The phrase “soft cap” is frequently used in the context of initial coin offerings (ICOs) and crowdfunding to refer to a project’s or company’s minimum financial target. Initial Coin Offerings (ICOs) and websites like Kickstarter and GoFundMe are examples of this.
A business sets both a soft cap and a hard cap during an ICO. The hard cap indicates the time at which they cease selling tokens and is the maximum amount of money they intend to raise.
The soft cap, on the other hand, denotes the minimal sum of money needed for the initiative to continue working. The money is often given back to the donors if the project falls short of the soft cap and does not proceed. There might occasionally be stepping stones between the soft cap and the hard cap. The soft cap, for instance, can be the very minimum required to build a minimally viable blockchain for the project. As the group proves its development and the worth of the
When considering investment opportunities in ICOs or fundraising campaigns, it is important to review the soft cap of the project. It is also crucial to understand the refund process in case the soft cap is not reached and ensure that the project’s smart contract is designed to refund any contributed tokens, such as Ethereum (ETH) or Bitcoin (BTC).