Collateralized Debt Position (CDP)
A smart contract structure where borrowers lock collateral to mint digital assets as a loan.
What is Collateralized Debt Position (CDP)?
CDPs, popularized by MakerDAO, allow users to lock collateral (e.g., ETH) in a smart contract to mint a protocol-native asset like DAI, which acts as a loan. For example, depositing $1,500 ETH at a 66.7% LTV might mint $1,000 DAI. If collateral value drops below the liquidation threshold, the CDP is liquidated to repay the debt.
In 2025, CDPs support multi-collateral assets, including real-world assets like tokenized bonds. MakerDAO’s CDP system managed over $8 billion in TVL in 2024, per Dune Analytics, driving stablecoin adoption while maintaining overcollateralization for stability.
Related Terms
Cryptocurrency
Digital currencies and assets secured by cryptography and operating on decentralized blockchain networks without central authority.
Digital Asset Treasury (DAT)
Public companies that strategically accumulate digital assets(primarily BTC or ETH) as core treasury reserves to drive shareholder value and provide digital asset market exposure.
Currency Sovereignty
A nation's control over its monetary policy and issuance in the digital era.
DAO
A blockchain-based organization governed by smart contracts and member voting, eliminating centralized control.
Digital Asset
Electronically stored items of value that can be owned, transferred, or traded, typically secured by blockchain technology for immutability and transparency.
DA (Data Availability)
DA is the mechanism ensuring rollup transaction data is accessible on Ethereum, preventing withholding attacks and enabling verification.