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

Input Output, the primary engineering company responsible for developing the Cardano blockchain, is seeking a substantially lower amount of funding from the project's community treasury compared to the previous year. The company has submitted nine proposals amounting to $46.8 million for 2026, marking a decrease from the $97.5 million requested in 2025. Several of these proposals are focused on enhancing Cardano's scalability to increase its transaction processing capacity and exploring opportunities in Bitcoin DeFi. Cardano, similar to other major blockchains, maintains a communal fund fueled by network fees, which is allocated towards development work through a voting process by community representatives. Historically, Input Output has been the largest recipient of this funding due to its significant role in employing engineers who develop the underlying software. However, the reduced funding request signifies the first concrete step in a plan aimed at phasing out this dependency. Input Output now intends to gradually reduce its annual funding requests until the company can sustain itself through its own revenue, allowing community funds to support a broader range of smaller, specialized engineering groups. By the end of 2026, Input Output anticipates that smaller teams, including firms like VacuumLabs and Midgard Labs that focus on specific layers of the Cardano software, will assume most of the work currently handled in-house. The submitted proposals are categorized into two primary themes. The first involves a consensus upgrade known as Leios, which 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. This upgrade is scheduled for a test release in June and is expected to be fully deployed by the end of the year. For context, this enhancement would position Cardano as a competitive chain, comparable to Solana and the fastest Ethereum layer-2 networks in terms of throughput. The second flagship proposal involves a system called Pogun, designed to integrate Bitcoin-based decentralized finance into Cardano. This system would enable bitcoin holders to borrow and earn yield on their holdings through Cardano without the need for a centralized intermediary. Pogun's lending component is targeted for public release in the second quarter. Additionally, there are smaller proposals aimed at improving the performance of Cardano's smart contract engine, enhancing security testing infrastructure, developing more comprehensive developer tools, and expanding API services. Each proposal outlines specific delivery leads and ties funding to the achievement of delivery milestones rather than releasing the funds upfront. This approach is akin to paying a contractor in stages as different parts of a project are completed, rather than providing the full budget at the outset. Voting on these proposals commenced on Tuesday and will continue through May 24, with decisions being 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 the vote will be a test of whether Cardano's governance treats Input Output as it would any other grant applicant or if it continues to approve its requests based on historical deference. Last year's proposal of $97.5 million was approved, but significant changes have occurred since then, including the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of the core Cardano software. These shifts mean that alternatives to Input Output now exist in a way they did not during previous votes. Input Output also highlighted progress within the ecosystem, including the launch of a new Cardano stablecoin, USDCx, which reached 14.6 million tokens in circulation within weeks of its launch. Furthermore, total assets deposited on Cardano, a key measure of network usage, increased 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 reshaped, will signal the extent to which the Cardano community's perspective has shifted, now that mechanisms to fund development beyond Input Output are in place.