Cap cap

Cap is an Ethereum-based credit marketplace for dollar-denominated on-chain lending. Its design separates lending, borrowing, and underwriting, with each function enforced by smart contracts. Lenders deposit whitelisted reserve assets and mint cUSD; cUSD can be staked as stcUSD, a yield-bearing stablecoin.

The protocol is intended to provide verifiable credit backed by financial guarantees rather than relying solely on a borrower’s own collateral. Underwriters escrow collateral for specific borrowers, creating a first-loss buffer that is visible onchain. The current Cap website describes the product as covered credit for the US dollar and highlights borrowers and underwriters as separate platform participants.

CAP is Cap’s governance and utility token. Official tokenomics documentation states a fixed total supply of 10 billion CAP. Governance rights are intended to phase in as the protocol matures, and protocol revenue may be used for discretionary buybacks. CAP should be distinguished from Cap’s cUSD and stcUSD assets: CAP is the protocol token, while cUSD is the reserve-backed dollar unit and stcUSD is its yield-bearing form.

Crypto lending typically requires borrowers to overcollateralize with their own assets, which is capital-inefficient for institutions that need dollar liquidity. Conversely, unsecured credit introduces counterparty and default risk that is difficult for decentralized users to evaluate. Cap targets this gap by separating capital provision from credit underwriting and by assigning borrower-specific risk to underwriters.

The model also addresses the lack of transparent protection for stablecoin yield strategies. Underwriter delegations are intended to cover losses first if a borrower becomes undercollateralized, while automated liquidation and redistribution return recovered assets to the reserve. This is not risk-free: Cap’s own risk documentation identifies smart-contract, shared-security, reserve-asset, oracle/bridge, idle-asset, depeg, redemption, and counterparty risks.

Lenders deposit whitelisted stablecoins or tokenized money-market assets into Cap’s reserve and mint cUSD. They may stake cUSD for stcUSD, which accrues yield from reserve assets and from lending activity. A borrower must obtain sufficient delegation from an underwriter before drawing reserve liquidity. Borrowers repay principal plus a hurdle rate; that rate combines a dynamic lending floor/utilization component with the fixed underwriting premium negotiated with the underwriter.

Underwriters select individual borrowers, perform due diligence, and escrow eligible collateral such as ETH, WBTC, liquid-staking tokens, or stablecoins. They set or negotiate an underwriting premium and accept first-loss exposure for the borrower they back. Cap uses Shared Security Networks such as Symbiotic and EigenLayer to hold or manage these delegations, making the guarantee and exposure inspectable onchain.

If a borrower’s health factor falls below the liquidation threshold, the protocol opens a permissionless liquidation process after its applicable grace period. Underwriter collateral is sold through a descending-price Dutch auction; liquidators repay debt in exchange for collateral at a bonus, and the proceeds are redistributed to Cap’s reserve. The intended result is that cUSD remains backed 1:1, although users remain exposed to the documented protocol and collateral risks.

CAP itself is governed by the tokenomics described in Cap’s docs: 10 billion fixed supply, allocations across ecosystem/community, private investors, team, ICO, private TVL deals, Echo community sale, and market makers. The docs state that TGE circulation combines the ICO allocation with 10% of the ecosystem/community allocation (about 15% total), while several allocations unlock after a 12-month cliff and then vest monthly for three years.