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

Input Output, the primary engineering company responsible for developing the Cardano blockchain, is now seeking roughly half of the funding it requested in the previous year from the project's community treasury. The company has submitted nine proposals amounting to $46.8 million for 2026, marking a substantial decrease from the $97.5 million proposed in 2025. Several of these proposals are focused on enhancing Cardano's scalability to increase its transaction processing capacity, as well as expanding into the realm of Bitcoin decentralized finance. Cardano, similar to other major blockchains, operates a shared fund fueled by network fees, which is allocated by community representatives towards development projects through a voting process. Historically, Input Output has been the largest recipient of these funds due to its significant role in employing engineers who work on the underlying software. However, this reduced funding request is the first tangible step in a strategic plan aimed at phasing out this dependency. Input Output now intends to gradually decrease its annual funding requests until the company can sustain itself through its own revenue, allowing community funds to support a broader range of smaller, specialized engineering groups. By the end of 2026, Input Output anticipates that smaller teams, including firms like VacuumLabs and Midgard Labs that focus on specific aspects of the Cardano software, will undertake the majority of the work currently handled in-house. The submitted proposals are grouped into two primary themes. The first involves significant funding for a consensus upgrade known as Leios, which Input Output claims will enhance Cardano's transaction processing capacity by 10 to 65 times, aiming for over 1,000 transactions per second. This would position Cardano as a competitive chain, rivaling the likes of Solana and the fastest Ethereum layer-2 networks in terms of throughput. Leios is slated for a test release in June, with full deployment expected by the end of the year. The second flagship proposal is for a system called Pogun, designed to integrate Bitcoin-based decentralized finance into Cardano. This system would enable bitcoin holders to borrow and earn yield on their holdings through Cardano without needing to rely on a centralized intermediary. Pogun's lending component is targeted for public release in the second quarter. Smaller proposals encompass performance enhancements for 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 the funds upfront. This approach is akin to paying a contractor in stages as different parts of a project are completed, rather than releasing the full budget at the outset. Voting commenced on Tuesday and will continue through May 24, with decisions made by approximately 1,000 elected delegates known as DReps, who represent ADA holders. Charles Hoskinson, the founder of Input Output, is scheduled to release a video this week, directly addressing these delegates to make the case for the proposals. The outcome of the vote will determine whether Cardano's governance treats Input Output like any other grant applicant or continues to approve its requests based on historical precedence. Last year, the $97.5 million proposal was approved, but since then, significant changes have occurred, including the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of core Cardano software. These shifts mean that alternatives to Input Output now exist in a way they did not during previous voting cycles. Input Output also highlighted ecosystem progress, noting that a new Cardano stablecoin, USDCx, has reached 14.6 million tokens in circulation shortly after its launch. Additionally, total assets deposited on Cardano have increased from $137.5 million to $142.7 million over the same period. The fate of the proposals - whether they are fully approved, partially funded, or significantly altered by the DReps - will signal the extent to which the Cardano community's perspective has shifted, now that mechanisms to fund development beyond Input Output are in place.