soft cap

What Is a Soft Cap?

A soft cap refers to a project’s minimum fundraising threshold or target.

In token fundraising, the soft cap represents the minimum amount that must be raised for the issuance plan to be deemed successful and move forward. If the soft cap is not reached, common practices include issuing refunds or postponing the project, which helps protect participants and maintain project credibility.

In the context of NFT minting, the soft cap sometimes acts as a flexible upper limit. Teams may set an initial target quantity, and once reached, decide whether to launch a second phase, extend the minting period, or close minting entirely—balancing supply with community demand.

Soft caps are typically paired with hard caps. While the soft cap is the minimum target, the hard cap is an absolute maximum—once reached, no further funds or mints are accepted. The combination of both controls the overall fundraising or minting range.

Why Should You Understand Soft Caps?

The soft cap directly affects whether you’ll receive tokens or NFTs, whether your funds could be refunded, and influences dilution and project development pace.

For participants, a soft cap set too low may let projects easily meet their goal but face insufficient funding for delivery. If too high, the campaign might fail to reach its goal, resulting in wasted time and locked funds, or delayed launches. Understanding the soft cap helps you assess risk and opportunity.

For project teams, setting an appropriate soft cap balances “minimum viable funding” and “market acceptance.” A threshold set too high deters new users; set too low, it may undermine development and marketing budgets.

How Does a Soft Cap Work?

The core logic of a soft cap is: only if the threshold is met can the project proceed. However, implementation details vary across contexts.

In token fundraising: Before the campaign begins, teams set both a soft cap and a hard cap. Funds are collected during the campaign period; if contributions reach at least the soft cap (but not the hard cap) by the deadline, the campaign ends as planned and distributions are made. If the soft cap is not reached, platforms typically refund participants or extend the subscription window according to preset rules.

In NFT minting: Teams set a target quantity as the soft cap. Once this is reached, they evaluate community enthusiasm and secondary market demand before deciding whether to open a second phase or allow limited additional mints. This approach helps prevent excessive supply that could cause price volatility.

Some fundraising models use dynamic pricing, such as LBP (Liquidity Bootstrapping Pool). While these emphasize price curves, they still specify minimum targets and maximum allocations—functionally similar to soft caps and hard caps working together.

Where Do Soft Caps Commonly Appear in Crypto?

Soft caps are most prevalent in three scenarios: exchange launches, decentralized offerings, and NFT minting.

In exchange launches (e.g., Gate Startup), projects announce target fundraising amounts and rules. If the soft cap is not reached, platforms typically process refunds or extend timelines as stated in their announcements. If the soft cap is met but not the hard cap, distribution proceeds at the end of the campaign. Participants must follow platform procedures to subscribe and claim results.

In decentralized offerings (commonly called IDOs), projects use smart contracts to set both soft and hard caps. At campaign end, the contract automatically checks if thresholds are met and executes either distribution or refunds.

In NFT minting, teams often use the soft cap as a first-stage target—for example, setting 10,000 mints as a goal. Once reached, they may close public sales, reserve portions for team and partners, or launch whitelist rounds to manage supply-demand balance and support market performance.

How Can You Assess If a Soft Cap Is Reasonable?

Step 1: Examine fund allocation. Review the project whitepaper or announcement to clarify which costs (development, auditing, marketing, operational period) the soft cap covers. If it cannot fund at least 6–12 months of basic operations, risk is elevated.

Step 2: Analyze community size and conversion rates. Monitor social media and community engagement to estimate how many followers will actually participate. A mismatch between expected participants and the soft cap may mean failure to reach goals or oversupply afterward.

Step 3: Evaluate valuation and allocation. For tokens, multiplying offering price by issuance quantity gives both fundraising total and implied valuation. If the implied valuation at the soft cap significantly deviates from similar projects, caution is warranted.

Step 4: Check platform rules and historical precedents. On Gate Startup’s page, review past rounds for completion rates, refunds, and delays to gauge typical soft cap ranges and success rates for similar projects.

