CDP

A CDP (Collateralised Debt Position) is a smart contract where you lock an asset (usually ETH or WBTC) and mint a stablecoin against it, typically at an over-collateralised ratio like 150%. It's DeFi's version of a pawn loan — you keep upside on your asset, get liquidity now, repay to unlock the collateral. If the collateral drops in value and your ratio approaches the liquidation threshold, anyone can trigger a liquidation (collateral gets sold to cover the debt, you pay a penalty). MakerDAO pioneered the pattern for DAI; Liquity, Aave (GHO), and many protocols have variants. The mental model: a CDP lets you borrow against your crypto without selling it or going through a bank — the only "bank" is the contract, and the only thing that can liquidate you is math.