How to Pay Back DAI Debt on MakerDAO CDP Vaults

I’ve made a few videos in the past talking about MakerDAO CDP vaults and how I use them to collateralize a portion of my crypto in order to gain liquidity to invest in other things. Sometimes I use this liquidity to reinvest in the same collateralized crypto (i.e. using the vault to collateralize BAT and generate DAI debt in order to buy more BAT), effectively making it a margin trade.

There are plenty of other use cases out there as well. Even using the vaults to generate liquidity for fiat-based investments.

A few people have asked if I could cover more aspects of these CDP vaults since there can be a lot of uncertainty involved when it comes to setting up your first vault and taking out a loan. One of the top questions is related to the process of paying back DAI debt after you’re done with the loan.

In this video, I cover the quick process of paying back DAI debt and even show how I use Uniswap to convert crypto out of collateralized vault into DAI to pay itself back. It’s an interesting concept because you can wait for the price of the underlying (in this case, BAT) to go up and then use the profits from the increase in price to pay back the loan itself.

Show Notes:

In This Episode:

  • Withdraw BAT From MakerDAO CDP
  • Convert BAT into DAI
  • Pay Back DAI on MakerDAO
  • Increase the Collateralization Ratio and Lower the Liquidation Price

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