1. Introduction
Under Indigo V3, the interest rate for each iAsset/collateral pair is not a fixed number but the output of an algorithmic formula:
Variable Interest Rate = max[0, (ITCR − NTCR)/(CTCR − NTCR) × (Upper Limit Int − Base Int)]
Final Interest Rate = Base Int + (Discount Rate × Variable Int)
where NTCR (neutral ratio), CTCR (capped ratio), and Base Int/Upper Limit Int are parameters calibrated by the DAO per iAsset. It’s this calibration — not a generic rate — that needs to be examined for iEUR.
This request is motivated by a concrete use case: using Indigo’s bidirectional order book and the depth of the EUR/USD market to arbitrage the gap between iEUR’s on-chain price and the real exchange rate. Such an arbitrage requires a funding cost (the CDP interest rate) proportional to the pair’s actual risk — which isn’t currently the case if iEUR simply inherits iUSD’s calibration.
2. Current Situation (Confirmed V3 Parameters)
| iAsset | Collateral | Base Int | NTCR | CTCR | Upper Limit Int | Buffer Rate |
|---|---|---|---|---|---|---|
| iUSD | — | 7.5% | 200% | 350% | 25% | 5% |
| iBTC | — | 5% | 170% | 250% | 15% | 5% |
| iETH | — | 5% | 170% | 250% | 10% | 5% |
| iSOL | — | 5% | 170% | 250% | 10% | 5% |
| iJPY | ADA / USDCx | 7.5% | 200% | 350% | 15% | 5% |
| iJPY | NIGHT | 10% | 200% | 350% | 15% | 5% |
| iEUR | ADA / USDCx | 7.5% | 200% | 350% | 15% | 5% |
| iEUR | NIGHT | 10% | 200% | 350% | 15% | 5% |
Key observation: on ADA/USDCx, iEUR and iJPY use exactly the same Base Int (7.5%) and NTCR/CTCR pair (200%/350%) as iUSD. Only the Upper Limit Int has been differentiated downward (15% vs. 25% for iUSD, aligned with iBTC’s tier rather than iUSD’s). In other words, the calibration isn’t a full copy-paste of iUSD — but the parameter that weighs most on the current cost, the Base Int (the absolute floor of the rate), remains identical to iUSD’s.
That 7.5% Base Int was calibrated for a synthetic dollar backed by crypto-collateral, with no deep external market to arbitrage against directly. EUR/USD, by contrast, is the most liquid currency pair in the world, with a reliable Pyth price feed and a bidirectional Indigo order book enabling direct arbitrage. The risk that justifies a 7.5% Base Int for iUSD doesn’t apply in the same way to iEUR.
Observable consequence: the iEUR market remains virtually unused (338 iEUR deposited in the Stability Pool, ~$386, 0% APR), while the floor borrowing cost (7.5%, before any variable component) is calibrated as if iEUR carried the same peg risk as iUSD.
3. Proposal
Request a specific calibration of the Base Int and the NTCR/CTCR pair for iEUR (and iJPY) on ADA/USDCx collateral, distinct from the iUSD template, based on the actual risk profile of a major currency pair rather than that of a crypto-collateralized stablecoin:
- Base Int: reduce from 7.5% to 3% — below the crypto tier (5%), since the depth and liquidity of the EUR/USD market justify a lower floor than iUSD’s (7.5%) or iBTC/iETH/iSOL’s (5%)
- NTCR / CTCR: move from 200%/350% (iUSD template) to 170%/250%, i.e. the tier already in use and proven for iBTC/iETH/iSOL. If this tier is judged safe for assets far more volatile than EUR/USD, it should be safe for iEUR a fortiori — this reuses a precedent already validated by the DAO rather than requiring an unprecedented new figure to be justified from scratch
- Upper Limit Int: already differentiated at 15% (vs. 25% for iUSD) — consistent, no change requested here, unless there’s an appetite to align it further with iETH/iSOL (10%)
Technical note: as long as iEUR’s Total Minted Supply (TMS) stays as low as it is today, the Discount Rate (tied to Order Book redeemable liquidity relative to TMS) is likely already close to 0%, which zeroes out the formula’s variable component — hence a current effective rate equal to the Base Int (7.5%), regardless of the NTCR/CTCR setting. Tightening NTCR/CTCR therefore won’t have an immediate effect on today’s observed rate; its value will mainly materialize once the iEUR market has grown. The lever with an immediate effect is the Base Int.
This request fits within the existing V3 governance framework (“Update a Collateral Asset for an iAsset”), which already allows adjusting LR/MR/RMR/interest rate oracle per iAsset/collateral pair — this is a request to open a new calibration for the iEUR/ADA-USDCx pair, not an exception outside that framework.
4. What if Indigo went aggressive?
The proposal above (chapter 3) is deliberately conservative: it reuses tiers already validated by the DAO. But it’s worth considering a more radical option, precisely because the iEUR market is starting from zero.
The observation that changes everything: with 338 iEUR deposited and only one CDP open across the entire protocol, the interest revenue currently generated by iEUR amounts to a few tens of dollars per year. The DAO therefore has, in practice, almost nothing to lose in the short term by being aggressive on this market — the stake isn’t protecting existing revenue, it’s making a market exist that doesn’t yet.
Ideas to consider, combined or not:
- Base Int at 1% (or even 0%) during a launch phase, on ADA/USDCx, for a defined duration or TVL milestone (e.g. 90-180 days, or until iEUR TVL reaches $250k-$1M), with an automatic step-up to a calibrated “cruising” rate (3%, cf. chapter 3) once the milestone is reached. The idea: an introductory rate rather than a permanent one, to remove the main friction identified in this document.
- NTCR/CTCR tightened even further than the crypto tier, e.g. 130%/200%, to allow higher effective leverage (up to ~5-8x) on a pair whose actual volatility justifies it — consistent with the leverage scenarios already evaluated in our discussions (2x, 2.56x, 3x).
- Temporary waiver of the Debt Minting Fee on iEUR during the launch phase, to reduce friction for early users.
- Positioning angle: present Indigo as one of the few DeFi protocols offering leveraged on-chain EUR/USD exposure — a growth vector distinct from the “stablecoin” narrative carried by iUSD, one that could appeal to European users looking for FX hedging without going through traditional finance.
A trade-off not to ignore: an overly aggressive calibration could also attract purely mercenary activity (leverage farming with no real economic use), without enough Stability Pool depth to absorb liquidations if the market grows faster than expected. Any aggressive measure would be better framed as explicitly temporary and bounded (by duration or TVL milestone), with a planned return to the chapter 3 parameters rather than a permanent change.
5. Conclusion
The goal isn’t to demand a lower rate in absolute terms, but to check whether iEUR’s Base Int and NTCR/CTCR pair actually reflect its own risk profile (a deep, liquid FX pair) rather than a mechanical inheritance from iUSD’s parameters. A better-suited calibration would lower the cost of EUR/USD arbitrage/hedging strategies and could help bootstrap an iEUR market that is currently almost empty. Depending on the DAO’s appetite, this calibration can be conservative (chapter 3) or deliberately aggressive during a launch phase (chapter 4); either way, we’re submitting this proposal for community discussion before any formal on-chain submission.