Cap, the stablecoin protocol backed by Franklin Templeton, has cut its promised Stabledrop reward to $4.2 million from about $12 million. Founder Benjamin Sarquis Peillard apologized for the reduction and said the team committed to the number before it had secured the funding to support it.
In a post on X on Friday, Cap said the Stabledrop will be paid in its dollar-pegged cUSD rather than the CAP governance token. The company had originally planned to fund the reward through a token sale structured around a $250 million valuation and 10% of CAP supply. When the sale took place in June, Cap instead offered 5% of supply at a $75 million floor, raised $4.2 million, and saw bids clear at valuations as high as $106 million. Cap said 100% of the sale proceeds would go to the Stabledrop.
Original promise and apology
Cap introduced the Stabledrop in February and set it at about $12 million. The structure was meant to give participants in the project’s Frontier program a fixed-value reward instead of a token payout exposed to market swings.
The company said that original figure assumed the token sale would clear at a $250 million valuation, with the Stabledrop making up roughly half of the expected raise. After market conditions worsened, Cap delayed the sale and came back in June with smaller terms.
In his own X post on Monday, Sarquis Peillard said the team had announced a figure that was not realistic. He wrote, "We announced a number that wasn't realistic," and added, "I'm sorry, genuinely."
Revised allocation under a “no-loss” rule
With only $4.2 million available instead of the larger amount first discussed, Cap changed how the reward would be allocated. The company said only Frontier participants who bought Pendle yield tokens, or YTs, and did not also hold the matching principal tokens are eligible. Users who held cUSD or supplied liquidity to Pendle are excluded.
Sarquis Peillard said the point of the revision was to keep participants from ending up out of pocket. He said a straight pro rata distribution of the smaller pool would have left some YT buyers with real losses, with the earliest supporters hit hardest. Under the updated plan, every YT holder is made whole, but none earns a profit. He said the same rule was applied to every wallet.
Founder rejects wallet allegations
Sarquis Peillard also addressed a separate accusation circulating among users: that one of the largest wallets expected to receive Stabledrop rewards could be traced to his previous professional circle, raising questions about self-dealing.
According to an interview he gave in May, Sarquis Peillard founded Cap in 2024. Before that, he helped grow QiDao, the DeFi lending protocol behind the MAI stablecoin, to about $400 million in total value locked, and earlier worked as an investment banking analyst at Citi.
He said the wallet in question belongs to a former colleague who is also a close friend and has no affiliation with Cap. He added that the address was not funded by the QiDao treasury beyond gas fees. The same no-loss rule applied to that wallet as to every other wallet, he said. The Defiant said it could not independently verify the ownership or funding history of the address.
Token and TVL move lower
According to CoinGecko, CAP has fallen about 20% over the past week, while Ether is down about 1% over the same period. The token also trades roughly 55% below its June 26 debut.
DefiLlama data shows Cap’s total value locked stood at about $230 million on Monday, down from last week’s peak of $262 million on July 8. Sarquis Peillard said the decline was caused by a jump in USDM borrowing rates on Aave’s deployment on MegaETH, which pushed stcUSD “loopers” to unwind leveraged positions. He said the move was unrelated to the Stabledrop.
He also said Cap processed the resulting redemptions without issue through its instant redemption system and did not expect additional redemptions.
Funding, product structure, and criticism
Cap raised $11 million in seed funding in April 2025 from Franklin Templeton, Susquehanna, Triton Capital, and market makers including Flow Traders, Nomura’s Laser Digital, GSR, and IMC Trading.
Its cUSD is a synthetic dollar backed by a basket of regulated stablecoins including USDC, PYUSD, BlackRock’s BUIDL, and Franklin Templeton’s BENJI. The staked version, stcUSD, pays yield generated by a network of operators and underwritten by restakers.
According to Cap’s Q1 2026 investor update, the protocol is building out a credit business and originated a $100 million revolving credit facility to Susquehanna Crypto, described in the report as a Cap operator and seed investor. DefiLlama lists Cap’s TVL at about $230 million.
Cap has described the smaller payout as the result of weaker market conditions. Critics have taken a different view. After the June sale, The Defiant reported that Cap’s token auction was oversubscribed by 5.5 times, drawing $16.4 million in commitments against the amount offered. Some users argue that demand was not the issue and that the shortfall came from Cap’s decision to halve the sale size to 5% of supply from 10%.
Claim window
Cap said Frontier participants can start claiming the Stabledrop on Monday through a dedicated site, and the window will remain open for three months until Oct. 13. Sarquis Peillard said Cap has “a lot of shipping in the coming months.”