Glossary

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Centralized Debt Position (CDP)

What is CDP?

The Maker DAO project's entire ecosystem helped develop the financial-cryptocurrency concept known as Collateralized Debt Position (CDP) since 2014. Essentially, Maker DAO's major goal is to reduce price volatility on cryptocurrency exchanges by using its own Maker DAO stable coin (Dai) against fiat money. This advancement has made it possible to currently develop new functions similar to those found in the conventional financial world. But because of blockchain technology and smart contracts, everything is decentralized.

You can lock your crypto assets (currently only ETH) inside the CDP vault using the collateralized debt position (CDP) tool. In exchange for the deposit, you will receive a loan in the amount of 66% of DAI (1 DAI = 1 USD). Simply pay back your borrowed loan in Dai to regain access to your restricted cryptocurrency.

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