The soft cap is the minimum amount that an initial coin offering (ICO) must raise. If the ICO fails to raise the required amount, it may be cancelled and the funds collected returned to participants.

A soft cap is a fundraising target set by startups or projects, particularly in initial coin offerings (ICOs) or crowdfunding campaigns, representing the minimum amount needed to begin operations. Unlike a hard cap, which is the maximum funding limit, a soft cap is flexible if not fully met, the project may still proceed with adjusted goals or refund contributors. It serves as a threshold to gauge investor interest and ensure basic viability. For example, a blockchain project might set a soft cap of $1 million to develop a prototype, while aiming for a higher hard cap to expand further. If the soft cap isn’t reached, funds may be returned, or the project may pivot. This approach balances ambition with realism, allowing creators to test market demand while providing backers with some security.