To design capacity model you should consider the amount of available active material in the cell for redox reactions during each cycle. The loss of active material results in lower current and since capacity is calculated by multiplying current and the time of discharge, therefor capacity fading appears in the cell. This could be due to SEI layer formation on the anode or electrodes degradation. So, you should consider electrochemical reactions during each cycle and make a model for current (I) Vs Time. Then having same model for different cycles you can generate capacity as a function of cycle No.
If you rather would like to model the usage than the technology of the battery the work of Göran Andersson at ETH Zurich might be a starting point. See attached file
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