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

Input Output, the primary engineering organization responsible for developing the Cardano blockchain, is seeking a substantially lower amount of funding from the project's community treasury compared to the previous year. The company has submitted nine proposals amounting to $46.8 million for 2026, marking a decrease from the $97.5 million requested in 2025. These proposals focus on enhancing Cardano's scalability to increase its transaction processing capacity and exploring the integration of Bitcoin DeFi. Several of the proposals are centered around scaling Cardano to bolster its transaction processing capabilities and expanding its presence in the Bitcoin DeFi space. Cardano, similar to other major blockchains, operates a communal fund that is financed by network fees, with community representatives voting to allocate these funds towards development initiatives. Historically, Input Output has been the largest recipient of these funds due to its significant role in employing the engineers who develop the underlying software. However, the reduced funding request signifies the first tangible step in a 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 be redirected towards a more diverse set of smaller engineering groups. By the end of 2026, Input Output anticipates that smaller, specialized teams will assume the majority of the work currently handled in-house, including firms like VacuumLabs and Midgard Labs that focus on specific layers of the Cardano software. The nine proposals can be broadly categorized into two primary themes. The first theme encompasses a consensus upgrade known as Leios, which Input Output claims will significantly enhance Cardano's transaction processing capacity, potentially increasing it by 10 to 65 times and targeting over 1,000 transactions per second. For context, this upgrade would propel Cardano from being a relatively slower chain to one that is competitive with 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 involves a system called Pogun, designed to introduce Bitcoin-based decentralized finance to the Cardano ecosystem. In practical terms, Pogun would enable bitcoin holders to borrow and earn yield on their bitcoin holdings through Cardano without needing to relinquish custody to a centralized intermediary. The lending component of Pogun 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 identifies specific delivery leads and ties funding to the achievement of delivery milestones, rather than releasing funds upfront. This approach is analogous to paying a contractor in stages as different parts of a project are completed, rather than providing the full budget at the outset. Voting commenced on Tuesday and will continue through May 24, with decisions being made by approximately 1,000 elected delegates known as DReps, who represent ADA holders in a manner similar to proxy representatives in a publicly traded company. 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 serve as a test of whether Cardano's governance treats Input Output as any other grant applicant or continues to approve its requests based on historical deference. Last year's proposal of $97.5 million was approved, but since then, the Cardano Foundation has taken over the project's grant-funding arm, and Intersect, the governance organization overseeing this vote, has assumed stewardship of the core Cardano software. These shifts mean that alternatives to Input Output now exist in a way they did not during previous votes. Input Output also highlighted progress within the ecosystem, noting that a new Cardano stablecoin, USDCx, reached 14.6 million tokens in circulation within weeks of its launch. Furthermore, total assets deposited on Cardano, a key indicator of a network's usage, increased from $137.5 million to $142.7 million over the same period. The outcome of the vote, whether the full slate is approved, partially funded, or entirely reshaped by the DReps, will signal the extent to which the Cardano community's perspective has shifted, now that the tools to fund development without Input Output are in place.