Iridescent Lagoon is a 'non-canon' island where Vetex and Tech fought. It was located near Judgement Isle and Miss Molly. Upon completing the Training Quest Chain, Theos will wait for you here to unlock your second mind.
The island consists of two islands separated by a small river. One side has a small village and large stone pillars that are covered in Inferno Fire, Tech's curse. While the other side has large electrified crystals from Vetex's Aether Lightning. Touching the fire or the crystals will cause the player to take damage.
As of V 1.6, Iridescent Lagoon has been replaced with Dawn's Refuge.