Collateralized Debt Position (Cdp)
| What is a Collateralized Debt Position (CDP)? A CDP is a position that is created when collateral is locked into a MakerDAO’s smart contract. It generates the decentralized stablecoin DAI. When collateral is locked into a CDP, the MakerDAO smart contract creates a debt position. This debt position is then used to generate the decentralized stablecoin DAI. The DAI is then used to pay back the debt position. The CDP system is designed to be collateral agnostic. This means that any type of collateral can be used to create a CDP. The most popular type of collateral used to create CDPs is ETH, but other types of collateral, such as BTC, can also be used. The MakerDAO smart contract is also designed to be decentralized. This means that it is not controlled by any one entity. Instead, it is controlled by the community of MakerDAO token holders. The CDP system is designed to be trustless. This means that there is no need to trust any centralized entity. The smart contract is designed to handle all aspects of the CDP system. The CDP system is designed to be scalable. This means that it can handle a large number of CDPs. The current limit is 10,000 CDPs. The CDP system is designed to be resilient. This means that it can withstand attacks from malicious actors. The CDP system is designed to be flexible. This means that it can be used for a variety of applications. The CDP system is designed to be extensible. This means that it can be extended to support new features and applications. The CDP system is designed to be adaptable. This means that it can be adapted to changing conditions. |
Share this glosssary
