Hard Cap

The maximum amount of money a cryptocurrency’s founders will accept while raising money in exchange for early coins on their platform.

If you’re thinking of investing in an ICO, you’ll encounter this term often enough. A hard cap refers to the upper limit of tokens that can be sold. The developer team is seeking to raise funds, and the hard cap is the maximum amount of funds they are willing to collect in exchange for selling their tokens.

Reaching the hard cap is like reaching a “sold out” sign during an ICO fundraising campaign. The maximum goal of the ICO is achieved when the hard cap is reached and the developers are no longer accepting investor funds but will instead start working on their project.

The development team balances their needs and sets how high the hard cap’s fundraising goal should be. They try to do this while also keeping in mind the economic scarcity and perceived worth of the tokens.

Now, some sources also use hard cap to refer to the maximum supply of a particular token or coin. In this case, hard cap means the upper limit of tokens or coins that will ever exist on their project's blockchain. But the best thing for these projects to do is use the term “maximum supply” rather than “hard cap.” 

Hard cap vs. soft cap

Hard cap may express the maximum tokens to be sold during an ICO, so other projects use the term soft cap to refer to the minimum funding a particular project needs to start its development. If the soft cap isn’t reached -- the project will not start. That’s why the soft cap is normally set lower than the hard cap.