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

The company behind the Cardano blockchain, Input Output, is requesting roughly half the funding it sought last year from the project's community treasury. The firm has submitted nine proposals amounting to $46.8 million for 2026, a substantial reduction from the $97.5 million proposed in 2025. Several of these proposals focus on enhancing Cardano's scalability to increase its transaction capacity and exploring opportunities in Bitcoin DeFi. Cardano, similar to other major blockchains, maintains a communal fund supported by network fees, which community representatives allocate through a voting process. Historically, Input Output has been the largest recipient of these funds due to its role in employing most of the engineers responsible for developing the blockchain's underlying software. However, the reduced funding request marks the first step in a plan to reduce this dependency, with the aim of eventually sustaining the company through its own revenue and redirecting 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 assume a significant portion of the work currently handled in-house, focusing on specific aspects of the Cardano software. The proposals can be categorized into two primary themes: scaling and Bitcoin DeFi integration. A key proposal involves funding for a consensus upgrade known as Leios, which Input Output claims will enhance Cardano's transaction processing capacity by 10 to 65 times, potentially exceeding 1,000 transactions per second. This upgrade is slated for a test release in June and full deployment by the end of the year. For context, this would position Cardano as a competitive chain, comparable to Solana and the fastest Ethereum layer-2 networks in terms of throughput. Another significant proposal involves 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 holdings through Cardano without relying on a centralized intermediary. Pogun's lending component is expected to be released publicly 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 delivery milestones, rather than providing upfront funding. The voting process, which opened on Tuesday and will run through May 24, will be decided by approximately 1,000 elected delegates known as DReps, who represent ADA holders. The outcome of this vote will test whether Cardano's governance treats Input Output like any other grant applicant or continues to approve its requests based on historical deference. Last year's $97.5 million proposal 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, potentially influencing the voting outcome. Input Output also highlighted ecosystem progress, including the launch of a new Cardano stablecoin, USDCx, which has reached 14.6 million tokens in circulation, and an increase in total assets deposited on Cardano from $137.5 million to $142.7 million. The fate of the proposals will signal how the Cardano community's perspective has evolved, particularly now that tools are available to fund development beyond Input Output.