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

Input Output, the company responsible for developing the Cardano blockchain, is seeking a substantially lower amount of funding from the community treasury this year. The company has submitted nine proposals amounting to $46.8 million for the 2026 funding cycle, marking a notable decrease from the $97.5 million requested in 2025. Several of these proposals focus on enhancing Cardano's scalability to increase its transaction capacity and expanding its presence in the Bitcoin DeFi space. Cardano, similar to other major blockchains, maintains a communal fund fueled by network fees, which is allocated towards development projects through a voting process by community representatives. Historically, Input Output has been the primary recipient of these funds due to its significant role in building and maintaining the underlying software. However, the company is now taking steps to reduce its reliance on community funding, aiming to decrease its annual requests until it can sustain itself through its own revenue. This shift will enable community funds to support a broader range of smaller, specialized engineering teams, such as VacuumLabs and Midgard Labs, which focus on specific aspects of the Cardano software. By the end of 2026, Input Output anticipates that these smaller teams will undertake a significant portion of its current in-house work. The submitted proposals are categorized into two primary themes: scaling and Bitcoin DeFi integration. The most substantial proposal supports the development of Leios, a consensus upgrade designed to significantly enhance Cardano's transaction processing capacity, potentially increasing it by 10 to 65 times, with a target of over 1,000 transactions per second. This upgrade is scheduled for a test release in June, with full deployment expected by the end of the year. For context, this enhancement would position Cardano as a competitive chain, rivaling Solana and the fastest Ethereum layer-2 networks in terms of throughput. Another key proposal is for Pogun, a system aimed at integrating Bitcoin-based decentralized finance into Cardano, allowing bitcoin holders to lend and earn yield on their holdings without the need for a centralized intermediary. Pogun's lending component is slated for public release in the second quarter. Smaller proposals cover various improvements, including 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. This approach is similar to paying a contractor in stages as different parts of a project are completed. Voting on these proposals begins on Tuesday and will conclude on May 24, with decisions made by approximately 1,000 elected delegates known as DReps, who represent ADA holders. The outcome of this vote will indicate whether Cardano's governance treats Input Output similarly to other grant applicants or continues to approve its requests based on historical deference. Last year's $97.5 million proposal was approved, but the governance landscape has evolved significantly since then, with the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of core Cardano software. These changes mean that alternatives to Input Output now exist, potentially influencing the voting outcome. Input Output also highlighted the progress within the ecosystem, noting 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 fate of the proposals, whether they are fully approved, partially funded, or reshaped, will signal the shift in the Cardano community's perspective now that alternatives to Input Output are available for funding development projects.