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

Input Output, the company responsible for building and maintaining the Cardano blockchain, is seeking a substantially lower amount of funding from the community treasury this year. The company has submitted nine proposals amounting to $46.8 million for 2026, marking a considerable reduction from the $97.5 million requested in 2025. Several of these proposals focus on enhancing Cardano's scalability to increase its transaction processing capacity and exploring opportunities in Bitcoin DeFi. Cardano, similar to other major blockchains, has a shared fund fueled by network fees, which is allocated by community representatives through a voting process. Historically, Input Output has been the largest recipient of these funds due to its significant role in developing the blockchain's underlying software. However, the company now aims to reduce its reliance on community funding, with plans to decrease its annual requests until it can sustain itself through its own revenue. This shift will allow community funds to support a more diverse range of smaller engineering groups. By the end of 2026, Input Output anticipates that smaller, specialized teams will take over 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 proposals can be grouped into two main categories: scaling and Bitcoin DeFi integration. A key proposal is the Leios consensus upgrade, which Input Output claims will significantly increase Cardano's transaction processing capacity, potentially reaching over 1,000 transactions per second. This upgrade is scheduled for a test release in June and full deployment by the end of the year. Another significant proposal is the Pogun system, designed to introduce Bitcoin-based decentralized finance to Cardano, allowing bitcoin holders to borrow and earn yield on their holdings without relying on centralized intermediaries. Pogun's lending component is expected to be released publicly in the second quarter. 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 milestones rather than providing upfront funding. The voting process, which opens on Tuesday and runs through May 24, will be decided by approximately 1,000 elected delegates known as DReps, who represent ADA holders. The outcome of the vote will indicate whether Cardano's governance treats Input Output as any other grant applicant or continues to approve its requests based on its historical role in the project. 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, providing alternatives to Input Output. 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 the shift in the Cardano community's approach to funding development, now that there are tools in place to support development beyond Input Output.