Cap (CAP)

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Overview

What is Cap?

Cap is a stablecoin protocol built on Ethereum that aims to make digital dollars both verifiable and productive. Instead of issuing a single corporate IOU, Cap wraps a diversified reserve of well‑known, attested dollar assets into a dollar‑pegged token called cUSD and then offers a yield‑bearing version, stcUSD, for users who choose to stake. The core idea is simple: keep the money stable and redeemable, and separate the risk of yield generation from everyday users through on‑chain guarantees. (docs.cap.app)

Key ideas at a glance

• Two assets sit at the heart of the design: cUSD (the redeemable digital dollar) and stcUSD (the reward‑accruing version you receive when you stake cUSD). (docs.cap.app)
• cUSD uses a Peg Stability Module (PSM) to let anyone mint, burn, or redeem directly against a basket of reserve assets (for example USDC, USDT, PYUSD, BENJI, and BUIDL), keeping the peg close to one dollar and the reserve transparent. (docs.cap.app)
• Yield generation is outsourced to whitelisted institutional operators and covered by “restakers” through shared‑security networks so that cUSD holders are protected even when yield‑producing strategies change with market conditions. (docs.cap.app)

Importantly for naming: in day‑to‑day use the live on‑chain assets are cUSD and stcUSD. As of October 2025, Cap has published Ethereum mainnet contract addresses for both tokens, and the project’s documentation centers on these assets rather than a separate, volatile “governance coin.” (docs.cap.app)

History & Team

Origins and mission

Cap was conceived by DeFi builders who had spent years working on stablecoins and yield infrastructure. Public materials and investor notes describe a founding team including Benjamin (previously involved with the QiDAO stablecoin project) and Weso (an early contributor and later CTO at the yield platform Beefy). The project’s growth lead, David “DeFi Dave” Liebowitz, has a background across Frax, Gelato, and IQ.wiki. Together they set out to build a system where digital dollars could earn market‑based returns without leaving users to absorb opaque risk. (rockawayx.com)

Investors and backers

In April 2025, Cap announced seed financing totaling $11 million led by Franklin Templeton and Triton Capital, with participation from a group of market‑making and trading firms, including Flow Traders, Nomura’s Laser Digital, GSR, and IMC Trading. Reports also noted involvement from industry founders like Michael Egorov (Curve) and Bryan Pellegrino (LayerZero). These funds were earmarked to build out Cap’s stablecoin and yield engine. (odaily.news)

Technology & How It Works

Architecture: cUSD, the PSM, and reserves

cUSD is minted by depositing whitelisted dollar assets into Cap’s Vault. The system runs as a Peg Stability Module: users can mint at oracle value, burn for the backing asset with the largest deviation (to discourage adverse selection), or redeem proportionally across the basket so that no one gets stuck with “last‑man‑standing” collateral during stress. When reserves are idle, the Vault can route base rewards from sources like money‑market funds or DeFi money markets (e.g., via Aave with automated management by Yearn). Dynamic fees help keep the collateral mix near target weights. All of these rules are executed by smart contracts and outlined in the docs. (docs.cap.app)

The project publishes an “Addresses” page with the mainnet contracts for cUSD and stcUSD, along with core infrastructure such as the Lender, Access Control, Delegation, and Oracle modules. This lets anyone verify deployments on Ethereum. (docs.cap.app)

Yield separation with Shared Security Networks

Cap’s defining feature is how it separates yield generation from user risk. Rather than a centralized team running strategies, Cap lets independent, whitelisted operators borrow reserve liquidity to pursue their own programs (for example, market‑making, basis trades, or RWA‑linked flows). To borrow, each operator must be “covered” by a restaker who posts performance collateral through a Shared Security Network such as Symbiotic, with EigenLayer integration planned. If an operator underperforms or breaches thresholds, their position can be liquidated and the restaker’s collateral is slashed, with proceeds redistributed to stabilize cUSD. This market‑priced underwriting shifts default risk away from stablecoin holders and into an explicit, collateralized coverage layer. (docs.cap.app)

Roles and flow of funds

Cap defines five roles working together:

• cUSD minters deposit backing assets and can stake to receive stcUSD, which accrues rewards.
• stcUSD holders collect yield that operators generate over the protocol’s hurdle rate.
• Operators borrow liquidity and pay restaker premiums plus any required fees; they keep the surplus above those costs.
• Restakers underwrite specific operators and earn a premium for their coverage.
• Liquidators run permissionless auctions to close unhealthy operator loans quickly. (docs.cap.app)

