What if an ICO reaches its soft cap lets say at $500,000 and collects a total of $750,000 while the hard cap is 1 mil. So will the ICO get $750,000 or $500,000 while the rest is refunded?

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Soft cap is the realistic minimum that an ico is aiming to fundraise as for the hard cap it's the exaggerated maximum set by an ico campaign. If ur hard cap is 1 million but u managed to get 750 k onboard of course u keep the 750 k and don't have to lower it down to the min of 500 k. Nothing is refunded u get the whole 750 k as long that it falls within the range of the soft and hard cap
A hard cap is usually set based on market research (i.e. what amounts did similar ICOs raise), calculating potential funds and rates for contribution coins (e.g. what would be raised if ETH is at $300, what would be the token price), and assessing development scenarios (e.g. what might be needed not only for steps 1 to 3 on our roadmap, but for our max. scenario). The soft cap is the minimal amount required for your project (e.g. only with steps 1 to 3 on our roadmap we can deliver a marketable product).
Thus, the hard cap is calculated based on the total number of distributed tokens, e.g. 2.5 M tokens total supply, of which 50%, thus 1.25 M should be distributed within the ICO, the other 1.25 M are for the team and further development. You plan to distribute the 1.25 M tokens via 1) an early investment round, 2) a public pre-sale, and 3) the ICO - all three phases account for a total discount/ bonus of 25%. The 1.25 M token incl. 25% bonus give you an average token price of $1 per token, thus a $1 M hard cap. If you sell all tokens you reached your hard cap of 1.25 M tokens valued at $1 M incl. discounts/ bonus. If your soft cap is $0.5 M and you could not even start your project, you would refund your contributors - as you have already cost with the ICO you might want to make your your soft cap reachable. If you raise e.g. $0.6 M and your bonus is evenly distributed over the three phases you would have around 0.75 M tokens sold and the remaining 0.5 M tokens usually would be burned.
Hope this makes sense. :)
If you are the ICO initiator and owner of the coin or tokeb, you can do whatever you want. ICOs are unregulated. You can either move a soft cap or continue selling, as long as the supply of coins or tokens s is not exhausted.