CAP
Last updated
Last updated
CAP is building the first stablecoin protocol that outsources yield generation in a programmatically secure manner, combining verifiable smart contracts with economically enforced guarantees through shared security networks.
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CAP introduces a paradigm shift in stablecoins – moving from centralized "hedge fund" models to decentralized, market-driven yield generation with credible financial guarantees. The protocol operates on two core principles:
Open protocols – Autonomous systems foster innovation and transparency through verifiable code
Market driven – Well-designed incentives minimize human judgment and maximize efficiency
Core Products:
cUSD – A unified digital dollar backed by regulated stablecoins (USDC, USDT, pyUSD, BUIDL), providing "singleness of money" across fragmented stablecoin ecosystem
stcUSD – Yield-bearing version earned by staking cUSD, with returns generated by a competitive network of professional operators
As : "CAP is building the natural evolution for stables, where every aspect is decentralized – even the yield generation (both on and off chain)."
Team & Backing: CAP combines institutional finance expertise with deep crypto-native understanding, backed by:
$1.1M community round via Echo (Omega, Patrons, Crab Notes, Price Club)
Seed round with participation from MegaMafia founders
Focus on aligned, long-term stakeholders over traditional VC model
Led by (founder) and (Head of Growth), the team maintains active presence across for discussions and collaborates regularly with MegaETH core team and Vitalik as advisor.
Issuance layer – Mint capUSD on Ethereum, use natively across MegaETH
Instant settlement – Leverage real-time blockchain for immediate yield allocation
Deep integration – CAP stablecoins as default primitive across MegaETH DeFi
CAP creates a three-sided marketplace that aligns incentives across all participants:
1. Minters (Stablecoin Holders)
Deposit USDC/USDT to mint cUSD 1:1
Always fully redeemable for underlying collateral
Can stake to stcUSD for yield or use cUSD as payment
2. Operators (Yield Generators)
Whitelisted institutions – banks, HFT firms, market makers, RWA protocols
Borrow protocol assets to execute yield strategies
Keep profits above CAP's benchmark yield (e.g., if benchmark is 13% and they earn 40%, they keep 27%)
Must secure delegations from restakers to access capital
3. Restakers (Security Providers)
Delegate staked ETH via EigenLayer to underwrite operators
Earn premiums from operators based on risk assessment
Subject to slashing if operators fail to meet obligations
Create verifiable downside protection for users
4. Liquidators
Execute permissionless Dutch auctions when positions become undercollateralized
Earn liquidation bonuses for maintaining protocol health
Ensure stablecoin holders remain protected at all times
CAP represents the evolution beyond existing models:
Type 0 – Endogenous yield (CDPs, leverage-based)
Type I – Team-run strategies (Celsius-style)
Type II – DAO-managed yield (governance bottlenecks)
Type III – Smart contract-enforced rules with economic guarantees
Key Innovations:
Zero-collateral lending for operators – Like extended flash loans with multi-day windows
Perpetual competitive yield – Market dynamics ensure optimal returns across all conditions
Verifiable protection – All guarantees transparent and enforceable on-chain
Strategy agnostic – Works with DeFi arbitrage, RWAs, market making, any yield source
Economic underwriting – Restakers' capital directly backs operator activities
Automatic slashing – Protocol enforces penalties for defaults or violations
Isolated risk pools – Only CAP-specific delegations at risk, not broader EigenLayer network
Regulated counterparties – Operators enter legal agreements with restakers
This creates what the team calls a "trust marketplace" – capital doesn't just validate, it underwrites productive financial activity.
CAP's contracts enforce immutable rules for all participants:
Hurdle rates – Minimum acceptable yields filter suboptimal operators
Delegation limits – Prevent concentration risk
Overcollateralization ratios – Conservative thresholds for each collateral type
Autonomous slashing – Objective conditions trigger penalties without governance
The protocol creates a competitive lending marketplace:
Separate markets for each collateral asset (USDC, USDT, etc.)
Operators submit bids with loan amount and expected returns
Smart contracts allocate to highest-yielding qualified bids
No human discretion in capital allocation
Multiple layers ensure user protection:
Whitelisted operators – Only regulated institutions with legal agreements
Blue-chip collateral – ETH, wBTC, LSTs, and stablecoins only
Buffer periods – Prevent accidental delegation withdrawals
Transparent coverage – Users can verify protection levels on-chain
Oracle protection – 0.25% mint/burn fees during pilot phase
Dynamic hurdle rates – Market rate floor + utilization-based adjustments
Liquidity guarantees – Sharp rate increases ensure withdrawal availability
Happy Path - Yield Distribution:
Alice deposits $100 USDC to mint 100 cUSD, then stakes for 100 stcUSD
An operator identifies opportunity above CAP's 8% hurdle rate
Operator secures delegation from restaker and borrows the USDC
Operator generates 15% yield and repays loan
Distribution: 8% to stcUSD holders, 2% to restakers, 5% operator profit
Protection Path - Slashing: If operator defaults or collateral value drops:
Dutch auction automatically triggers
Liquidators purchase slashed restaker collateral at discount
Proceeds restore reserves, keeping stcUSD holders whole
Fractional Reserves:
Unborrowed assets automatically earn yield via underlying protocols (Aave, Morpho)
ERC4626 vaults manage each asset independently
Programmatic allocation based on best available rates
Instant divestment when needed for withdrawals or new loans
The Bottom Line: CAP transforms stablecoins from static assets into actively productive instruments by creating an open marketplace where the world's best yield generators compete to serve users, all backed by verifiable economic guarantees. This isn't just another yield wrapper – it's the infrastructure for sustainable, scalable DeFi yield at institutional scale.
As a founding member of the , CAP will serve as the native stablecoin engine for MegaETH:
: "As part of MegaMafia, Cap will focus its growth and usage on MegaETH – the world's first real-time blockchain."
: Like Uber doesn't own vehicles and Airbnb doesn't own rooms, CAP doesn't execute yield strategies – it creates the marketplace for others to do so efficiently.
CAP pioneers using for productivity-based rewards rather than passive validation:
– Comprehensive articles on CAP's design
– Deep dive into CAP's architecture
– Join the discussion
– Audits
– Future development plans
| – Deep conversations with the team
