MakerDao CDP Creation Is Up Over 300% in the Last 4 MonthsBy Jack Filiba
The MakerDAO Collateralized Debt Position (CDP) is a smart contract that supports the existence of a stablecoin called Dai. It serves as a lending platform where Dai tokens are created while Ether (ETH) is held as collateral.
While CDPs can be difficult to understand, they are proving increasingly popular in recent months. In fact, the total number of CDPs created on the Maker platform has risen more than 300% in the last four months alone.
More Collateralized Debt Positions created than ever before
This year, the number of CDPs created in a single month reached its all-time high. As of press time on January 31, there have been 1839 CDPs created so far this year, according to MakerScan.io.
Comparing this to the amount of CDPs that were created in December of last year shows an increase of more than 97%. There were 933 CDPs created last month, and 661 created in November 2018.
While a significant number of blank CDPs were created this year, MakerScan.io’s creator, Sowmay Jain, told LongHash that the totals listed on the platform filtered out “spam” entries. He estimated that there were more than 6,000 blank CDPs created in January — all of which were excluded from these findings.
Currently, the total debt from all CDPs on the MakerDAO ecosystem is valued at just under $75.5 million USD, which exists in the form of Dai tokens. Further, the site lists the total amount of Ether held in collateral as over 2 million ETH, which is valued at around $217 million USD as of press time.
What it all means
If these findings are correct, one thing is abundantly clear: the number of CDPs being created is rising.
There are several reasons why people seek out Collateralized Debt Positions. The first is that they offer loans with flexible repayment, as users are not burdened with time limits or minimum repayment amounts. There are also no credit history requirements, and there is a lowered sense of risk as the process is carried out automatically and with transparency through a smart contract.
Users are able to borrow from the platform through a process which creates Dai tokens (DAI). In exchange, they lock some of their own currency (ETH) away as collateral. At any point, they can reclaim their collateral by returning the Dai that they borrowed.