Indigo Prime Introduces Two Loan Interest Modes and Expanded DeFi Controls for Cardano

Indigo Protocol has outlined new details of Indigo Prime, a development package supported by the Cardano PRIME program. Announced on November 3, the upgrade introduces two proposed interest-rate modes for individual loans, each with different redemption conditions.

The broader package includes multisignature position management, delegated wallet permissions, and additional mechanisms for handling debt and collateral. Indigo confirmed that Prime is under development, with the announced features not yet available on mainnet.

Protected and Redeemable Modes Offer Different Loan Conditions

Indigo enables users to mint synthetic assets, known as iAssets, including iUSD and iBTC. These assets are created through overcollateralized debt positions (CDPs), where borrowers lock collateral to issue tokens designed to track the value of external assets.

Indigo V3 currently determines borrowing interest algorithmically, with separate rates for each collateral and iAsset combination. Prime would introduce a choice between two interest-rate modes at the individual loan level.

Under Protected, borrowers would pay algorithmically determined interest without exposing their loans to the protocol's redemption mechanism.

Under Redeemable, borrowers would set their own interest rates while accepting redemption exposure.

Redemptions allow synthetic assets to be exchanged for underlying collateral according to protocol rules. They are distinct from liquidations, which address positions that no longer meet collateral requirements. Indigo has not published the detailed redemption rules, minimum interest rates, or adjustment limits for the proposed models.

Multisignature Ownership and Delegated Wallet Permissions

Indigo Prime also aims to expand how users control their positions. Planned native multisignature support would cover loans, Stability Pool accounts, and staking positions, allowing multiple authorized participants to manage the same position.

The protocol is also developing an Actions Permissions Allowlist, designed to let position owners delegate selected operations to another wallet without transferring ownership or unrestricted access. This could support automated position management under predefined permissions, although the specific permitted actions have not yet been published.

Indigo has additionally confirmed its participation in the core committee developing a Cardano Tokenised Vault Standard.

The team plans to make Indigo positions compatible with the emerging standard, enabling their inclusion in broader vault strategies and DeFi integrations. The standard remains under development, with no confirmed CIP number or published integration specification.

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Debt Redistribution and Cardano PRIME Development

Another planned feature addresses situations in which Stability Pool liquidity becomes insufficient to absorb debt from liquidated positions.

Stability Pools use deposited iAssets to cover debt during liquidations, distributing the associated collateral to depositors. Indigo Prime proposes a debt redistribution mechanism for cases where that available liquidity is exhausted, although the team has not yet detailed how the redistribution would operate.

The package also includes plans to expand eligible collateral assets across iAsset markets and upgrade the protocol's underlying infrastructure.

Indigo is among the projects supported by Cardano PRIME, an AlphaGrowth-led DeFi development program backed by a 120 million ADA Cardano Treasury allocation. That figure represents the overall program budget, not Indigo's individual grant, which has not been publicly disclosed.

Indigo confirmed on October 30 that Prime had officially entered development and followed with its feature outline on November 3. No testnet schedule or mainnet activation date has been announced.

Until the new loan modes are implemented and released, borrowers will continue using Indigo V3's existing algorithmic interest system.