Cardano Developer Seeks Reduced Funding of $46.8 Million for Expansion and DeFi Integration

Input Output, the primary engineering force behind the Cardano blockchain, is seeking to decrease its financial reliance on the project's community treasury by requesting approximately half the funding it sought in the previous year. The company has submitted nine proposals amounting to $46.8 million for the 2026 cycle, down from $97.5 million in 2025, with several proposals focusing on enhancing Cardano's scalability and exploring Bitcoin DeFi opportunities. Cardano, similar to other major blockchains, operates a communal fund fueled by network fees, with community representatives voting on the allocation of these funds for development purposes. Historically, Input Output has been the largest recipient of these funds due to its significant role in building and maintaining the underlying software. However, the company now aims to reduce its annual funding requests, with the long-term goal of becoming self-sustaining through its own revenue, thereby allowing community funds to support a broader range of smaller, specialized engineering teams. By the end of 2026, Input Output anticipates that smaller teams, such as VacuumLabs and Midgard Labs, will undertake a significant portion of the work currently handled in-house, including specific layers of the Cardano software. The proposals are categorized into two primary themes: the first involves a consensus upgrade called Leios, designed to increase Cardano's transaction processing capacity by 10 to 65 times, potentially reaching over 1,000 transactions per second. This upgrade is slated for a test release in June and full deployment by the end of the year. The second key proposal involves a system called Pogun, aimed at integrating Bitcoin-based decentralized finance into Cardano, enabling bitcoin holders to borrow and earn yield on their holdings without the need for a centralized intermediary. Pogun's lending component is targeted for public release in the second quarter. Smaller proposals address performance enhancements to Cardano's smart contract engine, security testing infrastructure, developer tools, and expanded API services. Each proposal outlines specific delivery leads and ties funding to the achievement of delivery milestones, rather than providing upfront funding. The voting process, which opened on Tuesday and will run through May 24, will be decided by approximately 1,000 elected delegates known as DReps, who represent ADA holders. The outcome of the vote will indicate whether Cardano's governance treats Input Output similarly to other grant applicants or continues to approve its requests based on historical precedence. The Cardano Foundation's takeover of the project's grant-funding arm and Intersect's assumption of core Cardano software stewardship have introduced alternatives to Input Output, potentially influencing the voting outcome. Additionally, Input Output highlighted ecosystem progress, including the launch of a new Cardano stablecoin, USDCx, which reached 14.6 million tokens in circulation within weeks, and an increase in total assets deposited on Cardano from $137.5 million to $142.7 million. The voting results will signal the extent to which the Cardano community's perspective has shifted, given the availability of tools to fund development independently of Input Output.