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Also, they often go into dept during wars (or if they have to integrate new lands), if you pay off their dept they will get back on their feet and colonizing faster.
Btw, One neat trick i recently discovered. If you have vassals and they have coring range, it can make sense to give them 10 coquered e.g. aztec lands to core and create a colonial nation. That way, when you integrate them you will get their colonial nations in addition of your own - which means all the benefits you get from size 10+colonal nations (extra merchant, global trade power etc). I got 40 merchants just by splitting my colonial nations with portugal just before integrating them, but if you really work it you could get enough merchants for every trade node in the game...
But the horrible border gore and different colors. It's not right man.
The colors change to yours when you integrate your vassals. Also, you can make sure its no bordergore by giving sculpting the borders yourself. You can also make sure they won't grow beyond 10 provinces by giving them lands that not adjacent to colony space. Also, smaller colonial nations don't get ideas about independance^^
I don't think that works though. Or at least it's not supposed to work. You only get the colonial nation if its a PU and inherited.
At least that how it worked till now.
Currently playing in 1.27 (and for some patches it has been this way):
If the overlord of a CN changes the CN changes its colour to match the new overlord.
If the overlord's colour changes (by nation formation) all current CNs retain their old colour, all new CNs get the overlord's new colour.
In my current Vijayanagar (yellow) -> Bharat (green) game if have yellow Vijayanagarian Australia (stayed yellow after forming Bharat) and green (all formed/conquered after forming Bharat) Bharati Canada, Frisian Brazil (was orange), English Peru (was red), Castilian Brazil, New Granada (both yellow), ...
However, if your vassal has already a CN in an area I would always create another for myself (if 10+ provinces are possible for both, so not in Alaska, difficult to set up in Caribbean and Australia as they have only little over 20 provinces (at least until 1.28 Caribbean Map changes)) as that is an additional merchants and additional forcelimit and I don't care about CN colours :)