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

Input Output, the primary engineering company responsible for developing the Cardano blockchain, is seeking a substantially reduced amount of funding from the project's treasury for 2026. The company has submitted nine proposals amounting to $46.8 million, which is roughly half of the $97.5 million it requested in 2025. These proposals focus on enhancing Cardano's scalability to increase its transaction capacity and exploring the integration of Bitcoin decentralized finance (DeFi) solutions. Cardano, similar to other major blockchain networks, operates a communal fund fueled by network fees, which is allocated through a voting process by community representatives. Historically, Input Output has been the largest recipient of these funds due to its significant role in developing the underlying software. This reduced funding request marks the first tangible step in a strategic plan to gradually decrease Input Output's reliance on community funding. The company aims to reduce 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, which focus on specific layers of the Cardano software, will undertake most of the work currently handled in-house. The proposals can be grouped into two main categories: scaling and Bitcoin DeFi. A significant portion of the funding is allocated to the Leios consensus upgrade, which Input Output claims will enhance Cardano's transaction processing capacity by 10 to 65 times, aiming for 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 perspective, 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 key proposal is for a system called Pogun, designed to introduce Bitcoin-based decentralized finance to the Cardano ecosystem. This system would enable bitcoin holders to borrow and earn yield on their bitcoin holdings through Cardano without needing to rely on a centralized intermediary. Pogun's lending component is targeted for public release in the second quarter of the year. Smaller proposals are focused on improving the performance of Cardano's smart contract engine, enhancing security testing infrastructure, developing more comprehensive developer tools, and expanding API services. Each proposal specifies delivery leads and ties funding to the achievement of specific milestones rather than releasing funds upfront. This approach is similar to paying a contractor in stages as different parts of a project are completed, rather than providing the full payment at the outset. Voting on these proposals begins on Tuesday and will continue through May 24. The decisions are made by approximately 1,000 elected delegates known as DReps, who represent ADA holders in a manner similar to proxy representatives in a publicly traded company. Charles Hoskinson, the founder of Input Output, is scheduled to release a video this week to directly address these delegates and make the case for the proposals. The outcome of this vote will be a test of whether Cardano's governance treats Input Output differently now that alternatives exist for grant funding and core software development. Last year's proposal of $97.5 million 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 have a more significant presence 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. Additionally, total assets deposited on Cardano increased from $137.5 million to $142.7 million over the same period, indicating growing network usage. The outcome of the vote, whether the full slate of proposals 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 there are viable alternatives for funding development outside of Input Output.