CDP Overview

KCD(Klaytn Crypto Dollar) is CDP crypto dollar minted against crypto collateral and designed with the goal of maintaining 1 KCD = 1 USD.

CDP stands for Collateralized Debt Position, where the number of tokens minted is determined by i) user’s collateral and ii) Maximum Mint(or Borrow) Limit. In Kurrency, the value of the collateral is always kept higher than the value of the minted KCDs, which is similar to the approach utilized by MakerDAO, a leading CDP project on the Ethereum network. As a result, the value of every KCD minted/circulated is guaranteed by assets of greater value.

Unlike traditional finance, where lending depends on a mix of the borrower’s creditworthiness and the value of the collateral, the blockchain ecosystemworks differently due to the anonymity of individuals, which makes credit assessments impractical. Here, the loan size is determined by the value of the collateral provided by the borrower. This value is intentionally set higher than the loan size to account for the potential price volatility of the deposited assets. Borrowers retain the flexibility to repay the loan at their convenience.