Appendix

Glossary

CDP (Collateralized Debt Position)

A vault that holds collateral and tracks stablecoin debt issued against it.

Oracle

A mechanism that supplies external price data to smart contracts.

Peg

The target price relationship (e.g., 1 stablecoin = 1 unit of fiat currency).

Collateralization Ratio

Collateral value divided by outstanding debt; must stay above a minimum threshold.

Liquidation

A process that sells collateral to repay debt when a vault becomes under-collateralized.

User deposits collateral into a vault.
User mints (draws) a currency stablecoin up to the allowed limit.
Over time, fees accrue on outstanding debt.
User repays stablecoins to reduce debt (and fees), then withdraws collateral.
If the collateral value falls below the minimum threshold, then a liquidation event is triggered, and the collateral is sold to cover the debt.

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