In the context of Initial Coin Offerings (ICOs), a hard cap is an upper limit on the number of tokens that can be sold for a particular cryptocurrency.
Understanding the term
The meaning of the term hard cap is the maximum amount of funds that the development team is willing to collect for their tokens during the early stage of funding. Thus, if the hard cap is reached during an ICO fundraising campaign, the tokens are said to be sold out for that particular round. Developers no longer accept investor funds once the maximum goal of the ICO event.
In other words, when the hard cap is reached in an ICO fundraising campaign, the tokens are considered sold out. The choice of how high the hard cap is set is up to the development team. They set the hard cap after balancing the upper limit of the fundraising goal with the economic scarcity of the tokens in question.
Cryptocurrency projects that have an unlimited supply can still have a hard cap, as it refers to a specific limit that the project wishes to raise during the funding. In some other cases, the term “hard cap” refers to the maximum supply of a particular cryptocurrency.
A hard cap is a limit placed by a blockchain’s code on the maximum supply of a particular cryptocurrency. It is strictly monitored by the project’s development team, community, and third-party crypto analytics. It represents a fundraising goal, instead of a minimum viable target.