The Skill Cap is a key balancing game mechanic in Ultima Online. It controls the amount of capability of a character can have by enforcing a limit on the number of total points in Skills a character can attain.
Without the skill cap, a character could conceiveably become godlike with the max 100 points of each of the 58 skills in UO. This would ultimately make gameplay moot as everyone would eventually have the exact same capabilities, not to mention extremely time-consuming and boring to work on GM'ing all 58 skills.
Initially with the release of UO, the skill cap was 700 total skill points for each character. A character could reach the maximum of 100 points, or Grandmaster, in seven skills, or 50 points in 14 skills, or any combination for that matter, but all skills ultimately adding up to a maximum of 700 points.
In September 2002, as part of the Veteran Rewards program update, skill caps were raised for players depending on the age of their account.
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Consequently, while the higher skill caps rewarded veteran players nicely, it also had the effect of creating a new market for veteran accounts. Anyone could buy a 4+ year old UO account from someone else quitting UO and be able to start anew with the max skill cap.
In January 2013, skill cap of all players have been raised up to 720 points.