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

Input Output, the private company responsible for building and maintaining the Cardano blockchain, is seeking a substantially lower amount of funding from the project's community treasury this year. The company has submitted nine proposals totaling $46.8 million for 2026, which marks a considerable reduction from the $97.5 million requested in 2025. These proposals focus on enhancing Cardano's scalability to increase its transaction capacity and exploring the integration of Bitcoin DeFi. Cardano, similar to other major blockchains, has a communal fund that is fueled by network fees, and community representatives vote on how to allocate these funds for development purposes. Historically, Input Output has been the primary recipient of these funds due to its significant role in employing the engineers who develop the underlying software. However, the company is now aiming to reduce its dependency on these community funds by decreasing its annual funding requests until it can sustain itself through its own revenue. This shift in strategy is expected to enable smaller, specialized teams to take over a significant portion of the work currently handled by Input Output. By the end of 2026, Input Output anticipates that firms like VacuumLabs and Midgard Labs will be responsible for most of the development work, including specific layers of the Cardano software. The nine proposals submitted by Input Output can be categorized into two primary themes. The first theme revolves around a consensus upgrade called Leios, which is designed to significantly enhance Cardano's transaction processing capacity. According to Input Output, Leios has the potential to increase the network's capacity by 10 to 65 times, enabling it to process over 1,000 transactions per second. This upgrade is scheduled for a test release in June, with a full deployment expected by the end of the year. The second flagship proposal focuses on a system called Pogun, which aims to introduce Bitcoin-based decentralized finance to the Cardano ecosystem. This system would allow bitcoin holders to borrow and earn yield on their holdings without having to rely on a centralized intermediary. Pogun's lending component is expected to be released to the public in the second quarter. In addition to these proposals, Input Output has also submitted smaller proposals that focus on improving the performance of Cardano's smart contract engine, enhancing security testing infrastructure, developing new tools for developers, and expanding API services. Each proposal outlines specific delivery leads and ties funding to delivery milestones, ensuring that funds are released in stages as different components of the project are completed. The voting process for these proposals is set to begin and will run through May 24, with roughly 1,000 elected delegates, known as DReps, making the decisions. These delegates represent ADA holders and will play a crucial role in determining the fate of Input Output's proposals. The outcome of this vote will be a significant test of Cardano's governance system, which has undergone significant expansion over the past two years. It will be interesting to see whether the community treats Input Output like any other grant applicant or continues to approve its requests based on its historical role in the project. Last year, Input Output's $97.5 million proposal was approved, but the governance landscape has changed significantly since then. The Cardano Foundation has taken over the project's grant-funding arm, and Intersect, the governance organization, has assumed stewardship of the core Cardano software. These shifts have created alternatives to Input Output, which did not exist during previous voting cycles. Input Output has also highlighted the progress made in the ecosystem, including the launch of a new Cardano stablecoin, USDCx, which has reached 14.6 million tokens in circulation within weeks of its launch. The total assets deposited on Cardano have also risen from $137.5 million to $142.7 million over the same period. The outcome of the vote will provide valuable insight into the Cardano community's thinking and its willingness to support Input Output's proposals.