cap

Cap issues reserve-backed cUSD and yield-bearing stcUSD. DefiLlama recorded about $283M on 2026-08-14, so the inherited below-materiality basis was false. stcUSD yield is funded by loans to whitelisted institutional operators that execute proprietary strategies; restaker collateral can be slashed and auctioned after default. That onchain recourse is meaningful, but it does not make the operators’ strategies or repayment capacity inspectable. The aggregate is therefore an off-chain-credit class application, not a claim that cUSD is presently impaired.

Review triggers: events that reopen the verdict
• Publishes operator-level exposures, enforceable strategy limits, loan terms, live collateral coverage, realized defaults and stressed-redemption results sufficient to underwrite the credit

Watched nightly: a warning on its venues or files, or a cited document that changes, reopens the memo. The first confirmation is due 2026-11-15.

The research file

Mechanism

Users mint cUSD against a reserve basket and may stake it for stcUSD. Idle reserves can earn through integrated money markets. Whitelisted operators obtain reserve loans after securing delegations from restakers, execute proprietary strategies, and owe a hurdle rate plus restaker premium; stcUSD captures the lender return.

Control and loss waterfall

Cap whitelists operators and sets reserve, rate and liquidation parameters. If an operator defaults or collateral breaches its threshold, the protocol slashes delegated stake and sells it by Dutch auction for reserve assets. Published defaults include an 80% liquidation threshold, 12-hour grace period and 10% liquidator bonus. Recovery still depends on collateral value and auction execution during stress.

Exit consequences

A cUSD holder can request the current proportional reserve basket rather than an unconditional cash claim; reserve composition and available liquidity determine what is received. stcUSD must first unwind to cUSD. When reserves are lent out, operator repayment or liquidation replenishes the reserve, so a correlated operator loss and collateral decline can delay or haircut practical exit.

Why the class rule decides

The yield-bearing claim finances named-but-whitelisted institutions whose proprietary trading books are not visible onchain. Restaker overcollateralization changes recovery priority, not the source of repayment risk. That is within the off-chain-credit rule. Review reopens with operator-level exposure, enforceable strategy limits, live collateral coverage, loan terms, realized defaults and stressed redemption outcomes.

Class rule

The off chain credit class is outside the approved structures, so every protocol in it is not approved until the rule changes. The rule is about the structure, not an adverse finding about this protocol, and it is not a client instruction. The events that would reopen it are listed with the memo.

Sources

The claims above trace to these. Where a number could not be independently verified, the thesis says so.

• Cap Docs — stcUSD lending mechanics · primary · accessed 2026-08-14
  Supports: operator loans, proprietary strategies, restaker collateral, default waterfall
• Cap Docs — lending and liquidation parameters · primary · accessed 2026-08-14
  Supports: liquidation threshold, grace period, target health, liquidator bonus
• Cap Labs — published audit repository · primary · accessed 2026-08-14
  Supports: published security reviews, review scope
• DefiLlama — Cap survey record · secondary · accessed 2026-08-14
  Supports: survey TVL, reserve composition, borrowed amount

Inherited controls

The research above describes the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The layer with the most administrative power sets the position’s effective control; that describes control, not quality or suitability.