The founder of Cap, a Franklin Templeton-backed stablecoin protocol, apologized for cutting a promised user reward to $4.2 million from the roughly $12 million the project had committed to in February, and denied accusations that he directed funds to a wallet linked to his former employer.
Cap said in a post on X on Friday that its “Stabledrop,” a reward paid in the project’s dollar-pegged cUSD rather than in its $CAP governance token, would total $4.2 million. The company had planned to fund the reward through a token sale targeting a $250 million valuation and an offering of 10% of $CAP‘s supply. When it ran the sale in June, it instead offered 5% of supply at a floor of $75 million and raised $4.2 million, with bids clearing at valuations of up to $106 million. Cap said 100% of the sale proceeds would go to the Stabledrop.
The reversal is the latest flashpoint over the “points” and airdrop programs that crypto projects use to attract early users, rewarding them with the promise of future tokens or cash while leaving the final payout to the team’s discretion. For Cap, a stablecoin protocol with about $230 million in total value locked, according to DefiLlama, the episode is a test of user trust as it builds out a credit business that, according to its Q1 2026 investor update, originated a $100 million revolving credit facility to Susquehanna Crypto, a Cap operator and seed investor.
What Cap Promised
Cap unveiled the Stabledrop in February and pegged it at about $12 million, as The Defiant reported at the time. The mechanism was designed to reward participants in Cap’s “Frontier” program with a fixed-value payout instead of a token whose price could swing.
Cap said the original amount assumed the token sale would clear at a $250 million valuation, with the Stabledrop accounting for roughly half of the anticipated raise. The company postponed the sale as market conditions deteriorated, then returned in June with smaller parameters.
Benjamin Sarquis Peillard, who founded Cap in 2024, addressed the cut in his own post on X on Monday. He said the team committed to the figure before securing the funding to back it.
“We announced a number that wasn’t realistic,” he wrote, adding, “I’m sorry, genuinely.”
The ‘No-Loss’ Reallocation
With $4.2 million to distribute rather than the larger sum, Cap said it changed how the reward is allocated. Only Frontier participants who bought Pendle yield tokens, or YTs, and did not also hold the matching principal tokens are eligible, the company said. Users who held cUSD or supplied liquidity to Pendle are excluded.
Sarquis Peillard said the goal was to make sure no participant ended up out of pocket. A straight-line distribution of the smaller amount would have left some YT buyers with real losses, hitting the earliest supporters hardest, he wrote. Under the revised plan, “every YT holder made whole,” but none turned a profit. He said the rule was applied identically to every wallet.
Allegations of Self-Dealing
Sarquis Peillard also used the post to rebut an accusation that had circulated among users: that one of the largest wallets set to receive the Stabledrop traced back to his previous role, implying he was farming the program himself.
Before founding Cap, Sarquis Peillard grew 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, according to an interview he gave in May.
He said the wallet in question belongs to a former colleague who is a close friend and is not affiliated with Cap, and 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, he said. The Defiant could not independently verify the ownership or funding history of the wallet.
Token and TVL Reaction
$CAP, the protocol’s governance token, has fallen about 20% over the past week, compared with a roughly 1% slide in Ether, according to CoinGecko. The token trades about 55% below its June 26 debut.
Cap’s total value locked slipped to about $230 million as of Monday from last week’s peak of $262 million on July 8, per DefiLlama. Sarquis Peillard attributed the decline to a spike in USDM borrowing rates on Aave’s deployment on MegaETH, which he said pushed stcUSD “loopers” to unwind leveraged positions, and said it was unrelated to the Stabledrop. He said Cap processed the resulting redemptions without issue through its instant redemption system and expected no others.
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, and its staked version, stcUSD, pays holders yield generated by a network of operators and underwritten by restakers.
Critics’ Argument
Cap frames the smaller payout as a consequence of a weaker market. Critics counter that the shortfall was self-inflicted. Cap’s June token auction was oversubscribed 5.5 times, drawing $16.4 million in commitments against the amount on offer, The Defiant reported after the sale. Some users argue that demand was not the constraint, and that Cap’s decision to halve the size of the sale, to 5% of supply from 10%, is what left less money to fund the reward.
What’s Next
Frontier participants can claim the Stabledrop starting Monday through a dedicated site, Cap said, with the window open for three months until Oct. 13. Sarquis Peillard said Cap has “a lot of shipping in the coming months.”
