Cardano Developer Seeks 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 compared to the previous year. The company has submitted nine proposals amounting to $46.8 million for 2026, marking a notable reduction from the $97.5 million requested in 2025. Several of these proposals focus on enhancing Cardano's scalability to increase its transaction capacity and exploring opportunities in Bitcoin decentralized finance (DeFi). Cardano, similar to other major blockchains, has a communal fund supported by network fees, which is allocated through a voting process by community representatives. Historically, Input Output has been the primary recipient of these funds due to its significant role in developing the underlying software. However, the company aims to gradually decrease its reliance on community funding, with the goal of becoming self-sustaining through its own revenue. This reduced funding request is the first step towards this objective, with plans to further decrease the amount sought each year. By the end of 2026, Input Output expects smaller, specialized teams to undertake 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 submitted proposals are categorized into two main themes: scaling and Bitcoin DeFi. A key proposal is the Leios consensus upgrade, which promises to increase Cardano's transaction processing capacity by 10 to 65 times, potentially reaching over 1,000 transactions per second. This would position Cardano competitively alongside other fast Ethereum layer-2 networks and Solana in terms of throughput. Leios is scheduled for a test release in June, with full deployment expected by the end of the year. Another significant proposal involves the Pogun system, designed to integrate Bitcoin-based DeFi into Cardano. This system would enable bitcoin holders to lend and earn yield on their holdings through Cardano without needing to rely on centralized intermediaries. Pogun's lending component is targeted for public release in the second quarter. Smaller proposals address performance enhancements for 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 defined milestones, rather than providing upfront funding. This approach is akin to paying a contractor in stages as different parts of a project are completed. Voting on these proposals began on Tuesday and will continue through 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 proposal of $97.5 million was approved, but the governance landscape has evolved, with the Cardano Foundation now overseeing the project's grant-funding arm and Intersect taking stewardship of core Cardano software. These changes mean that alternatives to Input Output now have a more significant presence. Input Output also highlighted ecosystem progress, including the launch of a new Cardano stablecoin, USDCx, which reached 14.6 million tokens in circulation shortly after its launch. Total assets deposited on Cardano increased from $137.5 million to $142.7 million over the same period. The fate of the proposals, whether they are fully approved, partially funded, or significantly altered by the DReps, will reveal the extent to which the Cardano community's perspective has shifted, especially now that there are tools in place to support development beyond Input Output.