Hard Cap

What is a Hard Cap

The term hard cap may mean different things based on the context. In cryptocurrency supply, a hard cap means the maximum supply limit of a coin programmed into its algorithm. Once this limit is reached, no more coins or tokens can be created or mined. This is in contrast to a soft cap, which is a target or suggested limit on the total supply of a cryptocurrency but may be exceeded if certain conditions are met.

A hard cap is often implemented as a feature of a cryptocurrency's underlying blockchain protocol and is intended to provide scarcity and stability for the coin or token. Having a hard cap on the total supply can also protect against inflation and devaluation of the currency.

It is important to note that not all cryptocurrencies have a hard cap on their total supply. Some, such as Bitcoin, have a limited total supply, but others, such as Ethereum, currently do not. Whether or not a cryptocurrency has a hard cap can be important when evaluating its potential value and prospects. This is a key factor in the tokenomics of a crypto project.

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