Hard Cap And Soft Cap In ICO: What Conditions To Check Before InvestmentsBefore starting the ICO its creators as usual set limits on the dates and amounts the planned fundraising.
Hard Cap And Soft Cap Concepts
To determine the stage of crowdsale success as a rule to use two terms: Hard Cap and Soft Cap. Soft Cap is the minimum amount necessary to implement the planned tasks of the blockchain project, and the Hard Cap is the maximum required to implement all goals.
So, if process of crowdsale is correct, the surplus Hard Cap, received after the finish of the round, is returned to investors. A striking example is the Brave browser, whose BAT token attracted $ 35 million in 30 seconds. Brave set a goal and successfully fulfilled it, - the project received the desired funding, and then was able to fully implement the plan.
There are also projects that ignore the need to establish limits on the collection of funds for the development of their project. "Unlimited" ICO attracts as much as the investors are willing to invest in a product. Among them, for example, Tezos, attracted $ 232 million. Currently, this is one of the largest ICO.
Advantages of unlimited ICO are that the team can get more means for realization a job while tokens of the project are received by bigger number of investors. Shortcomings that the cost of tokens can be much lower, than at start of the limited ICO.
So, Hard Cap and Soft Cap are goals for raising funds during the ICO rounds. Hard Cap is the absolute maximum that the team intends to attract, while Soft Cap, as a rule, is the minimum limit of raised funds. If the project was not able to collect the minimum amount of investment, then such a startup, as a rule, is not interesting for investors. The real example is BeautiQ token BTQ, in ICO which was collected only $ 59 but planned $ 576,000...
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