CDP

Collateralized Debt Position. A loan structure where users lock crypto collateral (usually ETH or wBTC) to mint stablecoins (DAI/USDS, LUSD, etc.) against it. The position has three numbers: collateral value, debt + accrued stability fee, and liquidation ratio (typically 110-150% depending on collateral). If the ratio falls below the threshold, anyone in the world can trigger liquidation — the collateral is sold at auction, debt repaid, and the user keeps what's left minus a penalty. MakerDAO pioneered the model; Liquity offers a no-fee immutable alternative.