DeFi & Yield

What is a collateralized debt position (CDP)?

A collateralized debt position (CDP) is a DeFi arrangement where you lock crypto as collateral in a smart contract to mint or borrow another asset against it. The collateral must exceed the borrowed amount, creating a buffer; if its value drops below a set threshold, the position is liquidated to repay the debt. For example, locking volatile crypto to mint a stablecoin leaves you exposed to liquidation if that crypto falls sharply. Outcomes depend on market moves and are not guaranteed, and you bear liquidation and smart-contract risk. Understanding collateral mechanics underpins disciplined crypto allocation, which is how we work at Qatobit. See our methodology.

Crypto investments are subject to market risk and volatility. Past performance is not indicative of future returns. This is general information, not investment advice — consider your own circumstances or consult a qualified adviser before investing.