Collateral Debt Position (CDP)

What is a CDP?

Overview

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

What can I do with a CDP?

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

Is there a required amount of collateral to open a CDP?

Yes. To open a CDP, you will need to deposit at least 10 ADA.

Is there any fee associated to a CDP?

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

I can't find my CDP. Where did it go?

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

What is CDP Liquid Staking?

Overview

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

What if I change stake pools? Will I still earn staking rewards?

Yes. If you delegate your wallet to a new stake pool after creating the CDP, the ADA collateral in the CDP will automatically earn rewards from the new stake pool.