
- Earn yield by helping the system stay solvent. People who park their tracker tokens in a stability pool absorb risky positions when they get closed, and in return they receive the discounted ADA backing plus a share of the interest the protocol collects and, where applicable, INDY staking rewards3. This gives both yield and a safety net for the whole system4.
- Vote on the protocol with INDY. Holders of the INDY token vote on settings, treasury spending, and upgrades on-chain by staking INDY, after proposals are discussed on the governance forum. Under the V3 upgrade, the total supply is capped at 25 million tokens5.
- Open-source trade router for Cardano. Dexter, an open-source TypeScript library maintained by the Indigo team, lets developers pull pool data from several Cardano exchanges and split swap orders across them.
- Five completed outside audits. Tweag reviewed Indigo's V1 automated code in 2021, and MLabs audited the protocol in 20226,7. MLabs then audited V2 and V2.1 in 2024, and TxPipe audited V3 in 20268.
What to Expect
You connect a Cardano wallet, like Lace or Eternl, at app.indigoprotocol.io and land on a dashboard showing your portfolio, open positions, and any active deposits. Opening a position takes a few clicks. Pick the tracker token to mint, deposit ADA as backing, and choose how much to mint while staying above the minimum backing ratio. Open positions accrue interest at a rate set by an algorithm for each pairing of collateral and tracker token.
From there, the same app handles everything else. You can stake INDY for governance rewards, deposit into the stability pools, swap tracker tokens through the trading interface, place buy or sell orders at a set price on the Indigo OrderBook, and vote on open governance polls. Documentation lives at docs.indigoprotocol.io with separate guides for opening positions and for stability pools. The public governance forum is the place to track proposals and discussion. You can also connect an AI assistant that supports the Model Context Protocol (MCP) to Indigo through the Indigo Agents Portal.
