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description: Initiating a Collateralized Debt Position (CDP)
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# Minting

This section outlines the process for minting and managing a Collateralized Debt Position (CDP) within the Hedgehog Protocol, focusing on the minting of Basefee tokens using Wrapped Staked Ether (wstETH) as collateral.&#x20;

### How to mint it

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To start the process, you'll need to interact with our protocol's smart contract to initiate a CDP. At a high level it can be described as simple as " putting up **wstETH** as collateral to create (mint) Basefee tokens."

1. **Connect Your Wallet**: Log into your Ethereum wallet via our user interface. Ensure it contains the wstETH you wish to use as collateral.
2. **Initiate a CDP**: Through our platform's dashboard, find the option to create a new CDP. You'll be prompted to specify the amount of **wstETH** you want to lock up.

**Minting Your Basefee Derivative Tokens**

Once your CDP is active, you can mint Basefee derivative tokens. The number of tokens you can create depends on the collateral's value (your wstETH) and the protocol's current collateralization ratio requirements, which must be >150%.

1. **Enter the Desired Amount**: Input how many Basefee tokens you wish to mint. The interface will show you the required amount of wstETH needed as collateral.
2. **Confirm and Mint**: After reviewing the transaction details, including any associated fees, confirm the transaction. Execute the minting to create your Basefee tokens.

**Managing Your Position**

With your Basefee tokens now in your wallet, you manage your exposure. Remember, your CDP is an active position you need to monitor.

1. **Monitoring**: Maintain a healthy collateralization ratio of your CDP. If the value of your locked wstETH falls to the amount of Basefee you've minted, you might need to add more collateral or reduce your debt to avoid [liquidation](liquidations).
2. [**Liquidation**](liquidations) **Process**: If the collateral falls below 150% [OCR](basefeelma-token), your CDP could be liquidated, meaning some or all of your wstETH could be sold automatically to cover your debt.

**Step 5: Closing Your Position**

When you decide it's time to close your position, you'll need to return the Basefee tokens you minted, plus any accrued interest or fees, to retrieve your collateral.

1. **Repaying the Debt**: Interact with the CDP through our platform, selecting the option to close the position. You'll need to submit the equivalent amount of Basefee tokens you initially borrowed, along with the [Redemption](redemptions) fee.
2. **Retrieving Your Collateral**: After your debt is repaid, you can withdraw your wstETH from the CDP. Your position is now closed, and your tokens are back in your wallet.

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