Throughout Ghost of Tsushima, you can find special characters who will let you purchase dyes for your armor sets. There's a new dye merchant in the Iki Island expansion, who sells special red armor customizations you can otherwise get. You can't just come across the Crimson Dye Merchant by exploring the island, however--you need to complete certain other objectives in order to unlock it.
Here's everything you need to know to find the Crimson Dye Merchant in the expansion. Check out our Iki Island guide roundup for more info to find everything the expansion has to offer.
You'll have to beat all four combatants in the Hidden Cove Tournament to unlock the Crimson Dye Merchant.
The trick, generally, is to use Perfect Parries and dodges to get clear of your enemies' attacks and to hit them while they're off balance. Spend some time practicing dodging each enemy's attacks to see what they'll throw at you--each one has a specific fighting style and only uses a few key attacks.
After you win the final duel, the Crimson Dye Merchant's shop will appear on your map. Fast-travel to the location, which is east of Fort Sakai and just north of Tatsu's Ladder. Travel there and the merchant will offer you one free armor dye. Once you've picked a freebie, you'll be able to get more armor customizations from the merchant, but you'll have to buy them with flowers like usual.
Buying something from the Crimson Dye Merchant is the first step in unlocking the Blood On Your Hands Trophy. The second step is to visit the Horse Armor Dye Merchant and buy something. To do that, you'll first need to complete the Legacy of Kazumasa Sakai Mythic Tale, then bring five Sakai Clan Banners to the Horse Armor Dye Merchant to earn a look.