Oracles and transparency

Cap relies on external price oracles for both collateral valuation and market checks. The project lists RedStone as the cUSD oracle reference, and also publishes oracle endpoints used by integrated markets (for example, Morpho’s stcUSD feed). Publishing oracle addresses alongside token contracts helps the community audit price dependencies. (docs.cap.app)

Audits and security posture

Ahead of its mainnet rollout, Cap released its codebase alongside multiple third‑party assessments. By August 2025, the team had commissioned audits from Zellic, Trail of Bits, Spearbit lead researchers, and Recon, plus a Sherlock audit contest. Publicly sharing those reports and repositories invited community review before broad usage. (cap.app)

Tokenomics & Utility

cUSD: redeemable digital dollar

• Backing and minting: Users deposit approved stable assets to mint cUSD at oracle value. The accept list focuses on “blue‑chip” dollars with public attestations and regulated issuers, such as USDC, USDT, PYUSD, BENJI (Franklin Templeton’s on‑chain fund share class), and BUIDL (BlackRock’s tokenized liquidity fund share class). cUSD remains 1:1 redeemable into any available reserve asset through the PSM. (docs.cap.app)
• Peg management: The PSM’s redeem and burn mechanics, plus dynamic fees, are designed to keep the peg tight while socializing any losses from a depeg event across all redemptions. The proportional redemption model reduces “last to exit” risk. (docs.cap.app)
• Base rewards on idle reserves: When capacity isn’t actively borrowed by operators, the reserve may accrue baseline yield via integrated venues (e.g., Aave managed by Yearn). These flows contribute to the protocol’s benchmark yield without exposing cUSD holders to operator risk. (cap.app)

stcUSD: stake‑to‑earn structure

Staking cUSD mints stcUSD, a reward‑accruing token that reflects your share of the yield produced by operators who borrow from Cap’s reserve and outperform the protocol’s hurdle rate. Borrowing is over‑collateralized, and if a position falls below health thresholds, the system triggers liquidation and slashes the restaker’s posted coverage. Slashed funds are redistributed such that cUSD remains fully backed. In short, stcUSD holders receive upside from operator performance, while cUSD holders are insulated by design. (docs.cap.app)

Incentive structure

The protocol’s incentive model aligns each party:

• Operators earn the “delta” after paying restaker premiums and meeting the benchmark rate.
• Restakers collect premiums for taking quantifiable, on‑chain slashing risk tied to specific operators.
• stcUSD holders earn auto‑compounding rewards, withdrawable at any time.
• Liquidators earn bonuses for acting quickly. The structure is codified in Cap’s Lender, Delegation, and Fee Auction modules, with role‑based access controls governing privileged actions. (docs.cap.app)

Ecosystem & Use Cases

Payments, saving, and trading

Because cUSD is redeemable into several leading reserve assets and transferable like any ERC‑20, it works as a digital dollar for day‑to‑day use: settling trades, moving funds across apps, parking proceeds between positions, or paying invoices on‑chain. Users who want passive earnings can stake to stcUSD to collect protocol yield while maintaining on‑chain transparency.

Integrations and venues

• Aave + Yearn: Within Cap’s Stablecoin Network, idle USDC can be routed to Aave and managed via Yearn’s vault standard for a base return, while operators compete to add active yield on top. (cap.app)
• Morpho markets: stcUSD and its fixed‑yield “PT‑stcUSD” variant have been listed on Morpho (with the listings coordinated by Gauntlet), opening lending and borrowing use cases for both variable and fixed income styles. (mytokencap.com)
• Pendle ecosystem: The Frontier Program highlights PT‑cUSD and PT‑stcUSD in Pendle‑based venues, enabling users to split principal and yield or lock in rates. (docs.cap.app)

As the protocol matures, the team positions Cap as a neutral settlement layer between institutional‑grade dollar assets, letting different issuers and strategies compete for deposits under a common, on‑chain rulebook. (docs.cap.app)

Advantages & Challenges

Advantages

• Verifiable backing and redeemability: cUSD’s PSM design, proportional redemptions, and diversified reserves create a clear, on‑chain picture of collateral and redemption mechanics. (docs.cap.app)
• Clear risk separation: Yield risk sits with operators and their underwriters, not with everyday cUSD holders. Slashing and instant redistribution formalize recourse and keep the stablecoin fully covered. (docs.cap.app)
• Composability: Ethereum deployment and published contract addresses make integration straightforward for DeFi apps and wallets. (docs.cap.app)
• Security posture: Multiple external audits and a public codebase provide a baseline of peer review. (cap.app)