Step 5: Compare soft cap to hard cap distance. A wide gap can create large discrepancies between supply and expectations; too narrow a gap can cause instant sell-outs during peak demand, impacting fairness. An optimal gap balances efficiency with fairness.

What Are Recent Trends or Data on Soft Caps?

Over the past year, soft caps have trended toward being set as ranges with more dynamic adjustments. Both platforms and projects now focus more on “achievability” and post-raise market absorption.

Based on aggregated public fundraising data and platform announcements (as of Q4 2025), around 65%–70% of new offerings use a “soft cap + hard cap” structure—about a 10% increase from all of 2024. This shift shows a preference for balancing minimum thresholds with maximum limits to boost success rates.

For NFT minting, in H2 2025 on Ethereum and Solana, it’s increasingly common to set an initial soft cap for phase one; after reaching it, teams reassess community response before deciding on a second phase. Typical first-phase targets range from 5,000 to 50,000 mints, with ongoing decisions informed by secondary market and community feedback.

On exchange platforms in Q3–Q4 2025 (such as Gate Startup), fundraising announcements increasingly specify “target amount ranges.” Rounds failing to reach their soft caps include detailed postponement or refund steps in official notices—improving transparency and managing participant expectations.

What’s the Difference Between Soft Cap and Hard Cap?

The soft cap sets the minimum threshold—a project must reach it to proceed successfully. The hard cap sets an absolute maximum—once reached, no further funds or mints are accepted.

Timing-wise, the soft cap is used to determine success or failure during an ongoing campaign; the hard cap limits maximum scale to prevent overfunding or oversupply.

From a risk and expectation perspective: The soft cap determines whether refunds occur and influences launch timing; the hard cap determines dilution levels and supply limits. Understanding both helps you make informed decisions when participating in fundraising or minting events and evaluate project feasibility and market outlook.

Related Terms

• Soft Cap: The lower fundraising target for an ICO; reaching it allows project initiation but missing it doesn’t always require mandatory refunds.
• Hard Cap: The highest fundraising limit for an ICO; once hit, further fundraising stops immediately to avoid overfunding.
• Token Issuance: Launching crypto tokens on a blockchain for fundraising or ecosystem incentives.
• Smart Contract: Self-executing code that ensures ICO fund security and transparent token distribution.
• Whitelist: A pre-approved list of ICO participants used to restrict eligibility and prevent fraud.

FAQ

What Are the Disadvantages of Soft Top Convertibles?

Soft top convertibles generally have weaker water resistance, poorer sound insulation, and are more prone to wear and tear. Prolonged exposure to sun or rain accelerates material degradation and increases maintenance costs. Additionally, their sealing is inferior compared to hard tops, leading to reduced warmth in winter.

What’s the Difference Between Soft Tops and Convertibles?

A “soft top” refers to a roof made of fabric or flexible materials that can be folded down; “convertible” means the entire roof can be opened or removed. Soft tops usually fold automatically into the rear of the car body, while convertibles may require manual operation or full removal. Soft tops offer greater convenience but less protection than hard tops.

Are Soft Top Cars More Prone to Water Leaks?

Compared to hard tops, soft top vehicles are indeed more susceptible to water leaks—especially in heavy rain or with prolonged parking. Seals where the roof meets the body can be less tight, causing seepage. Regularly checking weather stripping and repairing damage promptly reduces leak risk.

How Can You Properly Maintain a Soft Top for Longevity?

Key maintenance tips include regular cleaning, sun protection, and mold prevention. Use specialized cleaners with gentle wiping—avoid harsh scrubbing; limit long-term sun exposure by using car covers; keep interiors ventilated in humid environments to prevent mold growth. Schedule professional inspections annually to detect and repair small issues early.

Are Soft Top Cars More Expensive Than Hard Tops?

For comparable models, soft tops typically cost 10%–20% less than hard tops due to lower manufacturing costs. However, ongoing maintenance and repair costs may be higher for soft tops—so overall lifetime costs are similar. Your choice should depend on preferences for comfort, protection, and maintenance convenience.

References & Further Reading

• https://coinmarketcap.com/academy/glossary/soft-cap