Indium is a rendering optimisation mod that goes alongside Sodium to improve rendering. It is a must-have with Sodium for lots of mods, many mods will complain if you try to run them without Indium installed. Indium is built off the original fabric rendering API (Indigo) but adds new advanced rendering effects. Sodium by itself cannot access Indigo so Indium helps it access it.

Many mods do not explicitly require Indium, however, if a mod used Indigo and you have sodium installed, then you could run into issues without Indium installed as Indium provides indigo. It is important to note though that Indium like Indigo can sometimes conflict with other rendering engines installed so it is important to keep that in mind when making a modpack with multiple rendering engines. Some mods which use Indium include

Campanian
Bits and Chisels
LambdaBetterGrass
Continuity
Packages

And More.

Indium by itself does not do much to affect performance so should possibly be avoided if you do not need any mods which use it, but if you do then it is an official addon for Sodium. You need Sodium installed to play it, and Indium is useless by itself as it is just a way to make Indigo work with Sodium. You do need the Fabric API for Indium to work through. Indium could sometime in the future be merged into sodium once sodium is in a more stable state, but for now, it is not a priority for the Indium developers.

It is important to keep in mind that the newest changes in Indium may have some conflicts with other mods, such as Iris shaders may not always be compatible with the newest version of Indium. Indium is commonly used in many modpacks but not needed for all, but some which use entities or do other stuff with rendering may need it, however, there are alternate rendering engines which could be useful if you do not want to be too limited to fabric. Some mods claim to need Indium but turn on or do work with issues without Indium, alternate rendering plugins also work sometimes.

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Indium Mod