Challenges

• Multi‑party complexity: The system coordinates minters, operators, restakers, liquidators, and oracles. That complexity demands careful monitoring and robust automation.
• Dependencies: Cap explicitly relies on shared‑security networks (e.g., Symbiotic, later EigenLayer) and on the underlying reserve assets and their issuers. The project’s own risk page acknowledges exposure to depegs, oracle behavior, and third‑party infrastructure. (docs.cap.app)
• Whitelisting at launch: Operators and delegators are initially whitelisted to protect against malicious behavior, gradually opening participation as safeguards solidify. (docs.cap.app)

Where to Buy & Wallets

cUSD can be minted on the Cap app by depositing supported reserve assets such as USDC, USDT, PYUSD, BENJI, or BUIDL. stcUSD is obtained by staking cUSD within the app. (docs.cap.app)

stcUSD is available on Morpho markets, and PT‑stcUSD is available through Pendle‑based venues highlighted in Cap’s Frontier Program. (mytokencap.com)

cUSD and stcUSD are ERC‑20 tokens on Ethereum. They can be stored in standard EVM wallets such as MetaMask, Rabby, Coinbase Wallet, or hardware wallets like Ledger and Trezor. The project publishes the official Ethereum contract addresses so users can verify they are interacting with the correct tokens. (docs.cap.app)

Regulatory & Compliance

Cap structures its reserve around assets with public attestations and regulated issuers where applicable. The documentation names USDC, USDT, PYUSD (issued by Paxos), and tokenized money‑market fund share classes like BENJI (Franklin Templeton) and BUIDL (BlackRock). While Cap itself is a non‑custodial protocol, anchoring cUSD to a diversified basket of institutionally issued dollars helps align the design with mainstream financial reporting and audit practices. (docs.cap.app)

Stablecoin oversight continues to evolve. In the European Union, MiCA creates a framework for fiat‑referenced crypto‑assets; in the United Kingdom, the Bank of England and FCA are building a regime for sterling stablecoins, with policymakers discussing caps and systemic supervision; and in the United States, various legislative proposals and agency guidance address payment stablecoins and tokenized funds. Protocols like Cap position themselves to interoperate with regulated issuers and to make reserves auditable on‑chain as these rules crystallize. (reuters.com)

On Islamic finance, many readers look for alignment with principles that avoid excessive uncertainty (gharar) and interest (riba). Cap’s approach emphasizes asset‑backed money, transparent redemption rules, and on‑chain, rules‑based profit allocation via stcUSD rather than fixed‑rate lending to users. Because yield is generated by operators and underwritten by restakers, stablecoin holders do not bear uncovered risk, and rewards accrue only to those who opt into staking. These features are often cited as consistent with shariah‑compliant finance in spirit, though final determinations rest with qualified scholars and institutions in each jurisdiction.

From a legal operations perspective, Cap’s front‑end is published by Covered Agents S.A., a company incorporated in Panama, and the docs include platform terms, privacy policy, audits, and developer addresses to facilitate diligence by integrators and institutions. (docs.cap.app)

Future Outlook

Cap’s roadmap points to broader shared‑security coverage and deeper integrations. Symbiotic is live, and EigenLayer support is planned, which would widen the pool of restakers who can underwrite operators. The Stablecoin Network model makes it straightforward to add or rebalance reserve assets, while the PSM keeps cUSD redemption paths open across issuers. On the DeFi side, listings on lending markets (Morpho), fixed‑income platforms (Pendle), and optimizers (e.g., Yearn‑managed base strategies) suggest a growing menu of ways to hold or deploy cUSD and stcUSD. (docs.cap.app)

Longer term, the team describes Cap as a neutral settlement layer for digital dollars: users bring any approved reserve asset, mint cUSD, and operators compete under explicit, collateralized guarantees to deliver returns. If that model scales, it could reduce fragmentation across branded stablecoins by giving them a common, redeemable wrapper and a market for covered yield. (docs.cap.app)

Summary

Cap is a stablecoin protocol designed around two goals: keep digital dollars verifiable and liquid, and place yield generation behind transparent, collateralized safeguards. cUSD provides a redeemable dollar backed by a basket of attested reserve assets, while stcUSD lets voluntary stakers earn rewards that operators produce above a benchmark rate. Shared‑security networks, oracles, a PSM with proportional redemption, and published contracts make the system auditable and composable for DeFi. With funding from established institutions and a security program that includes multiple audits, Cap has positioned itself as a bridge between regulated dollar issuers and on‑chain finance. As integrations deepen and shared‑security markets expand, the protocol’s covered‑yield model offers a distinct approach to building a stable, productive dollar on Ethereum. (docs.cap.app)