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

Input Output, the company responsible for building and maintaining the Cardano blockchain, is seeking a substantially lower amount of funding from the project's treasury this year. The company has submitted nine proposals totaling $46.8 million for 2026, marking a notable reduction from its $97.5 million request in 2025. Several of these proposals focus on enhancing Cardano's scalability to increase its transaction capacity and exploring the integration of Bitcoin-based decentralized finance (DeFi) solutions. Cardano, similar to other major blockchain networks, has a shared fund that is fueled by network fees, with community representatives voting on how to allocate these funds for development purposes. 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. The reduced funding request is part of a broader plan to gradually decrease Input Output's dependency on community funds. The company aims to reduce its annual funding requests until it can sustain itself through its own revenue, allowing community funds to support a more diverse range of smaller engineering teams. By the end of 2026, Input Output anticipates that smaller, specialized teams will take over a significant portion of its current in-house work, including collaborations with firms like VacuumLabs and Midgard Labs that focus on specific aspects of the Cardano software. The proposals can be grouped into two primary themes: scaling and Bitcoin DeFi integration. A key proposal involves the development of Leios, a consensus upgrade that 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 position Cardano as a competitive force alongside 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. Another significant proposal is for a system called Pogun, which aims to introduce Bitcoin-based DeFi to the Cardano ecosystem. This system would enable bitcoin holders to borrow and earn yield on their holdings directly through Cardano, without the need for a centralized intermediary. The lending component of Pogun is targeted for public release in the second quarter. Smaller proposals cover a range of enhancements, including performance improvements 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 releasing funds upfront. Voting on these proposals begins on Tuesday and will run 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 and making the case for the proposals. The outcome of the vote will be a test of whether Cardano's governance treats Input Output similarly to other grant applicants or if it continues to approve its requests based on historical precedence. Last year's $97.5 million proposal was approved, but since then, the Cardano Foundation has taken over the project's grant-funding arm, and Intersect has assumed stewardship of the core Cardano software, introducing alternatives to Input Output that did not exist during previous votes. Input Output also highlighted progress within the ecosystem, noting that a new Cardano stablecoin, USDCx, has reached 14.6 million tokens in circulation just weeks after its launch. Additionally, total assets deposited on Cardano have increased from $137.5 million to $142.7 million over the same period, indicating growing usage of the network. The fate of the proposals, whether they are fully approved, partially funded, or significantly altered by the DReps, will signal a shift in the Cardano community's approach to development funding, especially now that alternatives to Input Output are more prominent.