Collateralized Debt Position (CDP)

In the Maker platform, a collateralized debt position (CDP) is established when a borrower offers cryptocurrency as collateral to generate or borrow the DAI stablecoin. The collateral value in a CDP must always exceed a specified minimum requirement to avoid liquidation. If liquidation occurs, the collateral in the CDP is sold to partially repay the DAI debt. The borrower can reclaim the collateral once the DAI debt is fully settled.