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

The company behind the Cardano blockchain is seeking a substantially lower amount of funding from the project's treasury, marking a shift towards reducing its dependence on community funds. Input Output has submitted nine proposals amounting to $46.8 million for the 2026 funding cycle, down from $97.5 million in the previous year. The proposals are focused on enhancing Cardano's scalability and exploring Bitcoin DeFi opportunities. The Cardano network, similar to other major blockchains, has a communal treasury that is funded by network fees and 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 decrease its annual funding requests, with the goal of becoming self-sustaining through its own revenue and allowing community funds to support a more diverse range of engineering groups. By the end of 2026, Input Output expects smaller, specialized teams to 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 submitted proposals are centered around two primary themes: scaling and Bitcoin DeFi integration. A key proposal is the Leios consensus upgrade, which Input Output claims will increase 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, with full deployment expected by the end of the year. Another significant proposal is the Pogun system, 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 without relying on centralized intermediaries. Pogun's lending component is targeted for public release in the second quarter. Additional 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 delivery milestones, rather than providing upfront funding. The voting process, which commenced 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 be a test of whether Cardano's governance treats Input Output like any other grant applicant or continues to approve its requests based on past deference. Last year's $97.5 million proposal was approved, but the governance landscape has since evolved, with the Cardano Foundation taking over the project's grant-funding arm and Intersect assuming stewardship of the core Cardano software. These changes mean that alternatives to Input Output now exist, potentially influencing the voting outcome. Input Output also highlighted the progress made in the ecosystem, including the launch of a new Cardano stablecoin, USDCx, which reached 14.6 million tokens in circulation within weeks, and an increase in total assets deposited on Cardano from $137.5 million to $142.7 million. The fate of the proposals, whether they are fully approved, partially funded, or reshaped, will signal the shift in the Cardano community's approach to funding development, now that tools exist to support development beyond Input Output.