Hidden Cap Definition
A Hidden Cap is a term used in the cryptocurrency world to refer to a fundraising strategy where the maximum limit of funds that can be raised in an Initial Coin Offering (ICO) or token sale is not publicly disclosed. This strategy is often used to prevent large investors (whales) from buying up a significant portion of the available tokens, thereby ensuring a more equitable distribution of tokens among a larger number of participants.
Hidden Cap Key Points
- The Hidden Cap is a strategy used in ICOs or token sales to prevent large investors from dominating the sale.
- It ensures a more equitable distribution of tokens among a larger number of participants.
- The maximum limit of funds that can be raised is not publicly disclosed.
- This strategy can help to create a more decentralized network by preventing the concentration of tokens in the hands of a few.
What is a Hidden Cap?
A Hidden Cap is a strategy used in the fundraising process of a cryptocurrency project, specifically during an ICO or token sale. The cap refers to the maximum amount of funds that the project aims to raise. However, in a Hidden Cap, this amount is not disclosed to the public. The main purpose of this strategy is to prevent large investors, often referred to as ‘whales’, from buying up a significant portion of the available tokens. By doing this, the project aims to ensure a more equitable distribution of tokens among a larger number of participants.
Why is a Hidden Cap used?
A Hidden Cap is used to prevent the concentration of tokens in the hands of a few large investors. This is important because it can help to create a more decentralized network, which is one of the key principles of blockchain technology. A more decentralized network can lead to a more secure and robust system. Furthermore, by ensuring a wider distribution of tokens, a Hidden Cap can also help to increase the liquidity of the token in the market.
When is a Hidden Cap used?
A Hidden Cap is used during the fundraising process of a cryptocurrency project, specifically during an ICO or token sale. It is a strategy that is decided upon by the project team before the sale begins.
Where is a Hidden Cap used?
A Hidden Cap is used in the cryptocurrency world, specifically in the context of ICOs or token sales. It is a strategy that is implemented by the project team and is relevant to potential investors in the project.
How is a Hidden Cap implemented?
A Hidden Cap is implemented by the project team during the planning stages of the ICO or token sale. The team decides on the maximum amount of funds that they aim to raise, but this information is not disclosed to the public. Instead, the sale continues until the hidden cap is reached. At this point, the sale ends, even if it was originally scheduled to continue for a longer period.
