> For the complete documentation index, see [llms.txt](https://docs.indigoprotocol.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.indigoprotocol.io/readme/collateral-debt-position-cdp.md).

# Collateralized Debt Positions (CDPs)

## **Overview 🌐**

### Understanding CDPs

A Collateralized Debt Position (CDP) is fundamental to minting iAssets in the Indigo Protocol. By locking collateral, users can create a CDP, borrowing against this collateral on a variable interest rate to mint iAssets. The protocol ensures that each iAsset is over-collateralized, safeguarding the system against market volatility.

In [Indigo Protocol V3](/readme/indigo-protocol-v3.md), CDPs support multiple collateral types beyond ADA. Each loan position is single-collateral-type from creation to closure — if you open a CDP backed by ADA, you can only add or withdraw ADA for its lifetime. The same applies to CNT-backed positions (e.g., USDCx, NIGHT).

## **Opening a CDP 🔄**

When opening a loan, the user selects:

1. The iAsset to mint (e.g., iUSD, iBTC, iJPY)
2. The collateral type to use (e.g., ADA, USDCx, NIGHT)

Only whitelisted collateral assets appear as available options. Each iAsset/collateral pair has its own Liquidation Ratio, Maintenance Ratio, Redemption Ratio, interest rate oracle, price oracle, and minimum collateral amount.

## **Managing a CDP 🔄**

### Actions for CDP Owners

As a CDP owner, you have the flexibility to:

1. **Deposit Collateral:** Increase your collateral ratio, potentially reducing the risk of liquidation. Only the same collateral asset type used at creation can be deposited.
2. **Withdraw Collateral:** Decrease your collateral ratio, which may elevate liquidation risk. Withdrawals are limited to the same collateral asset type.
3. **Mint iAsset:** Mint additional iAssets, which may lower your collateral ratio.
4. **Burn iAsset:** Increase your collateral ratio by burning iAssets. Burning all iAssets under a CDP closes it, returning your collateral.
5. **Close CDP:** Close your CDP by burning all iAsset debt and settling any accrued interest.

## **Fees 💸**

* **Debt Minting Fee:** A percentage of the amount minted, deducted during minting and sent to the Treasury. In V3, the fee is minted together with the debt (e.g., minting 100 iUSD debt yields 99.5 iUSD to the user and 0.5 iUSD to the Treasury).
* **Interest Payment:** In V3, interest accrues as iAsset debt rather than ADA. See the [Interest](/readme/interest.md) page for details.

## **CDP Liquidation ⚠️**

Locating and Understanding Liquidation

* If your CDP is not locatable, it may have been undercollateralized and liquidated due to collateral or iAsset price fluctuations. Liquidation payouts to Stability Pool depositors include the collateral asset type backing the liquidated CDP. For detailed insights into liquidation processes, refer to the dedicated [liquidation section](/readme/liquidations.md).