Macauley Peterson

Cap Labs’ new stablecoin cUSD has seen rapid adoption since launch, climbing to $67.85 million in circulation over the past week, <a href="https://defillama.com/stablecoin/cap-cusd">according</a> to DefiLlama.&nbsp;



Etherscan <a href="https://etherscan.io/token/0xcccc62962d17b8914c62d74ffb843d73b2a3cccc">shows</a> 2,735 holders of the token to date. The jump signals strong demand for Cap’s yield-layered digital dollar model, which combines regulated reserve assets with EigenLayer-powered credit underwriting.



Built atop the newly launched Cap Stablecoin Network (CSN), cUSD is designed as a 1:1 redeemable stablecoin backed by assets like <a href="https://blockworks.co/tag/paypal">PayPal’s</a> <a href="https://blockworks.co/price/pyusd">PYUSD</a>, <a href="https://blockworks.co/tag/blackrock">BlackRock</a>-managed <a href="https://blockworks.co/news/buidl-collateral-tokenization">BUIDL</a>, and <a href="https://blockworks.co/tag/franklin-templeton">Franklin Templeton’s</a> BENJI. The yield-bearing version stcUSD — minted by staking cUSD — is enabled by a three-party system of lenders, operators, and restakers.



Cap’s core innovation lies in its structure: operators borrow stablecoins to deploy yield strategies, restakers underwrite the operator’s credit risk, and lenders (stcUSD holders) earn a floating yield, currently around 12%, depending on market demand and operator performance. While restaker collateral provides protection against operator default, stcUSD holders are still exposed to fluctuating yield dynamics.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcu_7EBXZi3VItlG_gUlP9ZdT_spy2QXjOEzbUMHu7GkZFHRrKyJZ9-tlygRXK5q_omNcVAeG6WuoQ6iSAgmzzZFOSBYsP0chFvaZY1O5vP7YJeK2iehw-MHotrGOt4ZVsJb5OyEA?key=1HSKtor9sNS05yY8kpZnCg" alt=""/><figcaption class="wp-element-caption">cUSD’s impressive growth; Source: <a href="https://defillama.com/stablecoin/cap-cusd">DefiLlama</a></figcaption></figure>



Unlike many past stablecoin launches, Cap’s model is carefully tuned to comply with the <a href="https://blockworks.co/tag/genius-act">GENIUS Act</a>, the sweeping US stablecoin legislation that prohibits interest-bearing payment tokens. Speaking at the Stablecoin Summit in Cannes <a href="https://youtu.be/fxd5wXtAaC8?si=45kDRI1mmi8Zt56U">in June</a>, Cap Labs founder Benjamin Lens was blunt:



“They said no yield, and it’s pretty clear — there’s no way around it. They do not want stablecoins giving yield to retail investors,” Lens said.



Thus, stcUSD is a separate <a href="https://blockworks.co/tag/erc-4626">ERC-4626</a> vault token, which users can mint by staking cUSD. The yield is generated through a marketplace of borrowing and restaking, not directly from Cap Labs.



“Genius Act covers companies that are generating yield on behalf of users and giving them to the users,” Lens said in Cannes, whereas Cap is “an immutable open protocol like <a href="https://blockworks.co/tag/ethereum">Ethereum</a>, like Bitcoin.”



Combined with the fact that the percentage of any one stablecoin backing cUSD is limited to 40%, Lens thinks they have a compliant mechanism. “This is the standard that we&#8217;ve agreed to with Templeton and BlackRock for our integration with them,” Lens told Blockworks, noting it’s the same arrangement that UStB (from Ethena) made in partnership with BlackRock.



<h2 class="wp-block-heading">Restaking evolution</h2>



Cap’s design aligns with a trend emerging with restaking platforms such as <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a> and Symbiotic: the financialization of Actively Validated Services (AVSs). Traditionally, AVSs on EigenLayer offered infrastructure services — like oracles or bridges — with risk limited to uptime or correctness. But a new wave of AVSs is using EigenLayer to underwrite financial guarantees.



Cap is one example highlighted by EigenLayer founder Sreeram Kannan. “A staker can stake and promise that an operator [like Susquehanna] is going to make a 10% APR,” Kannan told Blockworks. “You can underwrite financial risk using EigenLayer, which is a very new kind of risk, which requires much, much more active curation and monitoring,” he said.



What makes this possible is EigenLayer’s recent rollout of a new feature, complementary to slashing, which <a href="https://blockworks.co/news/restaking-use-cases-reframed">went live in April</a>.&nbsp;



While slashing enables restakers to be penalized for backing underperforming operators, <a href="https://docs.eigencloud.xyz/products/eigenlayer/concepts/slashing/redistribution">redistribution</a>, launched in late July, allows slashed funds to be redirected back to the impacted AVS — such as Cap’s lending vault — rather than burned.



That change turns EigenLayer into a programmable risk distribution layer, capable of enforcing structured finance contracts entirely onchain.



“With financial AVSs, slashing is the core logic,” Kannan said. “A liquidation is an example — if the hurdle rate is not met — slash and move the money out.” That’s easier than slashing some infrastructure AVSs like a ZK or TEE coprocessor, where it’s harder to adequately express the slashing logic onchain, he added.



The early growth of cUSD “highlights demand for stable, compliant dollars backed by decentralized risk management,” according Misha Putiatin, co-founder of Symbiotic, which also provided infrastructure underlying Cap’s real-time credit risk coverage.



