A collateralized debt position is held by locking collateral in smart contracts to generate stablecoins.
A collateralized debt position (CDP) is the position created by locking collateral in MakerDAO’s smart contract to generate its decentralized stablecoin, DAI.This system was introduced to the decentralized finance world by the MakerDAO team and is how its decentralized stablecoin DAI is created.
Traditionally, only Ether could be used to fund MakerDAO’s CDPs, but now BAT, USDC, WBTC, TUSD, KNC, ZRX and MANA are also supported. A decentralized stablecoin backed by Ether-only is still available and is called SAI.
While MakerDAO introduced CDPs, technically other DeFi projects could adopt CDPs both as a term and a system in the future.
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