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What Is a “Collateralized Debt Position” (CDP) in Decentralized Finance?

A smart contract where a user locks volatile crypto collateral to mint or borrow an over-collateralized decentralized stablecoin (debt).
Greeks.Live22.11.25

What Is a “Collateralized Debt Position” (CDP) in Decentralized Finance?

A Collateralized Debt Position (CDP) is a smart contract that allows a user to lock up a volatile cryptocurrency (collateral) and, in return, mint or borrow a decentralized stablecoin. The value of the collateral must exceed the value of the stablecoin borrowed (over-collateralization).

The CDP functions as a self-service loan where the user creates debt in the form of the stablecoin. To reclaim their collateral, the user must repay the stablecoin plus any accrued interest or stability fees.

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