iBTC is a synthetic Bitcoin launched in November 2022 as part of Indigo Protocol v1. Indigo Protocol is a DeFi protocol based on Collateralized Debt Position (CDP) that brings capital-efficient synthetic assets to the Cardano ecosystem. Users can acquire iBTC from a DEX like any other Cardano native asset or mint iBTC within the Indigo Protocol by depositing ADA as collateral.

When minting iBTC within the Indigo Protocol, users need to deposit sufficient ADA to maintain their CDP above the Minimum Collateralization Ratio (MCR). This means users must deposit ADA as collateral that ensures over-collateralization. If the value of the user's ADA collateral starts to decrease towards the MCR, they can add more collateral to keep their iBTC position above the MCR. If a user's collateral becomes worth less than the MCR of their iBTC debt, the Indigo Stability Pool providers will allow the user to keep their iBTC but will exchange Stability Pool iBTC for the user's higher value ADA collateral. This ensures that iBTC remains overcollateralized and maintains the solvency of the Indigo Protocol through its efficient liquidation process.

A unique feature of Indigo is that users still receive their ADA staking rewards from stake pool delegation while ADA is being used as collateral in a CDP. This CDP Liquid Staking feature presents a unique use case for iBTC in trading strategies.

The iBTC parameters are controlled by the Indigo DAO, which has the authority to vote on raising or lowering the Minimum Collateralization Ratio for iBTC and all Indigo iAssets.