What is a Crypto Collateralized Debt Position

A Collateralized debt position (CDP) in crypto refers to a smart contract on a blockchain platform that allows a user to borrow a certain amount of cryptocurrency by providing a larger amount of a different cryptocurrency as collateral. The collateralized debt position is created on a decentralized lending platform such as MakerDAO and is governed by a set of rules encoded in the smart contract. The borrowed funds can be used for various purposes, such as trading, investing, or paying…