Hard Cap

The hard cap represents the upper limit of funds that the creators of a cryptocurrency will accept during the fundraising process in exchange for early coins on their platform.

You will commonly hear the term “hard cap” while thinking about investing in an Initial Coin Offering (ICO). The maximum number of tokens that can be sold during the ICO is referred to by this phrase. The hard cap denotes the most money the development team behind the ICO is ready to raise in exchange for the sale of its tokens. The goal of the ICO is to raise money. 

The developers will cease taking investor funds once the hard cap is met, signalling the completion of the ICO’s primary objective, and they will start developing their project. 

The development team carefully decides the hard cap fundraising target, taking into account their own needs, token scarcity in the market, and perceived token value. It’s important to keep in mind that some publications also refer to the hard cap as the maximum supply of a particular token or currency on a project’s blockchain. Nonetheless, it is advised for projects to employ “maximum supply” in these situations rather than “hard cap”.

The lowest amount of funding needed for a project to begin development is referred to as a “soft cap,” as opposed to a “hard cap.” The project will be abandoned if the soft cap is not reached. The soft cap is often set at a lower level than the hard cap because of this.