What is Collateralized Debt Position (CDP)?

On the Maker platform, a collateralized debt position (CDP) is created when a borrower provides cryptocurrency as collateral in order to mint or borrow the DAI stablecoin. The value of the collateral in a CDP must always remain above a certain minimum requirement or else risk liquidation. In the event of liquidation, the collateral in the CDP is sold in order to repay a portion of the DAI debt. The collateral in the CDP can be returned when the DAI is repaid by the borrower.