How do iUSD and dUSD work?

There was a small bit of a hype that iUSD by the Indigo protocol will allegedly be the first stable coin on Cardano:

And there still is dUSD by Ardana announced for in a couple of months (which I follow, because I will get a ridiculously small amount of DANA in their ISPO).

So, I tried to understand how these both work from and

As far as I can see they are quite similar: People deposit something (in the examples ADA) into a contract/vault/whatever and then can take a fraction of the deposited value out in the form of stable coins. And only these people (modulo liquidations) can later pay back the stable coins (plus some interest) to get back their deposited collateral.

What I do not understand: How does that make the stable coin pegged to the thing it is supposed to be pegged to (in these examples USD at first)?

For the people that have minted them, they are worth much more, since they need them to get their much higher collateral back. For everyone else the value is in the first place unclear.

In the case of Djed, I can understand the mechanism: There is a contract that will always buy and sell DJED according to the current ADA/USD exchange rate (modulo some fees). It is plain and simple how that retains the peg (if all is working smoothly).

Does anyone have deeper insights how iUSD and dUSD are supposed to keep pegged?


Hello @HeptaSean

They are not.
I read trough the white paper and watch their videos. They are just creating futures market version of crypto. There is only “price exposure” to underlying assets, not a peg. In their videos they are even talking about lumber contracts and ETFs. They openly say that these synthetic assets do not have any underlying value and only allow price exposure. :point_down:

I really wish everyone stops using the term “stable coin” as a buzz word. This term doesn’t have any meaning any more. It seems that anything that can match the price for a moment is now a stable coin under some definition.

Even their wording of iUSD being stable coin “solution:man_facepalming:

There is a simple term for that. SHORT POSITION. Writing a futures contract to sell is always a short position. That isn’t very clear from what they are saying, but if you would like to model it you can see that creating any of those contracts and selling that new token will loose you money if price goes up. Example: You create 1x iBTC by depositing $50k worth of ADA. iBTC $ = BTC $. If you sell iBTC you created at $20K and price goes to $30K your contract gets liquidated and you get remaining $20K from your collateral ($50k - $30k). So you are left with $40k ($20k from sale + $20k remaining from liquidation). That is $10k loss when price goes up by $10k. That is a short position. Making those contracts can lose 100% of ones collateral if markets turn against them to quickly.

We need to come up with a new (more honest) name for these things. Lets not keep misleading people with terms such as “Stable Coins”. They are not.


Got an answer in the Ardana Telegram group:

So, they are saying it’s similar to MakerDAO’s DAI, which seems to work, but there is surprisingly little documents on that. What I found is this:

I’ll have to go through in more depth to decide if I buy the argument.


Specifics in my example above are about iUSD and Indigo Protocol.

I’ll try to look into dUSD and see if I can model it.