With respect to an initial coin offering (ICO), it is the upper limit on the amount of tokens that a token’s developer can offer to the public. This represents the maximum amount of funds that can be raised in exchange for the tokens issued during the initial offering stage. In other words, if the hard cap is reached during an initial offering round, the token coins are said to be “sold out” and the initial offering is considered fulfilled. The developer will not accept any “oversubscription”- so to speak- by investors.

The size of hard cap is usually determined based on multiple factors, mainly including a proper balance between the targeted maximum amount of funds and the scarcity (or amount of supply) of the tokens.

The term “hard cap” may also loosely refer to the maximum supply (upper limit of issuance) of a specific token or coin (cryptocurrency), on a blockchain network, at a given point in time or during a given period. The issuance limit is defined by the protocol of a cryptocurrency. However, in reality, a hard cap and maximum supply of a token are two different things as “hard cap” particularly relates to the maximum goal of ICO issuance and fundraising stage.

The opposite of a hard cap is a soft cap.