“This marks an important step toward programmable DeFi where anyone can transparently launch, underwrite, and manage new financial primitives,” Putiatin told Blockworks.



According to a research note from Serenity Research and Catalysis <a href="https://serenityresearch.substack.com/p/serenity-premium-cap-money-and-cusd">published</a> Sunday, Cap’s model resembles a CDS-like structure: Restakers sign off-chain legal agreements to cover operator defaults, post collateral onchain, and are liquidated if their guarantee fails. Cap currently lists market makers like Fasanara, GSR, and Amber as operators, with Gauntlet and <a href="https://blockworks.co/tag/symbiotic">Symbiotic</a> restakers providing credit protection.



Cap Labs’ operating company, which handles smart contracts, social media and frontend, is based in Panama, Lens said.



“There are currently no plans to geofence the US. Since we&#8217;re functionally an autonomous, overcollateralized lending market, we&#8217;re taking a similar precedent to <a href="https://blockworks.co/tag/aave">Aave</a> and <a href="https://blockworks.co/analytics/morpho">Morpho</a>,” he said.



As Cap’s model gains traction, it could preview a broader shift in the restaking ecosystem: from securing infrastructure to enabling onchain credit underwriting, with slashing and redistribution forming the enforcement rails for next-gen financial AVSs.



Updated Aug. 26, 2025, at 10:05 am ET: Added comment from Symbiotic.



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Cap Labs attracts capital with EigenLayer-backed credit model

Casey Wagner

<div id="highlights-block_62b9fde9a550e" class="highlights">
 <ul>
 <li>Crypto companies and startups have received a total of $3.657 billion in venture funding so far in June, down from $4.219 billion in May and $6.829 billion in April</li>
 <li>One company had to lower its valuation 30% to close its latest round, its CEO said</li>
 </ul>
 
</div>



As cryptocurrency markets struggle to come back from their recent <a href="https://cms.blockworks.co/bitcoin-investment-products-endured-453m-of-outflows-last-week/" target="_blank" rel="noreferrer noopener">sell-off</a>, the days of record-setting venture capital funding in the space may be behind us. 



Crypto companies and startups have received a total of $3.657 billion in venture funding so far in June, down from May’s total of $4.219 billion, according to <a href="https://www.dovemetrics.com/" target="_blank" rel="noreferrer noopener">data</a> from Dove Metrics. In April, funding totaled $6.829 billion. 



“With increasing interest rates, investors are going to ask for a higher premium, and that means valuations are potentially going to drop, it means that you&#8217;re not going to see in a multi-$100 million rounds at multibillion-dollar valuations with a 20 or 30x multiple,” Rodrigo Vicuna, chief financial officer of Prime Trust, said. “We&#8217;re going to revert back to the mean or below and balance out, it&#8217;s all about balance and it&#8217;s all about cyclicality.” 



Jenna Pilgrim, CEO of Rite Network, told Blockworks her company lowered its valuation 30% to close its most recent fundraising round.&nbsp;



“What we&#8217;re seeing is investors, as each market drawdown happens, they tie themselves a lot tighter to their thesis,” Pilgrim said. “An investor in previous market conditions would have not necessarily invested outside of their thesis, but would have been more flexible, they are less so now.”&nbsp;



Saurabh Sharma, head of investments at Jump Crypto, added that investors may be taking more care in evaluating projects, but there will continue to be funding in the space.&nbsp;



“Very strong, quality entrepreneurs and conviction projects are always in demand,” Sharma said. “In general, I’d think the levels would be down, but I think from our perspective, one of the biggest focuses is going to be finding those very long-standing, vision entrepreneurs with high conviction projects.”&nbsp;



Prime Trust, a digital-assets custody and infrastructure startup, appealed to investors taking the long view, Vicuna said. The company just closed its $107 million Series B funding round earlier this month with plans to expand its product suite and portfolio.&nbsp;



Vicuna said the team at Prime Trust, which started raising its second round this year, was “starting to see the overall declining market,” adding “the writing was a little bit on the wall.”



“That really led us to look at what we need to weather a multi-year cycle and be scalable and efficient,” Vicuna said.&nbsp;



Prime Trust has about 700 customers, including exchanges, wallet providers, broker dealers and banks, and provides crypto-focused institutional products that eventually reach retail consumers.



Investors in the Series B round include payment processing firm FIS, Fin Capital, Kraken Ventures, Commerce Ventures and others.&nbsp;



“I think investors have the right sentiment of when things are hot, you grow, and when things are cool, you build,” Vicuna said. “Some might think of that as a tired adage, I think that it&#8217;s just good business because you have to prepare for not where the market is, but where the market can be.”



Tushar Jain, managing partner at Multicoin Capital, said it’s probably too early to say how current market conditions will affect funding in the long run.&nbsp;



“Valuations in private markets haven&#8217;t fully adjusted yet, because a lot of teams and projects raised money in the last 12 months or so, and so they&#8217;re flush with cash, they have more than enough runway,” Jain said. “A lot of these companies are in a very good spot, so that actually reduces the chances that we see a repricing of those deals, because they just don&#8217;t need to go to market and they don&#8217;t need to get repriced.”&nbsp;



Projects looking to launch in the bear market might tell a different story, Jain said.&nbsp;



“Then you can see public markets pricing those assets,” he added. “I do think launching in a bear market is better for projects than launching in a bull market, because it&#8217;s just less noise and only the people who actually care about your projects are there.”



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