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 significantly reduced amount of funding from the project's community treasury for 2026. The company has submitted nine proposals amounting to $46.8 million, which is roughly half of the $97.5 million requested in 2025. These proposals primarily focus on enhancing Cardano's scalability to increase its transaction capacity and exploring the realm of Bitcoin decentralized finance (DeFi). 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 largest recipient of these funds due to its significant role in employing the engineers who develop the blockchain's underlying software. This reduced funding request marks the initial step in a strategic plan to diminish Input Output's dependency on community funds. The company now aims to gradually decrease its annual funding requests until it can sustain itself through its own revenue, allowing community funds to support a broader range of smaller, specialized engineering teams. By the end of 2026, Input Output anticipates that smaller teams, such as VacuumLabs and Midgard Labs, will undertake a substantial portion of the work currently handled in-house. These teams focus on specific aspects of the Cardano software, contributing to a more decentralized development process. The submitted proposals are categorized into two primary themes: scaling and Bitcoin DeFi. A significant proposal is the Leios consensus upgrade, which Input Output claims will increase Cardano's transaction processing capacity by 10 to 65 times, aiming to achieve over 1,000 transactions per second. This upgrade is slated for a test release in June and is expected to be fully deployed by the end of the year. For perspective, this enhancement would elevate Cardano from a relatively slower blockchain to one that is competitive with Solana and the fastest Ethereum layer-2 networks in terms of throughput. Another key proposal involves a system called Pogun, designed to integrate Bitcoin-based DeFi into Cardano, enabling bitcoin holders to borrow and earn yield on their holdings without relying on centralized intermediaries. Pogun's lending component is targeted for public release in the second quarter of 2026. Smaller proposals address performance 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 the funds upfront. Voting on these proposals commences on Tuesday and will continue through May 24. The decisions will be 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 this vote will serve as a test for Cardano's governance system, which has undergone significant expansion over the past two years. It will indicate whether the governance treats Input Output similarly to any other grant applicant or if it continues to approve its requests based on historical deference. Last year, Input Output'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. These changes mean that alternatives to Input Output now exist in a way they did not during previous voting cycles. In its release, Input Output also highlighted progress within the ecosystem. A new Cardano stablecoin, USDCx, has reached 14.6 million tokens in circulation just weeks after its launch. Additionally, the total assets deposited on Cardano have risen 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.